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Construction Project Management: Theory and Practice

Name: Construction Project Management: Theory and Practice
Author: Kumar Neeraj Jha
ISBN: 9788131732496

by Kumar Neeraj Jha

January 2011

Beginner

692 pages

23h 13m

English

Pearson India

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Cover
Title page
Contents
About the Author
Dedication
List of Figures
List of Tables
List of Boxes
Foreword
Preface

Chapter 1. Introduction
1.1 General1.2 A Construction Project1.2.1 Phases of a Construction Project1.3 Importance of Construction and Construction Industry1.4 Indian Construction Industry1.5 Construction Project Management and Its Relevance1.5.1 Role of Project Management1.5.2 Why Construction Project Management?1.6 Participants/Stakeholders of a Construction Project1.6.1 Architect1.6.2 Client (Owner)1.6.3 Constructor1.6.4 Engineer (Consultant)1.6.5 Subcontractor/Supplier/Vendor1.6.6 Lawyer, Insurer, etc.1.7 Organization of the BookReferencesReview Questions
Chapter 2. Project Organization
2.1 Introduction2.2 Construction Company2.3 Forms of Business Organization2.3.1 Sole Proprietorship2.3.2 Partnership2.3.3 Corporation2.3.4 Limited Liability Company (LLC)2.3.5 Private Limited Company2.3.6 Public Limited Company2.3.7 Government Enterprises2.3.8 Joint Ventures2.4 Structure of Construction Organization2.4.1 Centralized Functional2.4.2 Decentralized Multidivisional2.5 Organizing for Project Management2.5.1 Classical (Functional)2.5.2 Pure Project or Product Management2.5.3 Matrix Organizations2.6 Management Levels2.6.1 Director Level2.6.2 President Level2.6.3 Construction Management Level2.6.4 Project Management Level2.6.5 Functional Management Level2.7 Traits of A Project Manager2.7.1 Strategies for Enhancing the Performance of a Project Manager2.8 Important Traits of a Project Coordinator2.8.1 Team Building Skill2.8.2 Contract Implementation Skill2.8.3 Project Organization Skill2.9 Ethical Conduct for Engineers2.10 Factors Behind the Success of a Construction OrganizationReferencesReview Questions
Chapter 3. Construction Economics
3.1 Introduction3.2 Economic Decision-Making3.2.1 Out-of-pocket Commitment3.2.2 Payback Period3.2.3 Average Annual Rate of Return3.3 Time Value of Money3.4 Cash-Flow Diagrams3.4.1 Project Cash-flow and Company Cash-flow Diagrams3.4.2 Using Cash-flow Diagrams3.5 Using Interest Tables3.6 Evaluating Alternatives by Equivalence3.6.1 Present Worth Comparison3.6.2 Future Worth Comparison3.6.3 Annual Cost and Worth Comparison3.6.4 Rate of Return Method3.7 Effect of Taxation on Comparison of Alternatives3.8 Effect of Inflation on Cash-Flow3.9 Evaluation of Public Projects: Discussion on Benefit–Cost Ratio3.9.1 Benefit/Cost CriteriaReferencesSolved ExamplesReview Questions
Chapter 4. Client’s Estimation of Project Cost
4.1 Introduction4.2 Approximate Methods of Estimation4.2.1 Preliminary Estimate for Buildings4.2.2 Preliminary Estimate for Industrial Structures4.3 Types of Estimates4.3.1 Rough Order of Magnitude Estimates4.3.2 Client’s Indicative Cost Estimate4.3.3 Client’s Preliminary Cost Estimate4.3.4 Client’s Detailed Estimate4.3.5 Client’s Definitive Estimate4.3.6 Revised Estimate4.3.7 Supplementary Estimates4.3.8 Project Closure Cost4.4 Methods of Structuring Project Costs4.5 Illustrative Cases in Preparation of Estimate4.5.1 Case 1: Multi-Level Car Parking Facility4.5.2 Case 2: Preliminary Estimate for Construction of Sewage Treatment PlantReferencesSolved ExamplesReview Questions
Chapter 5. Construction Contract
5.1 Construction Contract5.2 Contract Document5.2.1 The Contract Drawings5.2.2 The Specifications5.2.3 The General Conditions of Contract (GCC)5.2.4 The Special Conditions of Contract (SCC)5.2.5 The Bill of Quantities (BOQ)5.3 Classification of Engineering Contracts5.3.1 Separated Contract5.3.2 Management Contract5.3.3 Integrated Contract5.3.4 Discretionary Contract5.4 Bidding Process5.4.1 Pre-qualification Process5.4.2 Notice Inviting Tender5.4.3 Submission of Bids5.4.4 Analysis of Submitted Tenders5.4.5 Basis for Evaluation and Acceptance5.4.6 Letter of Intent5.4.7 Work Order5.4.8 Agreement5.5 Cpwd Contract Conditions5.6 Fidic form of Contract Agreement5.6.1 Need and Principles of FIDIC Contracts5.6.2 Salient Features of FIDIC Form of Contract5.7 Subcontracting5.7.1 Classification of Subcontractors5.7.2 Selection of Subcontractors5.7.3 Work Order5.7.4 Terms and Conditions5.7.5 Subcontractor Management—Some GuidelinesReferencesReview Questions
Chapter 6. Construction Planning
6.1 Introduction6.2 Types of Project Plans6.2.1 Time Plan6.2.2 Manpower Plan6.2.3 Material Plan6.2.4 Construction Equipment Plan6.2.5 Finance Plan6.3 Work-Breakdown Structure6.3.1 Methodology of WBS6.4 Planning techniques—Terminologies Used6.4.1 Event and Activity6.4.2 Dummy Activity6.4.3 Network6.4.4 Precedence6.4.5 Network Logic6.4.6 Duration of an Activity6.4.7 Forward and Backward Pass6.4.8 Float or Slack Time6.4.9 Path and Critical Path6.5 Bar Charts6.6 Preparation of Network Diagram6.7 Programme Evaluation and Review Technique (PERT)6.8 Critical Path Method (CPM)6.9 Ladder Network6.10 Precedence Network6.11 The Line-of-Balance (LOB)6.12 Network Techniques AdvantagesReferencesSolved ExampleReview Questions
Chapter 7. Project Scheduling and Resource Levelling
7.1 Introduction7.2 Resource Levelling7.3 Resource Allocation7.4 Importance of Project Scheduling7.5 Other Schedules Derived from Project Schedules7.5.1 Preparing Invoice Schedule7.5.2 Schedule of Milestone Events7.5.3 Schedule of Plant and Equipment7.5.4 Schedule of Project Staff7.5.5 Schedule of Labour Requirement7.5.6 Schedule of Materials Requirement7.5.7 Schedule of Specialized Agencies7.5.8 Schedule of Direct Costs7.5.9 Schedule of Overheads7.5.10 Schedule of Cash Inflow7.5.11 Schedule of Cash Outflow7.6 Network Crashing and Cost-Time Trade-OffReferencesReview Questions
Chapter 8. Contractor’s Estimation of Cost and Bidding Strategy
8.1 Contractor’s Estimation and Bidding Process8.1.1 Get Involved in Pre-Qualification Process8.1.2 Study the Tender Document, Drawings and Prepare Tender Summary8.1.3 Decisions to Take8.1.4 Arrange for Site Visit and Investigation8.1.5 Consultation, Queries and Meetings, and Other Associated Works8.1.6 Prepare Construction Schedule and Other Related Schedules8.1.7 Collect Information8.1.8 Determining Bid Price8.1.9 Analysis of Rates8.1.10 Fix Mark-Up8.1.11 Computing Bid Price8.1.12 Submit Bid8.1.13 Post-submission Activities8.2 Bidding Models8.2.1 Game Theory Models8.2.2 Statistical Bidding Strategy Models8.2.3 Cash Flow-Based Models8.3 Determination of Optimum Mark-Up Level8.4 Bidding and Estimation Practices in Indian Construction Industry8.4.1 Prevailing Estimation Practices8.4.2 Use of Statistical/Mathematical Tools in Estimation8.4.3 Breakup of Mark-Up8.4.4 Labour Cost Estimation8.4.5 Plant and Equipment Cost Estimation8.4.6 Dealing with Uncertainties8.4.7 Average Range of Mark-Up8.4.8 Mark-Up Distribution8.4.9 Mark-Up Range8.4.10 Summary and Conclusion from the StudyReferencesSolved ExamplesReview Questions
Chapter 9. Construction Equipment Management
9.1 Introduction9.2 Classification of Construction Equipments9.3 Factors Behind the Selection of Construction Equipments9.3.1 Economic Considerations9.3.2 Company-Specific9.3.3 Site-Specific9.3.4 Equipment-Specific9.3.5 Client- and Project-Specific9.3.6 Manufacturer-Specific9.3.7 Labour Consideration9.4 Earthwork Equipments9.5 Concreting Equipments9.6 Hoisting Equipments9.6.1 Hoists9.6.2 Cranes9.7 Plant and Equipment Acquisition9.8 Depreciation9.9 Depreciation and Taxation9.10 Methods of Calculating Depreciation9.10.1 Straight-Line Method9.10.2 Sum of Years Digit Method9.10.3 Declining Balance Method9.10.4 Sinking Fund Method9.10.5 Accelerated Depreciation9.11 Example of Depreciation Calculations for Equipment at a Site9.12 The Effect of Depreciation and Tax on Selection of Alternatives9.13 Evaluating Replacement Alternatives9.14 Advanced Concepts in Economic Analysis9.14.1 Sensitivity Analysis9.14.2 Breakeven AnalysisSolved ExamplesReferencesReview Questions
Chapter 10. Construction Accounts Management
10.1 General10.2 Principles of Accounting10.3 Accounting Process10.4 Construction Contract Revenue Recognition10.4.1 Cash Method of Revenue Recognition10.4.2 Straight Accrual Method of Revenue Recognition10.4.3 Completed Contract Method of Revenue Recognition10.4.4 Percentage of Completion Method of Revenue Recognition10.5 Construction Contract Status Report10.6 Limitations of Accounting10.7 Balance Sheet10.7.1 Liabilities10.7.2 Assets10.8 Profit and Loss Account10.9 Working Capital10.9.1 Need for Working Capital10.9.2 Operating Cycle10.9.3 Components of Working Capital10.9.4 Determination of Working Capital10.9.5 Financing Sources of Working Capital10.10 Ratio Analysis10.10.1 Liquidity Ratios10.10.2 Capital Structure Ratios10.10.3 Profitability Ratios10.10.4 Activity Ratios10.10.5 Supplementary Ratios10.11 Funds Flow Statement10.11.1 Changes in Working Capital or Funds10.11.2 Determining Funds Generated/Used by Business Operations10.11.3 Application of Funds Flow StatementReferencesReview Questions
Chapter 11. Construction Material Management
11.1 Introduction11.2 Material Procurement Process in Construction Organization11.3 Materials Management Functions11.3.1 Materials Planning11.3.2 Procurement11.3.3 Custody (Receiving, Warehousing and Issuing)11.3.4 Materials Accounting11.3.5 Transportation11.3.6 Inventory Monitoring and Control11.3.7 Materials Codification11.3.8 Computerization11.3.9 Source Development (Vendor Development)11.3.10 Disposal11.4 Inventory Management11.4.1 Inventory-Related Cost11.4.2 Functions of Inventory11.4.3 Inventory Policies11.4.4 Selective Inventory Control11.4.5 Inventory ModelsSolved ExamplesReferencesReview Questions
Chapter 12. Project Cost and Value Management
12.1 Project Cost Management12.1.1 Resources Planning Schedules12.1.2 Cost Planning12.1.3 Cost Budgeting12.1.4 Cost Control12.2 Collection of Cost-Related Information12.2.1 Labour Cost12.2.2 Material Cost12.2.3 Plant and Equipment Cost12.2.4 Subcontractor Cost12.2.5 Overhead Cost12.3 Cost Codes12.4 Cost Statement12.5 Value Management in Construction12.6 Steps in the Application of Value Engineering12.7 Description of the Case12.8 Value-Engineering Application in the Case Project12.8.1 Foundation Design12.8.2 Flooring System12.8.3 Precast vs In-Situ Construction12.8.4 Discussion of ResultsReferencesReview Questions
Chapter 13. Construction Quality Management
13.1 Introduction13.2 Construction Quality13.2.1 Definition of Quality13.2.2 Evolution of Quality13.3 Inspection, Quality Control and Quality Assurance in Projects13.3.1 Inspection13.3.2 Quality Control (QC)13.3.3 Quality Assurance (QA)13.4 Total Quality Management13.5 Quality Gurus and Their Teachings13.5.1 Deming13.5.2 Juran13.5.3 Philip Crosby13.6 Cost of Quality13.7 Iso Standards13.7.1 Benefits of ISO 900013.7.2 Principles of Quality Management Systems13.7.3 ISO 9001–2000 Family of Standards13.8 Conquas—Construction Quality Assessment System13.9 Audit13.10 Construction Productivity13.10.1 Typical Causes of Low Labour ProductivityReferencesReview Questions
Chapter 14. Risk and Insurance in Construction
14.1 Introduction14.2 Risk14.3 Risk Identification Process14.3.1 Preliminary Checklist14.3.2 Risk Events Consequences Scenario14.3.3 Risk Mapping14.3.4 Risk Classification14.3.5 Risk Category Summary Sheet14.4 Risk Analysis and Evaluation Process14.4.1 Data Collection14.4.2 Modelling Uncertainty14.4.3 Evaluation of Potential Impact of Risk14.5 Response Management Process (Risk Treatment Strategies)14.5.1 Risk Avoidance14.5.2 Loss Reduction and Risk Prevention14.5.3 Risk Retention and Assumption14.5.4 Risk Transfer (Non-Insurance or Contractual Transfer)14.5.5 Insurance14.6 Insurance in Construction Industry14.6.1 Fundamental Principles of Insurance14.6.2 Insurance Policies for a Typical Construction Organization14.6.3 Project Insurance14.6.4 Marine-Cum-Erection Insurance14.6.5 Contractor’s All-Risk Insurance (CAR Insurance)14.6.6 Marine/Transit Insurance14.6.7 Fire Policy14.6.8 Plant and Machinery Insurance14.6.9 Liquidity Damages Insurance14.6.10 Professional Indemnity Policy14.7 Common Examples of Business and Project Risk14.8 Risks Faced by Indian Construction Companies Assessing International Projects14.8.1 Risks in International ConstructionReferencesReview Questions
Chapter 15. Construction Safety Management
15.1 Introduction15.2 Evolution of Safety15.3 Accident Causation Theories15.4 Foundation of a Major Injury15.4.1 Unsafe Conditions15.4.2 Unsafe Acts15.5 Health and Safety Act and Regulations15.5.1 Building and Other Construction Workers (Regulation of Employment and Condition of Services) Act 199615.5.2 Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Central Rules, 199815.6 Cost of Accidents15.7 Roles of Safety Personnel15.8 Causes of Accidents15.9 Principles of Safety15.10 Safety and Health Management System15.10.1 Safety Policy and Organization15.10.2 Safety Budget15.10.3 Safety Organization15.10.4 Education and Training15.10.5 Safety Plan15.10.6 Safety Manual15.10.7 Safety Committee15.10.8 Incentive Programmes15.10.9 Accident Reporting, Investigation and Record Keeping15.10.10 Incident Investigation and Analysis15.10.11 Accident Statistics and Indices15.10.12 Safety Inspection15.10.13 Safety Audit15.10.14 Workers’ Health and First-Aid Facilities15.11 Research Results in Safety ManagementReferencesReview Questions
Chapter 16. Project Monitoring and Control System
16.1 Introduction16.2 Updating16.2.1 Updating Using Bar Chart16.2.2 Updating Using PERT/CPM16.2.3 Updating Using Precedence Network16.3 Project Control16.4 Schedule/Time/Progress Control16.4.1 Monthly Progress Report16.4.2 Measuring Progress at Site16.4.3 Typical Reports to Aid the Progress Review16.5 Cost Control16.5.1 Profit/Loss at the Completion of Contract16.5.2 Stage-Wise Completion of Cost16.5.3 Standard Costing16.5.4 S-Curve16.5.5 Unit Costing16.6 Control of Schedule, Cost and Technical Performance—Earned Value Method16.6.1 Terminologies of Earned Value Method16.7 Illustrations of Cost Control System16.8 Management Information SystemReferencesReview Questions
Chapter 17. Construction Claims, Disputes, and Project Closure
17.1 Claim17.1.1 Sources of Claims17.1.2 Claim Management17.1.3 Some Guidelines to Prepare the Claims17.2 Dispute17.2.1 Causes of Disputes17.2.2 Dispute Avoidance vs Dispute Resolution17.2.3 Mechanisms of Dispute Resolution17.2.4 Causes Leading to Arbitration17.2.5 Advantages of ADR Over Legal Proceedings in a Court17.2.6 Some Dos and Don’ts to Avoid Dispute17.3 Correspondence17.4 Project Closure17.4.1 Construction Closure17.4.2 Financial Closure17.4.3 Contract Closure17.4.4 Project Manager’s Closure17.4.5 Lessons Learned from the ProjectReferencesReview Questions
Chapter 18. Computer Applications in Scheduling, Resource Levelling, Monitoring, and Reporting
18.1 Introduction18.2 Popular Project Management Software18.2.1 Primavera18.2.2 Milestone Professional18.2.3 ‘Candy’—Construction Project Modelling and Project Control18.2.4 AMS Realtime Projects18.2.5 Project KickStart18.2.6 MS Project18.3 Functions of Project Management Software18.3.1 Scheduling Function18.3.2 Resource Management Function18.3.3 Tracking or Monitoring Function18.3.4 Reporting Function18.3.5 Additional Functions18.4 Illustration of MS Project18.4.1 Definitions of Some Terminologies18.4.2 Working with MS Project18.5 Illustration of Primavera18.5.1 Adding a New Project18.5.2 Preparing Schedule18.5.3 Resource Levelling18.5.4 Tracking the Project18.5.5 Reporting18.5.6 Some Additional FeaturesReferencesReview Questions
Chapter 19. Factors Behind the Success of a Construction Project
19.1 General19.2 Project Performance Measurement19.3 Criteria for Project Performance Evaluation19.4 Project Performance Attributes19.4.1 Success Attributes/Factors19.4.2 Failure Attributes19.5 Effect of Other Elements on Project Performance19.6 The Theory of 3CS and the Iron TriangleReferencesReview Questions
Notes
Chapter 4
Chapter 8
Chapter 12
Chapter 15
Chapter 16
Answers to the Objective Questions
Appendices
Acknowledgements
Copyright

Content preview from Construction Project Management: Theory and Practice

8 Contractor’s Estimation of Cost and Bidding Strategy

Contractor’s estimation and bidding process, bidding models, determination of optimum mark-up level, bidding and estimation practices in Indian construction industry

8.1 CONTRACTOR’S ESTIMATION AND BIDDING PROCESS

The procedure of cost estimation explained in Chapter 4 is suitable mostly for small and medium projects, and that too, mostly from the owners’ perspective. For a contractor, the stakes involved are very high. The estimates should be as close as possible to the actual cost for a contractor. If the estimates are on a lower side, the contractor, even if he is likely to win the bid, may have to bear monetary losses at the time of execution. If the estimates are on a higher side, ...

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Construction Project Management: Theory and Practice

by Kumar Neeraj Jha

8

Contractor’s Estimation of Cost and Bidding Strategy

8.1 CONTRACTOR’S ESTIMATION AND BIDDING PROCESS

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
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