Management Principle & Application - Assignment No.

02

Acknowledgement
First and foremost heartiest gratitude to our module lecturesMr.GaminiRajakarunafor
his valuable guidance and support provided. This report want is this successful if your
supervision wasnt there.
I sincere thanks go to all my class friends who helped me by providing new ideas, technical
support and various other things.
Finally, I thank my parents who helped me in such other way to accomplish this report.

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Management Principle & Application - Assignment No.02

Table of Contents
Acknowledgement......................................................................................................................1
Executive summery....................................................................................................................3
Introduction................................................................................................................................4
Task 01...................................................................................................................................5
Task 02...................................................................................................................................7
Task 03...................................................................................................................................8
Conclusion................................................................................................................................18
References................................................................................................................................19

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Executive summery

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Management Principle & Application - Assignment No.02

Introduction

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Management Principle & Application - Assignment No.02

Task 01
Explain the influence of the scale, size of contract, and type of client on function of a
construction organization.
When considering about the construction industry it is based on three main parties
which is client, contractor and the consultant. The client is the person who is willing to invest
his money on a project in order to gain profits in the late future. Contractor is the person who
is taking the project from the client and construct it according to the given plan/ design.
Consultant is the one who is taking care of the project on behalf of client. He is consulting
throughout the whole project inspecting whether it will satisfy the client at the end of it.
Client satisfaction and earning profits are the most basic targets of the two parties which are
contractor & consultant. These two parties are having their own organizational structures in
order to deliver a good product at the end of the project duration. Client is investing his
money with a risk at first stage.
Influence of scale
There are millions of companies all over the world. All of them are not same like. They can
be categorized under the scale of them & the field they are in. for an instance we can take the
KFC &Maga Engineering. KFC is a worldwide restaurant, but the Maga Engineering is a
construction company. They both are large scaled companies. But in different industries
which are not connected to each other in economic or another way. Now when we consider
about the construction industry, there are thousands of companies which are involved in
construction. Some of them are very large scaled companies. These kinds of companies are
handling the projects which are worth of billions of dollars. The organizational structures of
this kind of companies are very huge. Thousands of employees are working under them.
There are hundreds of departments and everything has to be managed. A small mistake of a
figure in the accounts division might end with a loss of millions. So this is a good example to
prove that the scale of an organization is performing an influence on its operations.

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Influence of type of client
When a client is asking for a building, it has to be designed according to the clients wish.
Actually everything is based under the clients wish. The function of an organization is
depending according to the clients type also. Client means the person who is willing to invest
his money in the present, seeking for the profits in late future. The client can be a single
person, a group of people, a private company, and a group of companies or may be the
government of a country. This depends under the project type. Most of the time the
infrastructure is supplied by the government and in this kind of projects the client is the
government. But if a person is thinking of to build him/her a new house the client will be that
single person. Likewise if a group of companies are thinking of situating a commercial
building based on their industries the client will be that particular group of companies. No
matter how many people are in that party of the client, whether it would be a single or a
group of people the right they deserve will be the same.
According to the clients type the function of an organization might vary. If its a large scale
project and the client is the government, that particular construction company will have to use
different types of resources and labors in order to complete it rather than building a house for
a person. Whatever or the how bigger the project is not a matter; the product has to be
accurate enough to make the client satisfied. After all when the project has been done, the
client has to be satisfied with it. To perform this procedure a better understanding between the
client and the designing team should be there. The designers must be able to understand what
the client wants and to design it for him. When the client has approved it, constructing it
according to the given plan has to be done by the engineers. So when a construction company
is handling a project, the clients type will effect on it. To make sure it wont be a failure at
the end, the better co-operation with client has to be done. This is a good example to prove
that the type of client will effect on the function of a construction organization.

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Task 02
Explain, techniques used to organize the site layout, resourcing, and accommodations
contribute to the management of a construction project.
First of all when the client asks for a building to be constructed according to his wish,
a proper inspection should be done about the site. Once the architect gets a better idea of what
type of a land has he got to build this building, he can design the building in a most
appropriate way which might give more benefits. For this purpose first of all the site has to be
cleared Then onwards the surveyors will have to mark the site and after that when the
architect gets to know about the specifications about the land, only then he can do a better
design for the client. Now the site has been cleared and the contractor knows how much the
premises he own for his construction are. If the suggested area for the construction is not big
enough to place temporary accommodation for the people who work in the site the contractor
will have to look for a nearby place to the site. Not only that the services has to be provided
in to those temporary accommodations to make them usable such as electricity, water and
ventilation. All these things have to be arranged by the contractor before the launch of the
project.

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Task 03
Explain Gantt Charts, CPA and other planning techniques. And how these methods can
employed for planning, monitoring, and to control the work and schedule, and manage the
supply and utilization of materials, plant and labor.
Gantt Charts
A Gantt chart is a type of bar chart that illustrates a project schedule. Gantt charts
illustrate the start and finish dates of the terminal elements and summary elements of a
project. Terminal elements and summary elements comprise the work breakdown structure of
the project. Although now regarded as a common charting technique, Gantt charts were
considered revolutionary when they were introduced. In recognition of Henry Gantt's
contributions, the Henry Laurence Gantt Medal is awarded for distinguished achievement in
management and in community service. This chart is used also in Information Technology to
represent data that has been collected. A Gantt chart is a graphical representation of the
duration of tasks against the progression of time.
Critical Path Analysis (CPA)
Critical Path Analysis and PERT are powerful tools that help you to schedule and
manage complex projects. They were developed in the 1950s to control large defense
projects, and have been used routinely since then. As with Gantt Charts, Critical Path
Analysis (CPA) or the Critical Path Method (CPM) helps you to plan all tasks that must be
completed as part of a project. They act as the basis both for preparation of a schedule, and of
resource planning. During management of a project, they allow you to monitor achievement
of project goals. They help you to see where remedial action needs to be taken to get a project
back on course.
Within a project it is likely that you will display your final project plan as a Gantt Chart
(using Microsoft Project or other software for projects of medium complexity or an excel
spread sheet for projects of low complexity).The benefit of using CPA within the planning
process is to help you develop and test your plan to ensure that it is robust. Critical Path
Analysis formally identifies tasks which must be completed on time for the whole project to
be completed on time.

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Cash Flow Techniques

Cash flow is one of the factors that you just have to get right when in business. If you
are paying out more than you have coming in and cannot turn your assets into hard cash
quickly enough, then you are doomed. Cash flow is everything and this is where you should
first turn your thoughts to if you are worried about insolvency and the effects it would have
on you and your business. 20% of newly formed businesses fail within the first 2 years and a
percentage of these do so due to poor cash flow. Therefore there are many factors you want to
take into account and tools you could use when it comes to the cash flow area of your
business and here lets take a look at some of them.

Purpose of Cash Flow Statement

The cash flow statement was previously known as the flow of Cash statement. The
cash flow statement reflects a firm's liquidity. The balance sheet is a snapshot of a firm's
financial resources and obligations at a single point in time, and the income statement
summarizes a firm's financial transactions over an interval of time. These two financial
statements reflect the accrual basis accounting used by firms to match revenues with the
expenses associated with generating those revenues. The cash flow statement includes only
inflows and outflows of cash and cash equivalents; it excludes transactions that do not
directly affect cash receipts and payments. These non-cash transactions include depreciation
or write-offs on bad debts or credit losses to name a few. The cash flow statement is a cash
basis report on three types of financial activities: operating activities, investing activities, and
financing activities. Non-cash activities are usually reported in footnotes. Following is a
figure of a cash flow budget for 3 months period.

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Labor, Material and Equipment Utilization

Labor, material and equipment are very important three things which must be
managed in order gain a successful project completion. Labors are paid for the amount they
work per day. They are motivated with raise of their wages & under the good supervision.
Materials are used for the construction by the labors and the place they are stocked, ease of
accessibility and the safety. Likewise the equipment, they have to be operated in the proper
way and should be maintained regularly in order to gain the maximum profit out of them.

Materials Management
Materials management is an important element in project planning and control.
Materials represent a major expense in construction, so minimizing procurement or purchase
costs presents important opportunities for reducing costs. Poor materials management can
also result in large and avoidable costs during construction. First, if materials are purchased
early, capital may be tied up and interest charges incurred on the excess inventoryof
materials. Even worse, materials may deteriorate during storage or be stolen unless special
care is taken. For example, electrical equipment often must be stored in waterproof locations.
Second, delays and extra expenses may be incurred if materials required for particular
activities are not available. Accordingly, insuring a timely flow of material is an important
concern of project managers.
Materials management is also a problem at the organization level if central purchasing and
inventory control is used for standard items. In this case, the various projects undertaken by
the organization would present requests to the central purchasing group. In turn, this group
would maintain inventories of standard items to reduce the delay in providing material or to
obtain lower costs due to bulk purchasing. This organizational materials management
problem is analogous to inventory control in any organization facing continuing demand for
particular items.

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Benefits of Material Management

From a study of twenty heavy construction sites, the following benefits from the introduction
of materials management systems were noted:

In one project, a 6% reduction in craft labor costs occurred due to the improved
availability of materials as needed on site. On other projects, an 8% savings due to
reduced delay for materials was estimated.

Against these various benefits, the costs of acquiring and maintaining a materials
management system has to be compared. However, management studies suggest that
investment in such systems can be quite beneficial.

Construction Equipment
The selection of the appropriate type and size of construction equipment often affects
the required amount of time and effort and thus the job-site productivity of a project. It is
therefore important for site managers and construction planners to be familiar with the
characteristics of the major types of equipment most commonly used in construction. Not
only that but also these equipment have to be taken a good care of. There must be yard to
park the heavy machineries like back-hoes and trucks, earth compactors, excavators, concrete
mixers, concrete pumping machines, etc. The operators who operate these should be able to
handle them with care. They should have enough experience on how to operate them in order
to minimize the accidents caused from the machineries. Otherwise the talented and
experienced machine operators are more efficient in working than the amateurs handling
them. When considering about the utilization of the construction equipment these facts would
matter.

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Task 04
Explain the application of Cost Planning, Cost Controlling and Cash Flow techniques to
monitor cost of construction work.
When considering the construction industry everything has a price. Even for the labor
hours. So managing the cost in an effective way is very essential. In a construction company
there is the quantity surveyors who can provide a full system of cost plan for their clients in
order to control the expenditure, ensure that the client receives better value for the money he
paid, in both design & quality and the project cost is keep within the agreed budget.
Dealing without a proper cost plan will end up with the bankrupt. So this plan of cost has to
be made under a special procedure which has been mentioned follow.

The Cost Planning Process

Cost planning is not an easy task. But with the following procedure it can be done.
This procedure mainly consisting with three basic steps which are.
1) The first of these involves the establishment of a realistic first estimate (Preliminary
Approximate Estimate)
2) The second stage plans how this estimate should be spent among the various parts or
elements of the project (Cost Plan)
3) The final stage is a checking process to ensure that the actual design details for the
various elements can be constructed within the cost plan (Cost Checking)

The cost planning process commences with the preparation of an approximate

estimate by the quantity surveyor, and then the setting of cost targets, which are based upon
elements. As the design evolves these cost targets are checked for any under-or-overspending
against the architect's details. The prudent quantity surveyor will also always be looking for
ways of simplifying the details, without altering the design, in an attempt to reduce the tender
sum.

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Cost planning over the last decade is increasingly becoming a valuable service that
the client is expecting from the quantity surveyor, to ensure that he receives better value-formoney, expenditure is controlled, and that the project cost is kept within the agreed budget.
To undertake this service effectively it is necessary for the quantity surveyor to be appointed
at the earliest possible stage, in order to make positive contribution at the brief and feasibility
stages. It attempts to keep the designer fully informed of all the cost implication of the
design.
Cost planning should be done three times before the start of construction: once at the projects
initial inception, once after the preliminary design is complete, and once after the final design
is permitted. Additionally, the cost plan should be regularly updated and tracked during the
course of construction to ensure accuracy, typically after each project milestone.
Although construction costs can be planned and estimated, they also can significantly change
during the course of actual construction. Even the smallest changes to design and scope can
lead to drastic cost changes due to having to rework a completed portion of the project. The
best way to meet original cost planning estimates is to limit the amount of design change that
occurs on a project. The various stages of Cost Planning during the design & construction
phases is shown in the diagram below.

Cost controlling
Cost is important to all industry. Costs can be divided into two general classes; absolute costs
and relative costs. Absolute cost measures the loss in value of assets. Relative cost involves a
comparison between the chosen course of action and the course of action that was rejected.
This cost of the alternative action - the action not taken - is often called the "opportunity
cost".
Cost data are, of course, essential to the technique of cost prediction. However, the form in
which much cost data are recorded limits accurate cost prediction to the field of comparable
situations only. This limitation of accurate cost prediction may not be serious in industries
where the production environment changes little from month to month or year to year. In

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harvesting, however, identical production situations are the exception rather than the rule.
Unless the cost data are broken down and recorded as unit costs, and correlated with the
factors that control their values, they are of little use in deciding between alternative
procedures. Here, the approach to the problem of useful cost data is that of identification,
isolation, and control of the factors affecting cost.

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Task 05
Explain how quality standards and statutory compliance are achieved and other aspects of
communication and liaison that need to be organized and manage in a project.

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Conclusion

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References
.

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