Engineering Management 2019

ENGINEERING MANAGEMENT AND ECONOMY COURSE BOOK ©2018-2019
Civil Engineering Department

Faculty of Engineering
University of Sulaimani
Subject: Engineering Management & Economy (EN5307)

Course Book – Year 3
Mr. Muhammad Arf Muhammad

BSc in Building Construction Engineering
MSc in Civil Engineering: Structural Engineering
Academic Year: 2018-2019
Page 1 of 5
COURSE BOOK
1. Course Title Engineering Management & Economy

2. Lecturer in Charge Mr. Muhammad Arf Muhammad
3. Department - Faculty Civil Engineering Department – Faculty of Engineering
4. Contact Email muhammad.rashid@univsul.edu.iq
5. Time and Unit Theory :2 hours per week ; 4 Units
6. Office Hours TBA
7. Course Code EN5307
8. Teacher’s Academic Profile https://sites.google.com/a/univsul.edu.iq/muhammad-arf/teaching
9. Keywords Construction Project, Time, Cost, Control, Economic Analysis, Interest Rate, alternatives
10. Course Review
This course consists of two engineering subjects; engineering management and engineering economy. Engineering
management related topics will be discussed during first term and second term is allocated to cover engineering economy.
Engineering Management is a specialized form of management that is required to successfully manage construction projects
in public and private sectors. In this course, the main focus is to deal with construction project planning, scheduling and
controlling. In addition, Engineering Economy deals with the different economic analysis methods that enable a project
manager to take economic decisions towards minimizing costs and maximizing benefits to business organizations.
11. Course Objective

This course is to:
• Prepare students with the basic principles of construction management and economics.
• Gain appropriate managerial knowledge about the construction industry.
• Provide students with technical knowledge on how to plan, schedule and control construction projects.
• Economically consider the design and construction of civil engineering projects.
• Provide the framework for selecting among alternative designs.
• Provide students with skills to assess the costs and benefits of engineering investments.
12. Student Obligation

Academic studies require significant effort and commitment. Learning topics could be “stress-free” if students energetically
participate in class. Active participation in class and on the class activities will be noted and reflected in the seasonal mark.
Moreover, class attendance is compulsory and each lecture student’s attendance is recorded and according to the University
regulations more than 10% absent leads to fail. It is expected that all students are present up to the lecture start time. Late
student will not be allowed to attend or she/he shall have reasonable circumstances outside of her/his control (i.e. Traffic Jam
in the morning). All coursework that is set by the lecturer must be completed by the due date.
13. Forms of Teaching

The course is conveyed by the means of lecture slide presentation. In addition, white board may be used as more explanation
required. Students will be provided with Slide Handouts in advance and they are recommended to take their notes during
lecture. The lecture topics related questions are warmly welcomed.
14. Assessment Scheme

Assessment is to ensure the students gained the course objectives. The student learning outcomes will be assessed based on
solving the real world problems and explanations. Students are highly recommended to consider “reading references” given
and PRACTICE those problems and solved examples there as much as possible. Managing time is also important part of the
assessments so students are recommended to test themselves based on available paper exams. Exam date and time will be
announced by the Examination Committee in Civil Engineering Department. It is well said: “No Pain, No Gain”.
TYPE OF ASSESSMENT DURATION (MINUTE) % WEIGHTING MARK NO. OF QUESTIONS DATE

First Periodical Exam 90 17 3 TBA
Second Periodical Exam 90 17 3 TBA
Coursework & Class Activities NA 06 NA TBA
Subtotal (Seasonal Mark) 40 TBA
Final Exam 180 60 5 TBA
Total (Seasonal Mark + Final Mark) 100 TBA
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15. Student Learning Outcome

Upon successful completion of the course, students will be able to:
• Discuss and illustrate what occurs through construction project stages.
• Understand the contract documents in detail.
• Explain and select the suitable contract type and project delivery method.
• Prepare bill of quantities and prices.
• Prepare payment and change order in construction projects.
• Know tendering process and evaluate tenders.
• Select the suitable contractor for a construction industry.
• Use Iraqi General Conditions of Civil Works.
• Show and discuss project planning and scheduling.
• Prepare bar chart and network diagram for a construction project
• Allocate and level project resources
• Update and crash a project schedule.
• Perform S-Curve in construction projects.
• Calculate engineering earned values in a progress status.
• Understand fundamentals of engineering economy.
• Formulate and calculate how both time and interest rate affect money.
• Draw and understand cash flow diagram in a project management.
• Do economic analysis between alternatives and select the best economically justified alternative.
• Understand the features of public and private sectors.
• Perform economic analysis for public projects.
16. Course Reading List and References
▪ Key Reading References

Part 1: ENGINEERING MANAGEMENT
A. Jackson, Barbara J., Construction management jumpstart, 2nd edition. 2010 , Wiley Publishing, Inc., Indianapolis, Indiana
B. Gould, Frederick, E and Joyce, Nancy, E., Construction Project Management, 2nd ed. 2003, Person Education Inc.
C. Mubarak, Saleh A., Construction Project Scheduling and Control, 1st ed., 2003, Person Education Inc.
D. Emad Elbeltagi, Lecture Notes on Construction Project Management, Mansoura University, 2009
Part 2: ENGINEERING ECONOMY
E. Leland Blank & Anthony Tarquin Engineering Economy, 7th edition, 2012
F. R. Panneerselvam, “Engineering Economics”, PHI learning Private Limited, New Delhi, Thirteenth Edition, pp. 2012.
G. Donald G. Newnan, Ted G. Eschenbach, Jerome P. Lavelle. “Engineering economic analysis “- 9th ed.
H. William G. Sullivan, Elin M. Wicks, C. Patrick Koelling “Engineering economy” .15th ed., 2012
▪ Useful References
o Project Management Institute, A Guide to the Project Management Body of Knowledge (PMBOK Guide), 5th Ed. 2012
o GENERAL CONDITIONS FOR CONTRACTS OF CIVIL ENGINEERING WORKS- PARTS I & II, Planning Board, 1973, Iraq
o Harold R. Kerzner, Project Management: A Systems Approach to Planning, Scheduling, and Controlling, 11th Edition,2013
o Danny Myers (2012) Construction Economics: A New Approach: 3rd Edition
o Leland Blank and Anthony Tarquin, Basics of engineering economy.—1st edition.
o Chan S. Park, Contemporary Engineering Economics, 5th Edition, Prentice Hall, 2011
o Thuesen & Fabrycky, Engineering Economy,9th Edition, Prentice Hall
▪ Magazines and review (internet)

o Project Management Institute (PMI), http://www.pmi.org
o International Federation of Consulting Engineers (FIDIC), http://fidic.org
o Journal of Construction Engineering and Management, http://ascelibrary.org/journal/jcemd4
o International Journal of Construction Management, http://www.tandfonline.com
o Journal of Engineering Construction Engineering and Project Management, http://www.jcepm.org
o NICMAR-Journal Of Construction Management, http://www.nicmar.ac.in
o RICS Construction Journal http://www.rics.org/us/news/journals/construction-journal
▪ Useful computer programs

o Primavera p6
o Microsoft Project
o Excel Spreadsheet
Page 3 of 5
17. Course Topics
NO. TOPICS READING REFERENCES WEEKS

PART I: ENGINEERING MANAGEMENT
Introduction to Course First lecture is to present course program and polices 1
1 The Construction Industry 1st handout (Chapter 1)
A Chapter 1, pp9-20; B Chapter 1, pp2-13; D Chapter ; A Chapter 2,
1
pp40-46; B Chapter 2, pp29-54; A Chapter 1, pp20-27
B Chapter 5, pp119-134-13;A Chapter 5, pp117-137
2 Contract strategy 2nd handout (Chapter 2)
2
A Chapter 4 pp111-115; B Chapter 4, pp100-115; D Chapter 2
3 Contract Documents 3rd handout (Chapter 3)
1
A Chapter 4, pp94-100; B Chapter 7
4 Bidding and Procurements 4th handout (Chapter 4)
2
A Chapter 3&4 ; B Chapter 7 ; D Chapter 2
5 Construction Law 5th handout (Chapter 5)
GENERAL CONDITIONS FOR CONTRACTS OF CIVIL ENGINEERING 1
WORKS- PARTS I & II, Planning Board, 1973, Iraq
6 Project Planning and 6th handout (Chapter 6)
1
Scheduling A Chapter 9; C Chapter 2, 3 & 4; D Chapter 3; B Chapter 10
7 Project Scheduling 7th handout (Chapter 7)
2
D Chapter 4; C Chapter 2, 3 & 4; B Chapter 10
8 Recourse Management 8th handout (Chapter 8)
1
D Chapter 7; C Chapter 6
9 Project Time-Cost Trade - 9th handout (Chapter 9)
1
Off C Chapter 8; D Chapter 8
10 Project Control: Time and 10th handout (Chapter 10)
2
Cost A Chapter 10; B Chapter 11; D Chapter 9 & 10; C Chapter 7
FIRST PERIODICAL EXAM ( ENGINEERING MANAGEMENT)
PART II: ENGINEERING ECONOMY
Introduction to 1st handout (Chapter 1)
11 1
Engineering Economy E Chapter 1; F Chapter 1 & 2 ; G Chapter 1 & 3 ; H Chapter 1
Factors: How Time and 2nd handout (Chapter 2)
12 2
Interest Affect Money E Chapter 2; F Chapter 3 ; G Chapter 3; H Chapter 4
Shifted Cash flow diagrams 3rd handout (Chapter 3)
13 1
& Combining Factors E Chapter 3; F Chapter 3 ; G Chapter 3; H Chapter 4
4th handout (Chapter 4)
14 Depreciation Methods 1
E Chapter 16; F Chapter 9; G Chapter 11 ; H Chapter 7
Present and Future Worth 5th handout (Chapter 5)
15 2
Analysis E Chapter 5; F Chapter 4 & 5 ; G Chapter 5; H Chapter 5 &6
16 Annual Worth Analysis 1
E Chapter 6; F Chapter 6 ; G Chapter 6; H Chapter 5 &6
17 Rate of Return Analysis 2
E Chapter 7 & 8; F Chapter 7 ; G Chapter 7; H Chapter 5 &6
Benefit/ Cost Analysis and 9th handout (Chapter 9)
18 2
public sector E Chapter 9; F Chapter 10 ; G Chapter 9 & 16; H Chapter 10
19 Breakeven Analysis 1
E Chapter 13; F Chapter ; G Chapter 2; H Chapter 11
Independent Projects with 10th handout (Chapter 10)
20 2
Budget Limitation E Chapter 12; G Chapter 17; H Chapter 13
SECOND PERIODICAL EXAM ( ENGINEERING ECONOMY)
FINAL EXAM (ENGINEERING MANAGEMENT AND ECONOMY)
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18. Practical Topics

No available in the course syllabus.
19. Examinations
Three types of exam questions will be used to assess the students learning outcomes as listed below:
1. Compositional:
In this type of exam the questions usually starts with solve the problem, What are the reasons for…? , Why………? How….?
Calculate….? Analyze……. Draw the ….and Discuss…….
2. True or false type of exams:

In this type of exam a short sentence about a specific subject will be provided, and then students will comment on the
trueness or falseness of this particular sentence.
3. Multiple choices:
In this type of exam there will be a number of phrases next or below a statement, students will match the correct phrase.
NOTE: students are provided with past exam question paper and their typical answers, as examples.
20. Extra Notes

As far as past exam papers are concerned, Students can have electronically access to achieve last year exam papers and it is
available online. They may benefit from how the exam format is; and please avoid memorizing past exam questions which will
NOT be used repeatedly for assessments again.
There are some recommendations for students to be taken into considerations during examinations:
o Feel confidence and do not hurry to leave the exam hall.
o Manage the allowed exam duration to cover all questions.
o Carefully read questions and understand what is exactly asked you.
o If you get stuck with a question, just leave it and answer the others. Later answer the question!
o At the end of the exam, review your answers if you have enough time.
o Never ever plan to do cheating! No one ethically accept cheating.
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Chapter 1: Construction Industry
EN5307 Engineering Management & Economy
Part 1: Engineering Management
Prepared by: Muhammad Arf Muhammad
muhammad.rashid@univsul.edu.iq
©2015‐2016
Chapter Outline
Definition of Construction Industry
Construction Industry Sectors
Investment Sectors in Kurdistan Region
Project Values
Project Stages
Project Participants
Engineering Management 1
Student Learning Outcomes
In this Chapter 1, students will learn the following:
1. The principle characteristics that defines the construction industry.
2. The four major sectors of construction projects, and the projects of
investment sectors in Kurdistan
3. The principal stages in life cycle of a project
4. Strategic values in projects to be taken into accounts.
5. The role and responsibilities of the key construction projects participants
Construction Industry
Definitions:
• Sector of national economy engaged in preparation of land and
construction, alteration and repair of buildings, structures, and
other real property (1)
• Construction industry work covers work on new or existing
commercial, industrial or domestic buildings or structures (2).
What does “industry” mean?
(1) Read more: http://www.businessdictionary.com

(2) Read more: http://www.cbserv.com.au
Construction Industry Sectors
 The construction industry is the largest industry in the world !
 It gives society a wide range of work opportunities.
 Generally there are four construction industry sectors:

1. Residential Sector
2. Commercial Building Sector
3. Infrastructure and Heavy Highway Sector
4. Industrial Sector
1. Residential Sector
• Those structures housing people:
o Single family house
o Low cost house
o High rise apartments
o Condominium
• Privately funded by individual owners.
• Less complex construction projects
• This sector is highly competitive, with There are numerous high-rise apartments in Navi Mumbai, India,

source: Google
potentially high risks as well as high
rewards.
2. Commercial Building Sector
• This sector includes a great variety of project
types and sizes, such as:
o Office building
o Shopping malls
o Sport centers
o Educational buildings
o Medical hospitals
• Privately funded by individual owners or
publicly funded by government.
• The owners usually are able to select
competent professional consultants and
Wembley Stadium, United Kingdom
arrange the financing of the project. source: http://www.wembleystadium.com/
• Specialty required in construction participants
3. Infrastructure and Heavy Highway Sector
• This sector includes projects such as:
o Highways
o Bridges
o Tunnels
o Dams
o Water treatment plants
o sewage treatment plants
• Most of these projects are publicly funded
by government.
• Huge budget usually needed
Hoover Dam, Colorado River Bridge, on the Arizona‐Nevada border, USA
• Construction participants are usually source: Read more hhttp://www.usbr.gov/lc/hooverdam/
Watch a National Geographic video about Hoover Dam
highly specialized. https://www.youtube.com/watch?v=Kk1pMH7nk6A
4. Industrial Sector
• Industrial construction usually involves
very large scale projects with a high degree
of technological complexity, such as:
o Oil refineries
o Steel mills
o Cement plants
o Nuclear power plants
• Privately funded by individual owners or
publicly funded by government.
• A variety of specialties involved.
• The sector affected by:
o Government economy
o Long range demand forecasting Cement Plant model
source: https://www.flickr.com/photos/cozyta/7175369362
o Government regulations
o Construction planning and time
Investment Sectors in Kurdistan Region‐Iraq
According to “Investment Law in
the Iraqi Kurdistan Region, Law
No. 4 of2006, Article 1, Seven”
Project:
“Any economic business or
investment project established by
a natural or corporate person on
the land allocated for it and with a
national or foreign capital that
conforms to the provisions of this
law, and the rules and regulations
issued under it.” Read more on “the official website of Kurdistan Board of Investment “
source: http://www.kurdistaninvestment.org/sectors.html
10
Project Values
Quality
Project deliverables
are fit for the purpose
Time Cost
Project delivered Project delivered
quickly at minimum cost
Target Project Values
Scope Desired results of the
project Safety
Project delivered as
unacceptable hazards
plans and specifications
to workers or users
Environment Function
No damage to Project satisfy the short‐
Environment and long‐term needs
11
Target Project Values
Quality
Project has to be
done as best quality
Most project target has
a balance of values
Project has to be done as Project has to be done
quickly as possible as cheaply as possible
Time Cost
Concentrating on one value adversely affects the other values
12
Project Stages (Project life cycle)
• The life of a project goes through many stages. Conception
Define project
• It starts out of an conception by owner. objects & Scope
Feasibility Analysis
• The idea combined with feasibility study, and Conceptual plans &
the project can be decided to be built. preliminary design
• The project is developed as drawings and Design
specifications by designers in design process Contract documents
• The project is given and built by contractors. It Bidding (Tendering)
is then built. contractor Selection
• When it is complete, it is turned over to the Construction
owner as a finished facility Completion of
construction
• The project is operated, and maintained as it Turnover & Startup
ages and eventually dies. Acceptance to Use
• At some point in its lifetime a project is likely to Maintenance &
be renovated, either rebuilt or change its use. Operation
Fulfillment of useful
life
Disposal
13
Feasibility Analysis Stage
Feasibility analysis is performed to
assess the proposed project as shown
in the flowchart:
1. Market Demand: there must be a
demand for the specific service or
product.
2. Schedule: construction schedule
should be relevant with market
demand.
3. Budget: The cost of actual project
must be taken into account.
4. Cost of money : it is important key
in investment (debt , interest rate)
Feasibility analysis flowchart for a project
14
Design Stage (the Four Phases of Project Design)
15
Bidding (Tendering) Stage
Bidding (tendering) is the process of
finding suitable contractor and handing
in Construction Documents to construct
the project through the use of a contract.
Source of picture: www.buildingwizard.com
16
Construction Stage
Once the procurement process has been completed,
construction of the project can begin.
The main features:
 Time scheduling of construction activities
 Obtaining and scheduling the crews
 Estimation of items and construction materials
 Choosing the most efficient and safe construction
techniques and methods.
 Ordering adequate materials, tools and equipment
 Monitoring schedule, cost, quality and safety
 Contract administration, i.e. ( accounting for payments)
 Changes during construction may delay the progress of
the project and may cost the owner more.
17
Turnover and Startup (Commissioning) Stage
After actual construction is complete, the contractor
must turn over the project to the owner.
The main features:
 This stage involve complicated technical issue and
problems ( testing machinery, checking over all actual
construction against contracted documents..)
 The more intense stages of creating a project for
owner, contractor and users
 Training user to use facilities correctly
 Preparation of actual construction documents, called
as‐built, and warranties, guarantees, operation manual.
 Legal process during which the project becomes the
legal property and responsibility of the owner.
 certificate of completion
Turnover and startup project ceremony
 Certificate of payments
18
Operation and Maintenance Stage
• It is the period in which the
project is put to the use.
The main features:
• Operating facilities.
• Maintaining the project or
its facilities in good working
order
• Repeatedly inspecting the
project to ensure safety and
health aspects.
source: http://www.emergencyreactivemaintenance.com
http://www.buildingmaintenancecompany.co.uk/
19
Disposal Stage
At the end of the useful life of the
project or its facilities, they may be :
 Closed down or simply abandoned
 Renovated
 Replaced to build an other project.
 Developed and expanded
High School Renovation
Source:http://www.wpxi.com/photo
20
Project Stages (Project life cycle) for a Shopping Mall As an Example
21
Project Participants
1. Project Owners
2. Design Professionals
3. Construction Professionals
22
1. Project Owners (Clients)
The project owner is the individual or organization for
whom a project is to be built under a contract. The
owner owns and finances the project and benefits from
it.
 Public Owners: Public owners are public bodies
(government). Most public projects or facilities are
built for public use and not sold to others
 Private Owners: Private owners may be individuals,
partnerships, corporations. Most private owners have
facilities or projects built for their own use or to be
sold, operated, leased, or rented to others.
 Owner Representatives: an individual or organization
or a professional consultant or building committee
authorized by the owner to manage and supervise a
project, so sometimes called project manager.
23
Architects
an individual who plans and design
buildings and their associated
landscaping. Architects mostly rely
on consulting engineers for
structural, electrical, and
mechanical work.
Specialty:
 Drafters/ CAD Operators
 Specification writers
Source: http://www.archh.com/
 Interior Designers
 Landscape architects
24
Engineers
The term engineer usually
refers to an individual or a firm
engaged in the design or other
work associated with the
design or construction.
Design engineers:
 Civil Engineers
o Structural Engineers
Structural analysis and design by civil Engineers
o Geotechnical Engineers
 Mechanical Engineers
 Electrical Engineers Note; All design related works supervised by a
 Surveyors person who is called, design manager
25
Contractors:
 General Contractor (Prime Contractor)
 Subcontractor (second contractor)
 First Subcontractor
 Second Subcontractor
 Specialty contractor
Relationship between owner and contractors
26
On the project site:
Construction manager
(Site manager)
Site Engineers
surveyor
Estimators
Schedulers
Site Engineer guiding workers
Source: http://www.123rf.com/
27
The Trades (Skilled labor):
The tradespeople are from the
core of the construction industry.
Here are some of them:
 Pile driver
 Sheet workers
 Plasterers
 Plumbers
 Pipefitters
 Electricians
 Bricklayers
 Carpenters Bricklayer
28
 Material suppliers:
Materials and building components
are manufactured , fabricated and
installed by suppliers, such as:
o Ready Concrete mix plant
o Steel Plant
o Brick factory
o Cement supplier
 Equipment Suppliers:
Equipment can play a very big role
in construction industry, such as:
o Excavators
o Cranes
o Concrete pump, mixers
o Asphalt pavers, rollers Tower cranes at work on Maracana Stadium, renovation, Brazil
Source: http://www.arabianindustry.com/construction
29
Reading Reference List
With reference to the selected chapters in the given syllabus table:
Engineering Management
A. Jackson, Barbara J. (2010) Construction management jumpstart , 2nd ed. , Wiley
Publishing, Inc., Indianapolis, Indiana
B. Gould, Frederick,E and Joyce, Nancy, E. (2003) Construction Project Management,
2nd ed. Person Education Inc. Upper Saddle Reiver, New Jercy
C. Mubarak, Saleh A. (2003) Construction Project Scedulling and Controll, 1st ed.,
Person Education Inc. Upper Saddle Reiver, New Jercy
D. Emad Elbeltagi (2009) Lecture Notes on Construction Project Management,
Structural Engineering Department, Faculty of Engineering, Mansoura University
30
Chapter 2: Contract Strategy
©2015‐2016
Chapter Outline
Definition of Contract
Types of Contract
Project Delivery Methods
Choosing the right delivery method
Choosing the right Contract Type
1. How to describe contract and three major types of contracts.
2. Primary delivery method arrangements
3. How to choose the appropriate contract type
4. How to choose the appropriate delivery method arrangements
What is a “Contract”?
• A contract is defined as: "an agreement made
between two or more parties which is enforceable
by law to provide something in return for
something else from a second party“.
• A construction contract is an agreement between
the owner and the contractor and is enforceable
by law. Generally, the contractor agrees to perform
a service for some consideration or payment.
• Contracts can be very simple or they may be very
long and complicated legal documents, called
contract documents.
• The two parties are expected to perform the
various obligations they have undertaken, as
expressed in a mutually agreed set of contract
documents.
• A contract therefore, is necessary to protect both
client and contractor.
4
Types of Contracts
 There are many types of construction contracts:
1. Lump Sum (Single Fixed Price)
2. Unit Cost
3. Cost‐Plus‐Fee
4. Guaranteed Maximum Price
 These contract types differ in two fundamental ways:
• Price: How the contractor’s price is quoted to the owner
• Risk: How risk is allocated to each of the parties
• Sometimes called “Drawing and Specifications Contract”
• Under this arrangement, the contractor agrees to complete the work
specified in the plans and specifications for a single fixed amount of
money in a specified time.
• The advantage of this contract type is that the owner know the final
project cost.
• Payments may be staged at intervals based on completion milestones
NOTE: In a lump sum contract, the specifications and drawings are used
to describe and identify the scope of works. Bill of Quantity does not use
for this purpose.
Example; the table illustrates Lump Sum Contract type, prices and risks for both contractor and owner.
Construction
Actual cost Design Stage Bidding Stage
Stage Owner
of Contractor Risk
Owner’s Lump Sum Risk
contractor Actual Cost
Estimated cost Contract type
No risk because
the contractor the contract
Case 1 $2,029,000
A contractor agreed to lose a $29,000 amount remains
complete the project the same
Owner allocated
by lump sum
($2,100,000) No risk because
($2,000,000)
the contractor the contract
(Contract amount)
Case 2 $1,990,000 earn a $10,000 amount remains
the same
• The risk for the owner:
oLower financial risk to the owner
oThe contract is only good as the accuracy of the contract
documents.
oAny flaws, errors, or omissions in the plans and specs (Contract
Documents) will result in a change order.
oChange orders result in extra work and/or extra time, both of which
result in extra cost to the owner.
• The risk for the Contractor:
oHigh financial risk to the contractor
oRisk when over contract amount spent
oNegotiation if Change order occurs
2. Unit Cost (Unit Price)
• In unit price contract, the owner and contractor agree on the price that will be
charged per unit quantity of the major elements of the project the table is
called “Bill of Quantities” (see Example table illustration)
• The owner/ designer provides estimated quantities of for the project, and in
bid and procurement process, contractor will bid unit price for estimated unit
quantities and final cost will be calculated based on the bid unit price.
• Sometimes printed bill of Quantities given by the owner and the contractor will
bid one percentage rate above or below the printed item unit prices,
sometimes called “percentage rate contract”
• The contractor will be paid based on the actual field quantifies of the project
multiplying by bid unit price.
Example: Unit Price contract illustration “Bill of Quantities and Prices” for a sewer project.
Design Stage Bidding (Tendering) Stage Construction Stage
Item Item Description Unit Estimated Owner’s Owner’s Contract Contract Item Actual Final Cost
No quantities Unit price item Unit Price amount Quantities “Payment”
(US$) amount (US$) (US$) (US$)
(US$)
1 Trench m3
7,000 5 35,000 5.25 36,750 6,700 35,175
Excavation
2 80cm Pipe m. L 1,750 60 105,000 55 96,250 1,750 96,250
3 Engineered Fill m3 1,400 78 109,200 72 100,800 1,500 108,000
4 Backfill m3 2,000 5 10,000 4 8,000 1,700 6,800
TOTAL 259,200 241,800 246,225
10
Risk:
• In some cases it is NOT ethical and practical to have a big gap difference
between estimated quantities and actual quantities.
• Mistaken estimated quantities expose the owner to unbalanced bid and

increasing the project’s cost (over allocated budget).
• There will be change order during actual work

o Increase or decrease in quantities
o Delete and new item addition
o Change in drawing or specification
• Change order will be risk for owner or contractor based on the situation
11
3. Cost Plus a Fee
• It is also referred to as ( time and materials), the owner reimburses (pays back) the
contractor for all actual costs plus a fee, there are three types:
o Cost Plus Fixed Fee ,
o percentage of the cost
o fluctuating percentage of the cost
• The owner should spell out clearly in advance :
o what cost will be reimbursed for calculation of “Actual Cost”
o which cost will be covered by the fee “ cost multiplying by “% of Fee”
• This contract makes sense when:
o the scope of the work is difficult to define or
o it is important to fast‐track the project.
• The construction manager must prepare the bill of costs, and the owner or
architect must review and approve the bill
12
3. Cost Plus a Fee
Example; Cost Plus a Fee for $2,000,000 Budget and 5% fee illustration for a
project with this contract type
Construction
Design Stage Bidding Stage Results of Biding Stage
Stage
Contractor
Owner Risk
Risk
Cost Plus Fee Fee as 5% Contract
Budget Actual Cost
Contract type of Cost Amount
Owner Owner agreed to pay None, the

$94,225 over
allocated back actual cost and contractor
$1,994,500 $99,725 $2,094,225 budget
($2,000,000) 5% fee of actual cost still earn a
amount
Budget to the contractor 5% fee
13
• A contract methodology (similar to cost plus a fee) in which the
contractor is reimbursed for actual costs of materials, labor,
equipment, subcontracts, overhead, and profit up to a maximum
fixed‐price amount.
• Any costs over the maximum price shall be borne by the
contractor.
• Any savings below the maximum price will return into the owner.
• This type of contract is often implemented when design is less
than 100 percent complete.
14
Example; Guaranteed Maximum Price cost plus a fee for $2,000,000 Budget and 5%
fee illustration for a project with this contract type
Construction
Design Stage Bidding Stage Results of Biding Stage
Stage Contractor
Owner Risk
Risk
Guaranteed Maximum Fee as 5% Contract
Budget Actual Cost
Price Contract type of Cost Amount
None, the
Owner agreed to pay Yes, the
contract
back actual cost and contractor
$1,994,500 $99,725 $2,094,225 amount
5% fee of actual cost to lose a
remains the
Owner the contractor. $94,225
same
allocated (Guaranteed
($2,000,000) Maximum Price None, the
Budget contract amount contractor None, the
=$2,000,000) under the owner receives
$1,892,000 $94,600 $1,986,600
contract the benefit of
amount $13,400 saving
15
Project Delivery Methods
The term “delivery method” refers to the owner’s approach to organizing the
contractual relationship between project team that will manage the entire design
and construction process of the project
There are most common project delivery methods:
1. Traditional (Design‐Bid‐Build)
2. Design/Build
3. Construction management
4. Design‐operate‐transfer
5. Turkey
6. Direct labor
16
• This is the most common approach in civil engineering projects in which
the design has to be completed before construction can start.
• The owner first hires a designer who then prepares contract documents.
• The designer is typically paid a fee that either a percentage of estimated
construction cost or a lump sum amount.
• With a set of complete of documents available, the owner either conducts
competitive bit opening to obtain a contractor or negotiates with a specific
contractor.
• The contractor may choose subcontractor to perform much of works.
• During construction process, the owner could hire an engineer to
administer the contract.
17
18
19
 Advantages:
• Price competition
• Total cost is known before construction starts.
• Well documented approach used in most government projects.
 Disadvantages
• Long time
• Design does not benefit from construction expertise.
• Conflict between owner, contractor and designer
20
2. Design/Build
• For the owner, this method provides a single point of contract and
responsibility.
• The design/ build firm hired by the owner will perform both design
and construction.
• The firm may be design/ build firm with in house employees or joint
venture firms that come together contractually to perform the
project. In either case, the design/ build entity can hire
subcontractors who perform the actual construction in the field.
• This mode is used extensively in highly technical project and certain
industrial construction due to the complexity of industrial projects.
21
2. Design/Build
22
2. Design/Build
23
2. Design/Build
 Advantages:
• Minimum owner involvement
• Used for fast‐track projects in order to reduce time
• Good communication between designer and contractor and easier in
implementing the changes.
Disadvantages
• Cost may not be known until the end of the part construction
• High risk to contractor and more cost to owner
• Design‐build company may reduce quality to save cost
24
3. Construction Management
• In this delivery method, the owner hires both a design firm and project
management firm early in the preconstruction phase of a project.
• The owner do much of the programming and designer selection and looks to the
construction manager to manage and coordinate the design and construction
phases of a project using a Teamwork approach.
• The services offered by the project management firm , such as:
o management and programming of design
o cost forecasting and financial arrangements
o preparation of tender documents
o tender analysis and selection of contractors
o selection of construction methods
o recommendations on construction economics
o planning and scheduling construction works
25
26
27
 Advantages:
• Good communication among the owner, designer, the constructor early from
preconstruction phase till the completion of the project.
• It allows for a good value‐engineering program
• The owner receives the cost benefit from subcontractor bids
• The implementation of change is not difficult as that of traditional method.
Disadvantages:
• It depends heavily on shared and mutual respect among the players (owner,
designer, management firm)
• High owner involvement is necessary for this method to work
28
4. Turn‐key method
 This approach is similar to the design/build method but with the
developer being responsible for performing both design,
construction, and project financing.
 Owner payment is then made at the completion (when the contractor
turns over the “key”).
 This type of arrangement can be used for construction projects
ranging from single buildings to large‐scale developments.
https://consultations.rics.org/consult.ti/comparative.construction/view?objectId=2425300
29
5. Design‐Operate‐Transfer
• It is a type of public‐private partnerships , an investor (project company) is
responsible for performing (design, construction, financing, temporary operation,
and maintenance) of the project, usually “operation period” 10‐20 years. Afterwards,
the project returns to the government to become publicly owned.
• This approach has been extensively used in recent years and is expected to continue.
An example of its use is in industrial Infrastructure and highway projects
o Energy and Power
o Water and Sanitation
o Transportation
o Soil Waste
• The revenues generated from the operation period are intended to cover all the
costs
http://ppp.worldbank.org/public‐private‐partnership 30
5. Design‐Operate‐Transfer – Contractual flow chart model
31
6. Direct labor
In this approach, owner organization performs both
the design and construction using its in‐house labor
force.
• Used by large authorities
• The owner performs both the design and the
construction
• May use consultants for some specialized designs
• Most suitable for small projects
• Can be used when expertise are available
• Low risk projects
• Inadequate scope definition
32
Choosing the right delivery method
 It is the owner’s job to select the best project delivery method relative to the
requirements for the project. Each project is unique, and there is not one single
method suited to all situations or project types.
 It is very important to assess the goals for every new project being considered. It is
required to evaluate advantages/disadvantages of each delivery methods.
 Some factors that influence an owner’s project delivery selection include:
• Cost
• Time
• finance
• Quality
• Risk tolerance
• Construction expertise
• Design, Build, operation, maintenance
33
Choosing the right Contract Type
The contract type , like delivery
method, is an important choice for
the owner because it addresses:
 Project risk
 Price against performance
 Completion time
 Changes
The goal is to provide the actual
construction service for the lowest
price possible without creating undue
risk for the owner.
34
35
Chapter 3: Contract Documents
©2015‐2016
Chapter Outline
Definition of Contract Documents
Construction Drawings and project Manual
Elements of Construction Drawings
Elements of Project Manuals
1. How to be familiar with the construction contract documents.
2. The major elements of construction drawing required to build a project
3. The major elements of project manual rather than construction
drawings required to build a project
Contract Documents
• There are many more documents that direct the construction of the project and
responsibilities of the parties. All of these documents taken together make up the
construction contract, and they are referred to as the “contract documents”.
• The contract documents consist of two major components: the drawings and the
project manual.
o The drawings basically define the quantity of the work—the length, the width, the area, the
volume, and so on.
o The project manual, which includes the specifications, defines the quality of the work.
• It is important that the contract documents shall be as complete and free from
error as possible.
Contract Documents
Drawings
General view:
• The drawings are a graphical set of directives prepared by the architects and engineers
in order to communicate the wishes and desires of the owner.
• Prior to the Renaissance, the master builders communicated their design intent by
building models and drawing sketches to help explain what they wanted the builders to
do.
• During the Renaissance, architects decided that they could simply make drawings and
write instructions on paper to communicate their desires.
• Today, models are being reintroduced to supplement building drawings with the use of
3D and even 4D (4D includes time) computer modeling.
• it is important for anyone interested in construction management to read and
understand construction drawings.
Drawings
Organizing of Drawings:
• A lot of information must be conveyed to the
construction team when trying to build a complex
facility.
• Various engineers are hired by the architect to assist
with specialized areas of design, such as civil
engineering and structural, mechanical, and electrical
design.
• Most sets of drawings start with a cover sheet
providing general information about the project.
• The common standard protocol to order the drawings:
o Cover Sheet
o Civil Drawings
o Architectural Drawings
o Structural Drawings
o Electrical Drawings
o Mechanical Drawings
Drawings: Cover Sheet
Most sets of drawings start with a
cover sheet providing general
information about the project. For
example,
• Name and addresss of the project
• The project owner
• The architect,
• The engineers,
• The financier
• Sometimes a perspective drawing
of the structure
• Sheet index
• Project map
• General notes
Cover sheet sample

source: http://www.greenengineeringinc.com/SampleProjectDrawings.htm 8
Drawings: Civil Drawings
These drawings are usually prepared by a civil engineer working with the architect and describe all items of
work associated with the site. The site work includes such things as grading, demolition, excavation, site
utilities, streets, curbs, and gutters and their details.
Sanitary and plumping works: Geotechnical works:
• Sewerage system plans
• site investigation report
• Cold water system plans
• Hot water system plans
• Soil boring Data
• Rain water system plans • Earthwork and Excavation
• Detail of pipes and all requirements
• Water storage system Topographic survey works
o Ground tank using pumping,
• Project location
o Gravity water tank on Roof, or
o Direct City water pumping system • Property line
• Other related requirements • Survey information
• Plumbing abbreviations and symbols
The civil drawing sheets are typically numbered as C1, C2, C3, and so on.
Drawings: Architectural Drawings
The architectural drawings are prepared by the architect. They describe the overall aesthetics of the
facility, including project size, shape, and appearance. Detailed information regarding dimensions,
materials, and quality are graphically depicted through the architectural drawings.
The architectural work includes such things as:
• Site location map
• Site plan
• Landscape plan
• Floor plans: Basement floors, Ground floor, Other Floor, Roof and ceiling plan, furniture plans
• Sections: At least two sections in both short and long directions of the building
• Elevations: Right, left, front, and back elevation views of the building
• Door and window Door and window location symbol plan, Detail of doors, Detail of windows
• door/window schedule :This table will have a list of doors, describing the opening, "hand" of doors,
window information
• Maximizing architectural parts for more detail :Such as Staircases, joints, etc.
• Finish schedule: This is usually a table listing the different finishes in each individual room.
These drawing sheets are numbered A1, A2, A3, and so on.
10
Drawings: Architectural Drawings
11
Drawings: Structural Drawings
The structural drawings are prepared by a structural engineer working as a consultant
to the architect. Coordination between the architecture and the structure is very
important. The structural engineer also provides the structural calculations, which
analyze the vertical loads as well as lateral loads consisting of wind and earthquake
loads.
Structural works includes such things as:
• Structural Design data: Loading data, Material properties, Allowable bearing
pressure, design method, Software application name,…etc.
• Center Grid lines plan: The plan includes vertical and horizontal grids (A ,B ,C.. and
1, 2, 3 etc.)
• Footing plan: Footing plan includes columns and shear walls footprints
• Columns and tie beams plan
• Girders, Beams and columns floor plans
• Beams, columns, slabs plans
• Frame sections
12
Drawings: Structural Drawings
• Reinforcement Details:
o Footing reinforcement schedule in plans and sections
o Column reinforcement schedules
o Beam reinforcement schedules
o Tie beam reinforcement schedules
o Slab reinforcement plan and section
o Stairs reinforcement plan and section
o Shear walls and retaining walls reinforcement plan and section
o Any other structural components
• Foundation Design Detailing:
• Structural Abbreviations and symbols
These drawing sheets are typically numbered S1, S2, S3, and so on.
13
Drawings: Mechanical Drawings
• The architect will hire a mechanical engineer to prepare the mechanical drawings. The
mechanical work splits between two major support components for any building—the plumbing
and the heating, ventilation, and air conditioning (HVAC).
• The plumbing portion of the drawings typically includes information describing the installation of
water lines, sewer lines, and gas lines.
• The HVAC portion of the drawings covers ductwork, air handlers, compressors, and other
equipment associated with climate control. Fire protection can also be included with the
mechanical drawings.
• The mechanical engineer also provides heating and cooling calculations used to determine the
required capacity of the heating and cooling equipment and the requisite energy compliance
forms to demonstrate that the building complies with energy‐efficiency requirements
• The mechanical sheets are numbered M1, M2, M3, and so on.
14
Drawings: Mechanical Drawings
HVAC: Pluming :
• Mechanical plan symbols‐HVAC system
• Sewerage line
• Cold water line
• Project Electricity generator
• Water Drill well and generators • Hot water line
• Electrical stairs and Elevators • Gas line
• Detail and specification of equipment • Detail of pipes and all requirements
• Mechanical abbreviations and symbols
• Plumbing abbreviations and symbols
The mechanical sheets are numbered M1, M2, M3, and so on.
15
Drawings: Electrical Drawings
The electrical engineer, working as a consultant to the architect, prepares the electrical drawings. The
electrical engineer provides calculations to determine the proper wire size, conduit size, and over‐
current protection device (fuse or circuit breaker) capacity.
The electrical work includes as things :
• Electrical plan symbols‐Power: Wire, cables, switches and sockets, circuit breakers, Switch boards,
distribution boards, fans,
• Electrical plan symbols‐Security: Surveillance camera with their accessories, wires, monitoring
room, etc.
• Electrical plan symbols‐Communications: Internal telephone system, external telephone, satellite
inlets, door Bill ring
• Electrical plan symbols‐Fire alarms
• Electrical plan symbols‐lightning (indoors and outdoors)
• Electrical supply plans for Mechanical works
• Any other requirements
• Details and specifications of equipment
• Electrical abbreviations and symbols
These drawing sheets are numbered E1, E2, E3, and so on.
16
Project Manual
• The project manual is the second part of the contract documents. This is the part that is often
referred to as the specifications .
• The project manual contains all the written construction documents about the structure to be
built.
• Whereas the project drawings provide the graphic instructions for the builder, the project
manual provides the written instructions.
• The project manual typically has four primary sections:
1. Bidding documents
2. General conditions
3. Supplemental conditions
4. Technical specifications
17
1. Bidding Documents
• The first section of the project manual provides information regarding the bidding
process. There are four documents included under this heading:
Advertisement or invitation for bids:
The invitation for bids acts as a notice to interested parties regarding the project and the
requirements for bidding.
Instructions to bidders:
This section includes specific instructions regarding the bidding process and goes into
much more detail than the invitation for bids.
Bid forms:
The bid or proposal form includes information regarding the bid price, completion date,
subcontractors, alternate pricing if requested, and receipt of addendum.
The agreement form:
A copy of the contract form that will actually be signed by the parties after the contract is
awarded.
18
2. General Conditions
The general conditions document is one of the most important documents associated with the
contract for construction. In essence, it sets the ground rules for playing the game. The
responsibilities of each of the parties are clearly delineated, and the specific terms of the
contract are defined in this section of the manual.
• General Provisions • Protection of Persons and Property
• Insurance and Bonds
• Owner Responsibilities
• Uncovering and Correction of Work
• Contractor Responsibilities • Termination or Suspension of the Contract
• Administration of the Contract
• Subcontracts and Subcontractor Relations
• Construction by Owner or Others
• Changes in the Work
• Time and Schedule Requirements
• Payments and Completion
19
3. Supplemental conditions
The supplemental conditions or special conditions usually deal with matters that are project specific. In
other words, they are considerations beyond the scope of the standard general conditions and serve as an
augmentation to the terms laid out in the general conditions.
Examples of some project‐specific information that may appear in these conditions are listed here:
• Soils and soil‐testing information provided by the owner
• Survey information provided by the owner
• Materials or other services provided by the owner
• Job signage requirements
• Traffic control and pedestrian safety requirements
• Phasing or special schedule requirements
• Requirements for security
• Temporary facilities and sanitation requirements
20
4. Technical Specifications
Technical specifications make up the bulk of the project manual. the
specifications deal more directly with the construction.
The specifications identify the requirements of the project relative to the
labor, materials, equipment, and procedures needed to accomplish the
work of the contract.
The primary purpose of the specifications is to clarify and describe the
following aspects of the job:
• Quality of materials
• Standard of workmanship
• Methods of installation and erection
• Quality control and quality assurance procedures
21
22
Chapter 4: Bidding and Procurements
©2015‐2016
Chapter Outline
Bidding Process (Tendering Process)
Bid Documents (Tender Documents)
Advertisement or invitation for bids (Tenders)
Instructions to bidders (Tenderer)
Bid forms (Tender forms)
The agreement form
Bonds
Insurance
Qualification of Bidders
Bid Evaluation (Tender Evaluation)
Award of the Contract
In this Chapter 4, students will learn the following
1. How to find the project and understand the bidding process.
2. The specific parts of biding process
3. Identification local bidding documents relating to biding process
4. The issues involved in prequalification and invitation of contractors
5. The issue involved in analyzing bids and awarding a contract
What does Procurement mean?
Procurement
The process of obtaining goods and services required to complete project
objectives
Procurement Planning
Deciding how the project deliverables will be obtained.
Procurement Method ( sometimes, called project delivery method)
The method in which the client can obtain the project deliverables
How Contractors need procurement process?
How does the owner needs procurement?
The first competition criteria for Contractor selection and Project Delivery Methods
Owner decides to
Project Delivery
Design‐Bid‐Build Construction Management Design‐Build
Price Qualifications Qualifications and Price
Selection Criteria
7
Design‐Bid‐Build Stages
Design
Bid
Build
Bidding or Tendering Process in in more detail
Invitation to Bidders Bid Documents is Ready Owner
Pre‐Bid Qualification
Contractual Relationship to perform
Bid Document Collection Bidding Period
Bid Bonds • Bidders visit the Site
the contract agreement
Bid Submission • Pre‐Bid Conference
• Notice to Bidders
Bid Opening
Bid Evaluation Post‐Bid Qualification
Bid Report
Reject ALL
Bid Decision Rebid, Redesign, or cancel project
Accept one
Performance Acceptance Letter to Bid Winner
& Payment
Bonds
Contract Agreement Contract Documents Contractor
Insurance
9
Award of the contract
Bid Documents
The bid documents (Bid Packages or Tender Documents) are sent out
including “drawings” and “specifications” and are often bound in the
specification book for bidding process.
When these documents, may be with extra documents, are legalized
and signed by the parties, they are called “Contract Documents”.
The bid documents contains:
1. Advertisement or invitation for bids
2. Instructions to bidders
3. Bid forms
4. The agreement form
10
Objectives
• Advise potential bidders that a contract is being tendered
• The invitation to bid is a request for pricing.
• Invite bids for suitable companies
Invitation Methods
• Letters
• Advertisements
o Newspaper
o Television
o Ministry or Directorate office website
o Bidding websites
11
The invitation includes information that is relevant to the project :
• The name, type, location of the project
• Bid period, bid due date and time
• Project start and completion date, if applicable
• Bonds, (bid bond, bid performance, bid documents receipt)
• The office address for bid documents collection, bid submission, bid opening)
• Legal requirements, i.e. (contractor registration, Grade, previous work evidence,
other documents)
• Pre‐bid conference, if applicable
12
1. Advertisement for bids, Sample
Also look at more advertisements
in Kurdistan‐Iraq:
Vist Hawler Governorate website:
http://www.hawlergov.org/en/tenders.php
Visit KRG ministry of housing and reconstruction website
http://www.krg‐mocah.net/pageDetails.php?page=news&id=225
Visit KRG ‐ Ministry of Municipality and Tourism
General Directorate of Water and Sewerage
http://www.watsan‐krg.org/index.php/tenders
13
2. Instructions to bidders
This section includes specific instructions regarding the bidding process and goes
into much more detail than the invitation for bids.
The instructions to bidders also include the following:
• Instruction about filling out forms
• Places to indicate additional work
• Method of awarding contracts
• Procedures for submitting questions and obtaining clarifications regarding the
contract documents.
• Rules concerning bid submission including bond requirements, bid opening,
rejection of bids, and notification of successful bidder.
14
2. Instructions to bidders, Sample
Read ALL INSTRUCTIONS:
GENERAL CONDITIONS FOR CONTRACTS
OF CIVIL ENGINEERING WORKS,
“INSTRUCTION TO TENDERER” , pp7‐10,
PREPARED BY SPECIAL COMMITTEE
AND APPROVED BY THE PLANNING
BOARD, Iraq, JUNE 1973
15
3. Bid forms
The actual forms that need to be filled out when submitting the bid .
Generally bid forms includes:
Application Form ( Tender Form)
o Name of contractor, Subcontractors,
o The total bid price both in numbers and in words
o Time required for completion, other blank filling obligations
Bill of Quantities and Prices
• Item , item description, specification clauses, unit quantities, estimated
quantities, unit price and remarks
Other Forms, if applicable
16
3. Bid forms, Sample of Tender Form
Read:
GENERAL CONDITIONS FOR CONTRACTS OF CIVIL
ENGINEERING WORKS, “Tender Form” , pp 10,
PREPARED BY SPECIAL COMMITTEE AND
APPROVED BY THE PLANNING BOARD, Iraq, JUNE
1973
17
3. Bid forms, Working Example of “Bill of Quantity”
Project: Construction of 4 km masonry fence around a residential area
ALL prices in US$
Items Item Description Unit Quantity Unit Price Item Price Remarks
1 Site Preparation L. S. 1 5,000 5,000
2 Excavation ݉ଷ 900 6 5,400
3 Concrete Foundation 30cm thick ݉ଷ 720 100 72,000
4 Block Masonry wall ݉ଷ 1,840 80 147,200
5 Finishing (cement plaster & Paint) ݉ଶ 16,000 10 160,000
6 Mental Garage Door No. 4 1,000 4,000
7 Mental decorative burglar m. L. 4,000 35 140,000
Total Price 533,400
Note; 1. The bill is the pre‐bidding owner’s estimate.
2. The bill without prices must be given to the bidders.
3. Remark will be used by the bidders for any proposed change and comment
18
4. The agreement form
A copy of the contract form is also included in the project manual. This is the
document that will actually be signed by the parties after the contract is awarded.
Essential Elements of a Construction Contract:
• Identification of the parties and signatures
• Description of the project and the work
• Project duration and date of project start
• Liquidated damage
• The contract sum and contract type
• Progress payments
• The court to be obligated by both parties.
• Retainage and guarantee
• Enumeration of contract documents Read more on http://www.networx.com/article/essential‐elements‐of‐a‐construction‐con
http://www.semi.org/en/IndustrySegments/SecondaryMarket/CTR_028902
http://trentcotney.com/construction/five‐essential‐elements‐of‐a‐construction‐contract/
19
4. The agreement form, Sample
Read:
GENERAL CONDITIONS FOR CONTRACTS
OF CIVIL ENGINEERING WORKS,
“CONTRACT AGREEMENT” , pp 53,
PREPARED BY SPECIAL COMMITTEE AND
APPROVED BY THE PLANNING BOARD,
Iraq, JUNE 1973
20
Bonds (Guarantee)
There are three types of bonds commonly required in construction: Bid Bonds,
Performance bonds and payment bonds.
1. Bid Bonds:
• To participate in biding process, the bidder usually has to submit a bid bond with
its bid.
• A bid bond is usually 5% to 10% of bid price or a single fixed amount of money.
• The purpose of the bid bond is to ensure that a bidder does not withdraw his or
her bid after becoming the bid winner.
• If the bid winner withdraw his or her bid, the bid bond will go to the owner.
• All bid bonds are returned to bidders upon acceptance of the bid winner
• The bid bond is also returned to the bid winner after the contract is signed.
21
Bonds (Guarantee)
2. Performance Bonds:
• To participate in contracting process, the bid winner usually has to submit a
performance bond before the contract is signed.
• A performance bond is usually 5% to 10% of bid price or a single fixed amount of
money.
• The purpose of the performance bond is to ensure that the contractor will
perform the contract according the terms of the agreement.
• If the contractor goes bankrupt or otherwise cannot complete the project, the
performance bond will go to the owner.
• The performance bonds are returned to the contract upon acceptance of the
project successfully by the owner.
22
Bonds (Guarantee)
3. Payment Bonds:
• This is also called labor and material bonds
• The payment bonds is usually purchased at the same time as the performance
bonds from the same contractor and will cover all unpaid bill in a default situation
• These bonds is to ensure that the contractor will pay all bills, thus leaving the
owner unharmed by claims.
• This payment bond may not be necessary if:
o the owner feels confidant about the contractor.
o The project is simple or short.
23
Insurance
There are many forms of insurance that a contractor can purchase to protect
against risk during a construction project. In some countries, Many types of
insurances are obligated by a contract or law for the life of the project. Before the
contract agreement, the owner requires a “certificate of insurance”, examples:
1. Worker’s compensation: This insurance covers disability and medical treatment
for injuries resulting from accidents that occurs during construction.
2. Comprehensive liability: This provides protection from third party claims. It
covers injury to non‐worker at the site, damage caused by construction
vehicles, damage occurring after completion.
3. Builder’s risk: this is essentially property insurance for the building while it is
under the control of the contractor. It covers losses resulting from fire, smoke,
explosions, vandalism, and theft.
24
Qualification of Bidders
Before a contractor is awarded a contract, it is likely to be put through a
qualification process. There are two methods of qualifying bidders:
1.Pre‐Bid Qualification:
This requires the bidders to submit information about their companies before the
bid is opened to check the terms of conditions as published in the advertisements
2. Post‐Bid Qualification:
These are submitted with the bid and reviewed by the owner during bid opening
and analysis. Qualification is determined by evidence of capability from:
o Previous work
o Financial strength and stability
o Personal availability
o Safety record, etc.
25
Bid Period
Bidders:
• Visit the project site
• Determine “construction methodology, resource requirements, contract price”
• Prepare qualification evidences required by the owner
• Fill out the bid forms according to the owner’s “instructions to Bidders”
• Submit ALL bid documents signed and sealed before “due to time”
Owners:
• Give clarifications to any questions
• Sometimes organize a “pre‐bid conference”
• Give notice to all bidders in advance if any change issued
26
Bid Opening
Bid Opening Committee:
A Bid Opening Committee manages over the bid opening. It should consist of at
least two, but preferably three, members ‐ a Chairperson, a Secretary and a
Witness. All bidders must be present in bid opening ceremony.
Bid opening in Public:
All competitive bids for contracts valued must be opened in public (for public The
Name of the projects, government work)
Upon opening each bid envelope, the Chairperson must announce:
• bidder or company who submitted the bid
• The amount of the bid
• Any amendment (tag) to the total amount of the bid, if applicable.
• Finally, owner’s estimate price
Then no bid is chosen until:
The committee provides “Bid Report “ based on “Bid Evaluation”.
27
Bid Evaluation Criteria
 Financial criteria
• Low price
• Financial capability
 Technical criteria (Attribute, Quality
or qualification)
• Experience
• Resource availability
o Staff
o Equipment
• Time schedule
• Construction methodology
• Safety Track Record
• Any other consideration
28
Methods of Bid Evaluation
1. Low‐Bid Price Selection
• Consider the Lowest bid price only
• A bidders must pass ALL requirements.
• The lowest responsive bid wins.
2. Best‐Value Selection
• Consider both price and non‐price qualifications
• Non‐price qualifications and price given weighting grades
• All grades added together to give total weighting grade
• Highest scores wins
3. Qualifications‐based Selection
• Consider only qualifications
• Non‐price qualification given grades
• All grades added together to give total grade
• Highest scores wins
29
Methods of Bid Evaluation
Evaluation Criteria
Methods of Bid
Bid Winner
Evaluation Non‐Price
Requirements Price Weighting
Qualification
Low‐Bid Price Lowest Price

Selection Conforming
Best‐Value
Highest Score
Selection
Qualification‐ Highest Score
based Selection
30
Evaluation process
• Check that ALL submitted document certificates are applicable.
• Check arithmetic bill of quantities and Correcting arithmetical
corrections in bills of quantities according to “the owner’s Guideline
of Bid Evaluation”.
• Apply the evaluation method which already informed bidders
• Tabulate all bids and their evaluation criteria
• Go through the applicable owners' guideline and recommend one bid.
• Briefly Write all biding process and evaluation process in a report to
the owner, called “Bid Evaluation Report”
31
Bid Evaluation: Working Example
Reference to the bill of quantity of 4km fence project shown before, if five bidders; A
($500,350), B ($605,825), C ($480,287), D ($508,187), E (489,768) and F ($654,234);
submitted their tenders with legal requirements, you should recommend one bidder
to the owner based on the evaluation their tenders and note that each tender price
shall not be underestimate by 25% and overestimate by 7% of owner’s estimate
price:
1. Use lowest bid selection method conforming lowest price according to Iraqi
General Conditions of Civil Works, (Instructions to Tenderers)
2. If bidders pass pre‐qualification process, Use best value selection method based
on both financial criteria weighting (70%) and technical criteria weighting (30%
with at least minimum 20%). Technical criteria covers work experience, time
schedule, and staff availability. Each one weighting 10%.
32
Working Example 1‐Low‐bid Selection Conforming
ALL prices in US$
Contractors Income tax
Bid Bid Company Time Experience Program of
Bidders Ranks Classification registration
Prices Bond certificate Schedule certificate Work
certificate certificate.
A 3 500,350 Pass Pass Pass Pass Pass Fail Fail

B 5 605,825 Pass Pass pass Fail Pass Pass Fail
C 1 480,287 Fail Pass Pass Fail Fail Pass Fail
D 4 508,187 Pass Pass pass Pass Pass Pass Pass
E 2 489,768 Pass Pass Fail Fail Pass Pass Fail
F 6 654,234 Fail Pass Pass Pass Fail Fail Pass
Note; 1. the pre‐bidding owner’s estimate total price = US$ 533,400
2. Requirements are according to “INSTRUCTIONS TO TENDERERS” Iraqi General
Conditions for Contracts of Civil Engineering Works, pp7‐10 33
Working Example 2‐Best‐Value Selection
ALL prices in US$
Bidders Ranks Bid Prices Financial Work Time Staff Technical Percentage
(Lowest criteria Experience Schedule criteria weighting
price)
(min. 20%)
Max. Marks 70% 10% 10% 10% 30% 100%
A 3 500,350 67.19 86.69

5 6.5 8 19.5
B 5 605,825 55.49 83.49
10 8 10 28
C 1 480,287 70.00 86.50
4 5 7.5 16.5
D 4 508,187 66.16 78.66
5 4.5 3 12.5
E 2 489,768 68.64 90.14
5.5 6 10 21.5
F 6 654,234 51.39 77.39
9 7 10 26
Note; 1. The pre‐bidding owner’s estimate total price = US$ 533,400
2. Assume the submit all compulsory legal requirement evidences
34
3. Financial capability= (lowest bid/ current bid)*70%
Bid Evaluation Report
A bid report is a brief history of the tendering process and an analysis of each bid
submission and any subsequent negotiations. Contents might include:
• The background to the contract.
• The scope of the contract.
• Pre‐qualification and post qualification criteria.
• The bid evaluation criteria.
• Reasons for rejection of unsuccessful bids.
• Reasons for the recommendation.
• A summary of any post‐bid negotiations.
• Comparison with the owner’s estimate.
• Any implications for the project.
35
Award of the Contract
36
Notice to Proceed
• After the contract is signed, and all of the legal paperwork is in order,
an official order document is issued by the owner to handover the
project site with the contract and proceed with the work.
• The notice to proceed is an important document in that it starts the
clock running for the construction (Actual project start date).
• and there must be an official start and end to the job in order to
measure performance, especially when penalties are assessed for late
completion.
37
38
Chapter 5: Construction Law
©2015‐2016
Chapter Outline
Construction Law
International Contract forms
Introduction to FIDIC
General Conditions for Civil Engineering Works‐Iraq
 Contents
 key processes
 Payment and measurements
 Change order
Student Learning outcomes
1. The role of government in the creation of the laws and regulations
2. How to be familiar with the standard general contract forms
3. Iraqi general condition and how to adopt to constriction project
4. How to prepare a payment for finished works during construction
5. How to prepare a Change Order during construction process
What are laws and regulations?
Levels of laws in a federal
government such as Iraq: Federal
Constitution Regional
Constitution
Federal Parliament
Regional Parliament
Federal Laws
Regional Laws
Federal Government
Regional Government
Obligation order
Sometimes Obligation Order
4
What is Construction Law?
• Those laws govern construction activities and the rights and obligations of organizations
and individuals investing in construction of works and engaging in construction activities.
• Laws, codes, standards and regulations play an important role in construction industry.
• Some example of laws and regulations:
o Investment law
o Work law
o Law of companies
o Income tax law
o Standard Contract forms regulations
o Contractors Calcification regulations
o Safety and health regulations
o Environmental regulations
o Disability Rights Law*
o ACI Codes
o ASTM Standards
o Iraqi codes and Standards
What are Contact Forms?
• Terms and conditions that set the rights and obligations of the contracting
parties, when a contract is awarded or entered into. These contract forms
include:
o 'general conditions' which are common to all types of contracts,
o ‘Particular conditions’ which are peculiar to a specific contract.
• Generally these contract forms may contain:
o Tender form
o Agreement forms
o Bid bond form
o Performance security form
o Letter of acceptance form
o Instructions to tenderers form
6
STANDARD FORM CONSTRUCTION CONTRACTS
International associations which they offer the standardized contract forms including:
1. International Federation of Consulting Engineers (FIDIC), based in Geneva, Switzerland
Official website: http://www.fidic.org
2. Institution of Civil Engineers (ICE), based in London, UK
Official website: https://www.ice.org.uk
3. The New Engineering Contract (the NEC), based in London, UK
Official website: https://www.neccontract.com
4. Institution of Electrical Engineers (IEE), based in London, UK
Official website: http://www.iee.org
5. Institute of Chemical Engineers, based in London, UK
Official website: http://www.icheme.org
6. The Joint Contracts Tribunal (JCT), based in London, UK
Official website: www.jctltd.co.uk
7. The Association of Consultant Architects (ACA), based in London, UK
Official website: http://www.acarchitects.co.uk
8. International Chamber of Commerce (ICC), based in Paris, France,
Official website: http://www.iccwbo.org/law/contracts
What is FIDIC?
• Independent international organization, Geneva, Switzerland
• The formal constitution on 22 July 1913
• Membership and FIDIC Partners all over the world
• FIDIC currently has 101 Member Associations & Associates.
• FIDIC's key role and that of its Member Associations is to “improve
Quality of Life through the promotion of quality, integrity and
sustainability in the infrastructure industry.”
• The backbone of the body of FIDIC's publications is FIDIC's selection
of contracts and agreements
What is FIDIC Contract Forms?
Latest Contracts
1. Conditions of Contract for Construction (First Edition, 1999) The Red Book . For building and
engineering works designed by the Employer
2. Conditions of Subcontract for Construction (First Edition, 2011). For building and engineering
works designed by the Employer
3. Conditions of Contract for Plant and Design‐Build (First Edition, 1999) The Yellow Book
4. Conditions of Contract for EPC/Turnkey Projects (First Edition, 1999) The Silver Book
5. Conditions of Contract for Design, Build and Operate Projects (1st Ed, 2008) The Gold Book
6. Short Form of Contract (First Edition, 1999) The Green Book
7. Form of Contract for Dredging and Reclamation Works “Dredgers Contract” The Blue Book
8. A form of agreement for engagement of Consultants (The White Book)
9. A form of agreement for Subconsultants
10. A joint venture agreement form
Which FIDIC Contract should I use?
10
http://fidic.org/bookshop/about‐bookshop/which‐fidic‐contract‐should‐i‐use
General Condition Contract Forms in Iraq?
 Two forms of Conditions
1. GENERAL CONDITIONS FOR CONTRACTS OF CIVIL ENGINEERING WORKS‐
PARTS I & II
2. GENERAL CONDITIONS FOR CONTRACTS OF ELECTRICAL, MECHANICAL
AND CHEMICAL ENGINEERING WORKS‐ PARTS I & II
 These conditions:
o Approved by The Iraqi Planning Board on 12/6/1972
o Enforced the distribution thereof to Ministries and Public establishments.
11
General Conditions for Civil Engineering Works‐Iraq?
• Instructions to Tenderers
o 16 INSTRUCTIONS
• Tender Form
o ONE Page
• Part I. General Conditions
o 71 CLAUSES
• Part II. Conditions of Particular Application
o 11 CLAUSES
• Contract Agreement
o ONE Page
12
General Conditions for Civil Engineering Works‐Iraq?
This contract form covers the following process:
1. Tendering and contract agreement process

2. Construction process
3. One year period maintenance process
Tendering Construction Maintenance
13
1. Tendering and contract agreement process
Deadline to
Start Date to submit tender Letter of Contract
collect tender (Ins. 11) acceptance Agreement
(Ins. 12)
Tender Tender Period Max. allowed Period
Documents Time
Tender Bonds Tender Tender Tender Bonds

(Ins. 7) opening Evaluation
can be released
Report
(Ins. 7)
Tender Performance Bond
Invitation to tender Evaluation (10.1),
(Advertisement) Period Labor security (23) 14
Extension of
2. Construction process Duration (45) or
Delay Time
Contract Letter of
Agreement Commencement (42) Deadline to Certificate of
complete project Completion
(49)
Max. allowed
Period to start
Project Duration (44)
Time
Tender Bonds Test and Inspections Bill of Quantity (56)

can be released (18, 37, 39) Delay penalty
(Ins. 7) Measurement (48)
Acceptance of work (57, 58)
Refuse of work Payments (62) Change Order

(40) (52, 53)
Retainage (62.1) 15
3. Maintenance Process Final certificate of

acceptance or Maintenance
Certificate (64) Release
Performance Bond
certificate of The end of (10.2)
completion maintenance
(49)
One Year Maintenance Period(50.1)
Time
Release Retainage
Delay penalty Inspections by owner’s Maintain (62)
(48) Engineer and contractor failures
(50.2) (50.2, 50.3)
Final Payment
16
Payment Process
Owner Owner’s Engineer Contractor
Order and supervision of works Progress of Works
Completion of a part or the
Tests and inspections of works whole of the works by a report
Direct Involvements in
Written Refuse
any step Reconstruct or repair refused works
Decision
Acceptance
Presence of contractor’s Engineer,
measurement of works
provision of facilities
Provide the payment regarding the
Approval contract bill, delay penalty, retainage
Signed by contractor’s Engineer
Pay
Bank Cheque
17
Example: “Bill of Quantities and Prices” for a sewer project, illustrates the estimates of
owner and the contract prices of the contractor: explain ‘measurement of quantity, payment, and
change order using:
Case 1: Bill of Quantities and Prices (Payment WHEN Change Order does not occur)
Case 2: Bill of Quantities and Prices (Change Order required), and quantity measurements
Design Stage Bidding (Tendering) Stage
Item Item Description Unit Estimated Owner’s Owner’s Contract Contract Item
No quantities Unit price item Unit Price amount
(US$) amount (US$) (US$)
(US$)
1 Trench Excavation m3
7,000 5 35,000 5.25 36,750
2 80cm Pipe m. L 1,750 60 105,000 55 96,250

3 Engineered Fill m3 1,400 78 109,200 72 100,800
4 Backfill m3 2,000 5 10,000 4 8,000
TOTAL 259,200 241,800
18
Case 1: Bill of Quantities and Prices (Payment WHEN Change Order does not occur)
Case 1: “Bill of Quantities and Prices” for a sewer project, illustrates the estimates of owner and the
contract prices of the contractor: actual quantities given and payment calculated without change order.
Item Item Unit Estimated Owner’s Owner’s Contract Contract Item Actual Final Cost
No Description quantities Unit price item amount Unit Price amount Quantities “Payment”
(US$) (US$) (US$) (US$) (US$)
1 Trench m3
7,000 5 35,000 5.25 36,750 6,700 35,175
Excavation
2 80cm Pipe m. L 1,750 60 105,000 55 96,250 1,750 96,250
3 Engineered Fill m3 1,400 78 109,200 72 100,800 1,500 108,000
4 Backfill m3 2,000 5 10,000 4 8,000 1,700 6,800
TOTAL 259,200 241,800 246,225
5% total cost (retainage) 12,311
Pay 233,914
19
NOTE: in Case 1, actual quantities are assumed
Measurement of finished Quantity
Item No 1:Trench Excavation
Volume of finished quantity (m3) = length *width * mean long profile excavation height
=1500m* (0.2+0.8+0.2) m * 3m=5400m3
Item No 2: 80cm Pipe
Measure Length of finished quantity= 1500m
1.8m
Item No 3: Engineering Fill (concrete)
Volume of finished quantity (m3) = length *width * height (as drawings)
= (square area‐ pipe area )* length
= (1.2*1.2‐∏* 0.4^2) * 1500=1406m3
Item No 4: Backfill (suitable soil) 3m
Volume of finished quantity (m3) = length *width* mean long profile excavation height
=1500m* (0.2+0.8+0.2) m * 1.8m=3240m3
Item 5: NEW ITEM (manhole)
Measure numbers finished according to drawings and specifications
Required No. = 20 1.2m
(the sewer project cross section)
20
Change Order (Variation Order)
Change Order
According to General Condition of Civil Works, Iraq, Change Order will be issued for:
o Increased item quantities
(>20% the unit price needs negotiation between owner and contractor)
o New item
(the unit price needs negotiation between owner and contractor)
o Item reduction
(No effect)
o Change in material quality and drawings

New unit prices may be needed negotiation
21
Case 2: Bill of Quantities and Prices (Change Order required)
Case 2; change order needs because of item reduction, new item and more than 20% estimate’s
work
Item Item Description Unit Estimated Owner’s Owner’s Contract Contract Item Actual Change
No quantities Unit price item Unit Price amount Quantities status
(US$) amount (US$) (US$)
(US$)
1 Trench m3
7,000 5 35,000 5.25 36,750 5,400
Excavation ‐23%
2 80cm Pipe m. L 1,750 60 105,000 55 96,250 1,500 ‐14%
3 Engineered Fill m3 1,400 78 109,200 72 100,800 1,406 0%
4 Backfill m3 2,000 5 10,000 4 8,000 3,240 62%
5 Manhole NO. 20 New
TOTAL 259,200 241,800
22
Case 2: Bill of Quantities and Prices (Change Order required)
Case 2; change order needs because of item reduction, new item and more than 20% estimate’s
work
23
Must Reference Reading
GENERAL CONDITIONS FOR CONTRACTS OF CIVIL ENGINEERING WORKS‐ PARTS I & II,

Planning Board, 1973, Iraq
24
Chapter 6: Project Planning and Scheduling
©2015‐2016
Chapter Outline
What is project planning and scheduling?
What is project scheduling?
How do we schedule?
Work breakdown structure
Organization Breakdown Structure
Project Activities
Activity Relationships
Activity Durations
Project Networks
What is Different between Node Network and Arrow Network?
2
1. How to provide the construction project planning and scheduling.
2. The four major types of construction project scheduling
3. Project activity types and the different types of relationships
4. Introduction t a project networks and their types
What is “Project Planning and Scheduling”?
Planning: the process of determining the following questions:
• “What” is going to be done? Work Breakdown Structure (WBS) )
• “Who” will be doing activities? Organizational Breakdown Structure (OBS)
• “How much” activities will cost? Cost Breakdown Structure (CBS)
• “How” activities are going to be done? Specification and Contract documents
• “Where” are activities to be done? Location of activities on a site project
• When is the project expected to start and end? project duration
“Failing to plan is planning to fail”
by J. Hinze, Construction Planning and Scheduling
4
What is “Project Planning and Scheduling”?
Scheduling:
• Focuses on one part of the planning ” when”.
• Deals with “when” are the activities to be done on detailed level?
“scheduling is about time”
by J. Hinze, Construction Planning and Scheduling
General Framework for the planning process
How do we Schedule?
There are several methods of project scheduling used to determine the schedule:
Non‐Network Diagrams
o Bar chart or Gantt chart
o Linked bar chart
o Resource bar chart
o Time distance chart ( or time‐Location chart)
o line‐of‐balance
 Network diagrams
 Arrow Network and Node Network
o Critical path method
o Precedence network
o Program Evaluation and Review Technique (PERT)
Construction Project Planning Process
During tendering stage or construction stage, we can use the inputs to prepare
planning outputs.
Construction Project Planning Steps
The following can be used as a guideline for a project planning:
1. Define the scope of work, method statement, and sequence of work.
2. Generate the work breakdown structure (WBS) to produce a complete
list of activities.
3. Develop the organization breakdown structure (OBS) and link it with
work breakdown structure to identify responsibilities.
4. Determine the relationship between activities.
5. Estimate activities time duration, cost expenditure, and resource
requirement.
6. Develop the project network.
Work Breakdown Structure (WBS)
WBS is a deliverable oriented hierarchy based
on decomposition of the project into smaller
manageable pieces of work.
o The project name : the top of the diagram.
o Divisions or Work Parts: sub‐divided smaller
elements of project breakdown structures at
each lower level.
o Work packages: the deliverable elements at
the lowest level of WBS.
o Activities: A list of project’s activities is
developed from the work packages. Each
activity has a specified duration to be Act. 2.1.3.1
performed.
Act. 2.1.3.1
o WBS Coding: each work package and activity
in a WBS is given a unique code that is used in
project planning and control.
WBS template sample
Read more on WBS on http://www.workbreakdownstructure.com 9
Warehouse WBS
Level 1The Project To construct a 5-unit

warehouse for light industry
full Scope
Complex
Level 2:Divisions Site Preparation Foundation Structural Systems Finishing
Level 3:Sub‐Divisions Survey Soils Analysis Excavate Soil Backfill & Compact
Level 4:Work Site Boundaries Elevation Building Locate

packages Data Points Footprints Buried Services
10
CSI Standard Master Format of WBS for a project
The Master format is divided into 16 divisions as follows:
1) General Requirements 9) Finishes
2) Site work 10) Specialties
3) Concrete 11) Equipment
4) Masonry 12) Furnishings
5) Metals 13) Special Construction
6) Woods & Plastics 14) Conveying Systems
7) Thermal & Moisture Protection 15) Mechanical
8) Doors & Windows 16) Electrical
11
Organization Breakdown Structure (OBS)
• Define the different responsibility levels and their appropriate reporting.
• Assign the appropriate human resources to perform works in WBS.
• Organize all human recourse in a heritachy called organizational breakdown
structure (OBS).
12
Example of OBS
13
WBS linked OBS, sample
14
Project Activities
An activity is defined as any function or decision in the project that: consumes
time, resources, and cost. Activities are classified to three types:
• Production activities: activities that involve the use of resources such as labor,
equipment, material. Examples are: excavation, formwork, reinforcement,
concreting, etc. each production activity can have a certain quantity of work,
resource needs, costs, and duration.
• Procurement activities: activities that specify the time for procuring materials or
equipment that are needed for a production activity. Examples are: brick
procurement, boiler manufacturing and delivery, etc.
• Management activities: activities that are related to management decisions such
as approvals, vacations, etc.
15
Activity Relationships
Four types of relationships:
• Finish to Start (FS): Activity B cannot start until Activity A has finished.
• Start to Start (SS): Activity B cannot start until Activity A has started.
• Finish to Finish (FF): Activity B cannot finish until Activity A has finished.
• Start to Finish (SF): Activity B cannot finish until Activity A has started.
Start Finish Start Finish
SF
FS
Activity A Activity B
FF
SS
16
Activity Relationships
Overlap or lag between activities:
• Overlap (negative lag or lead) is defined as how much a particular activity must
be completed before a succeeding activity may start. The absence of overlap
means that the first activity must finish before the second may start.
• A negative overlap (lag) means a delay is required between the two activities
17
Activity Durations
Straightforward approach to the estimation of activity durations:
• Historical experience records
• Using unit productivity rates;
Activity duration = quantity of work / number of crews x resource output
Where, the quantity of work is determined from engineering drawings of a specific
project. The number of crews working is decided by the planner.
NOTE: Knowing activity duration and resources employed, it is simple to estimate
the activity direct cost.
18
Activity Durations
Example:
If the daily production rate for a crew that works in an activity is 175 units/day and
the total crew cost per day is $1800. The material needed for daily work is 4.5 units
at $100/unit.
a. Calculate the time and cost it takes the crew to finish 1400 units
b. Calculate the total unit cost. Consider an eight hour work day.
19
Activity Durations
Solution
a. Duration (units of time) = Quantity / Production per unit of time x number of crews
= 1400 / 175 x 1 = 8 days
Cost (labor cost) = Duration (units of time) x crew cost per unit of time
= 8 days x $ 1800 / day = $ 14400
Total direct cost = $ 14400 + 4.5 units of material x $ 100 / day x 8 days
= $ 18000
b. Unit cost = total cost / quantity
= $ 18000 / 1400 = $ 12.86 / unit
20
Project Network
A network is a logical and chronological graphic representation of the
activities composing a project. Network diagrams are basically of two
types: Arrow network and Node network.
1. Arrow Network
Arrow networks are called the arrow diagraming (ADM), activity on arrow
(AOA) networks, or the I‐J method. in arrow network, an arrow represents
activities.
2. Node Network
Node networks are also called activity on node (AON) networks. In node
network, a node represents an activity. Nodes (activities) are connected
with arrows that represent the logical relationships between activities.
21
Working Example: Arrow Network and Node Network
Draw arrow network and Node network for the following project:
Solution: Dummy activity
Project
Finish
Project
Start
Called Activity F, or
arrow network Activity 40‐50
22
Working Example: Arrow Network and Node Network
Draw arrow network and Node network for the following project:
Solution:
A D
Project
Finish
PS B E PF
Project C F
Start
Node network
23
What is Different between Node Network and Arrow Network?
Predecessor Successor Predecessor Successor

Relationship Activity A Activity B
Activity A Activity B Relationship
NODE NETORKS ARROW NETWORKS
1. called activity on node (AON) networks 1. called activity on arrow (AON) networks
2. Nodes represents activities. 2. Arrows represents activities.
3. Arrows represents logical relationships 3. Nodes represents logical relationships
between activities. between activities.
4. There is NO need for dummy activities 4. It may need “dummy activity”
5. More practical and common in use 5. More Traditional and getting complex
24
Correct and Incorrect Diagraming
“Node Networks”
25
Activity Start Activity Finish
Activity A
26
Incorrect Correct
A A
C C
27
Incorrect Correct
B
A B
A
28
Incorrect Correct
B B
A A
C C
29
Incorrect Correct
A B A B
D C D C
30
31
Chapter 7: Project Scheduling:
Critical Path Method and Gantt Chart
©2015‐2016
Chapter Outline
What is Critical Path Method (CPM)?
How to Perform CPM Calculations
What is Gantt Chart?
Advantage and disadvantage of Bar chart (Gantt chart)
Working Examples with extra topic explanation
1. How to define the Gantt chart and critical pass method in detail
2. How to perform critical pass method analysis
3. How to draw Gantt chart for projects
4. An implementation of both method in a bridge project
What is Critical Path Method (CPM)?
• Critical Path Method (CPM) is a systematic scheduling method for a project
network (usually a node network) used to manage project duration.
• The CPM involves four main steps:
o A forward path to determine activities early‐start times
o A backward path to determine activities late‐finish times
o Float times calculations
o Identifying critical activities
• The most widely used scheduling technique
o Many textbooks and project managers regard CPM
o Widely available Computer program for CPM
 Example: Primavera P6, MS Project 4
How to Perform CPM Calculations?
ES of Activity D = max
8+4=12 (EF) of predecessors=
8 4 12 max (12; 11) =12
Activity B
0 8 8 12 2 14
Activity A Activity D
8 3 11
Activity C
Forward Pass Calcula on (→)
the process of navigating through a network from start to finish of
the project. ES Dur. EF
Activity Duration (Dur.):the estimate time to finish the activity
Activity C
Early Start (ES) is the earliest date an activity can start.
Early Finish (EF) is the earliest date an activity can finish. LS TF LF
5
ES of Activity D = max
8+4=12 (EF) of predecessors=
8 4 12 max (12; 11) =12
Activity B
0 8 8 8 12 12 2 14
0 8 8 3 11 12 14
Activity C
9 12 LS of Activity D = LF of Activity D – Dur.
LF of Activity A =
min (LS) of = 14‐2=12
predecessors= min
(9; 8) =8
Backward Pass Calcula on (←) ES Dur. EF

the process of navigating through a network from finish to
start of the project. Activity C
Late Start (LS) is the latest date an activity can start. LS TF LF
Late Finish (LF) is the latest date an activity can finish. 6
Critical path= A‐B‐D
8 4 12 Critical activities= A, D, B
Activity B Non critical activity= C
0 8 8 8 0 12 12 2 14
0 0 8 8 3 11 12 0 14
Activity C
9 1 12
TF= 9‐8=12‐11= 1
Total float (TF) the maximum amount of time an activity can be
delayed from its early start without delaying in the entire project.
ES Dur. EF
TF= LS‐ES or TF= LF‐EF
Critical path: the longest path in a network, from start to finish. Activity C
Critical activity: an activity on the critical path. Any delay in a start to LS TF LF
finish of a critical activity will result in a delay of the entire project. 7
What is Gantt Chart?
• A Gantt char or Bar chart is a graphical representation of project activities shown in
a time‐ scaled bar with no links shown between activities.
• The bar chart was originally developed by Henry L, Gantt in 1917 and alternatively
called a Gantt chart.
0 8
A
List of Activities
Activity Duration 8 12
B
8 11 TF
C
12 14
D
Time Scale ( time unit)
8
Advantage and disadvantage of Bar chart (Gantt chart)
Advantages
o Simplicity of preparation
o Easy to understand
o Good communication tool
o Easy to update
o It can be loaded with other project information
Disadvantages
o It does NOT show interrelation between activities
o It is not adequate documentation for claims
The Critical Path Method and Gantt Chart
Worked Example 1
Worked Example 2
Worked Example 3
10
Example 1: answer the questions for the
ACTIVITY IPA DURATION
following project:
(days)
1. Draw the logical node network.
2. Draw a new format nodes for activities for
A ‐ 5
writing ES, EF, LF, LS, TF, activity duration, and
activity ID. B A 8
3. Calculate Early Start (ES) and Early Finish (EF)
for all activities. C A 6
4. What is total duration of the project? D B 9
5. Indicate the critical path and critical activities.
6. Calculate Late Start (LS) and Late Finish (LF) for E B, C 6
all activities.
F C 3
7. Calculate total float (FT) for all activities
8. Tabulate above data. G D, E, F 1
11
Solution (1):
ACTIVITY IPA DURATION
(days)
A ‐ 5
B D
B A 8
C A 6
A E G
D B 9
E B, C 6
C F
F C 3
G D, E, F 1
the logical node network
12
Solution (2):The node Network with new node format
8 9
B D
5 6 8
A E G
ES Dur EF 6 3
Activity ID C F
LS TF LF
13
Solution (3): Calculation of ES and EF (Forward Path)
5 8 13 13 9 22
B D
0 5 5 13 6 19 22 1 23
A E G
ES Dur EF 5 6 11 11 3 14
Activity ID C F
LS TF LF
14
Solution (4): Total Project Duration
Total Project Duration= 23 days
Solution (5): there are FOUR paths
Paths Duration
ABDG 5+8+9+1= 23 CRITICAL PATH
ABEG 5+8+6+1= 20
ACEG 5+6+6+1= 18
ACFG 5+6+3+1= 15
15
Solution (5): Indicating Critical Path
5 8 13 13 9 22
B D
0 5 5 13 6 19 22 1 23
A E G
ES Dur EF 5 6 11 11 3 14
Activity ID C F
LS TF LF
16
Solution (6): Calculation of LS and LF (Backward Path)
5 8 13 13 9 22
B D
5 13 13 22
0 5 5 13 6 19 22 1 23
A E G
0 5 16 22 22 23
ES Dur EF 5 6 11 11 3 14
Activity ID C F
LS TF LF 10 16 19 22
17
Solution (7): Calculation of Total Float
5 8 13 13 9 22
B D
5 0 13 13 0 22
0 5 5 13 6 19 22 1 23
A E G
0 0 5 16 3 22 22 0 23
ES Dur EF 5 6 11 11 3 14
Activity ID C F
LS TF LF 10 5 16 19 8 22
18
Solution (8): Summary of CPM Calculation
ACTIVITY DURATION ES EF LS LF TF
A 5 0 5 0 5 0
B 8 5 13 5 13 0
C 6 5 11 10 16 5
D 9 13 22 13 22 0
E 6 13 19 16 22 3
F 3 11 14 19 22 8
G 1 22 23 22 23 0
19
• Complimentary to Example 1
• We can Draw Bar Chart from Network
but we can NOT draw Network from
bar chart.
• Let us draw bar chart for Example 1
20
Bar Chart for Example 1 based on ES and EF of activities
G
Time
(days)
0 2 4 6 8 10 12 14 16 18 20 22 24
21
Critical Activities with Black Colour
G
Time
(days)
0 2 4 6 8 10 12 14 16 18 20 22 24
22
NON‐Critical Activities with their Total Floats (TF)
B
TF
C
D
TF
E
TF
F
G
Time
(days)
0 2 4 6 8 10 12 14 16 18 20 22 24
23
Free Float and Interfering Float
Free Float (FF): the maximum amount of time an activity can be delayed from its early
start without delaying the ES of its successors. Free float can be calculated by using the
following equation:
For activity C: min 11, 13 11 0
For activity E: min 22 19 3
Interfering Float (Int. F) : the maximum amount of time an activity can be delayed
from its early start will delay its successors but not delaying the entire project.
Int. F= TF-FF
For activity C: Int. F=TF-FF=5-0=5 days=TF
24
Activity Floats
There are three cases:
• TF = FF + Int. F
• TF = FF + 0 = FF
• TF = 0 + Int. F = Int. F
25
Activity E and F with Free Float and Activity C with Int. F
B
TF= Int. F
C
D
TF=FF
E
TF=FF
F
G
Time
(days)
0 2 4 6 8 10 12 14 16 18 20 22 24
26
if we delay Activity C with Int. F=5, Activity E and F will be delayed by 3 and 5 days respectively
B
TF= Int. F
C
D
TF=FF
E
TF=FF
F
G
Time
(days)
0 2 4 6 8 10 12 14 16 18 20 22 24
27
Activity E can be delayed with its FF, it will NOT affect other activities
B
TF=Int. F
C
D
TF=FF
E
TF=FF
F
G
Time
(days)
0 2 4 6 8 10 12 14 16 18 20 22 24
28
Example 2: Draw the Node Network and Perform CPM calculation for
construction of two span bridge as shown below:
Two Span Bridge side view
29
Finishes
14 days
Surface Bridge
5 days Precast Span In Situ Span
7 days 30 days
Substructure Centre
Substructure West 20 days Substructure East
20 days 23 days
Pile & Cap West Pile & Cap Centre
8 days 5 days Pile & Cap East
10 days
The Bridge side section with activity Durations
30
The Project Activities with Their Information
Activity Duration
Activity ID Activity Description Predecessors (days)
A Pile & Cap West - 8

B Pile & Cap Centre - 5
C Pile & Cap East - 10
D Substructure West A 20
E Substructure Centre B 20
F Substructure East C 23
G Precast Span D, E 7
H In Situ Span E, F 30
I Surface Bridge G, H 5
J Finishes I 14
31
Node Network for the Bridge
8 20
Pile & Cap West Substructure West
7
Precast Span
0 5 20 5 14
Pile & Cap Centre Substructure Centre Surface Bridge Finishes
PS
30
In Situ Span
10 23
Pile & Cap East Substructure East
32
Node Network for the Bridge (CPM Calculation)
0 8 8 8 20 28
Pile & Cap West Substructure West
28 28 36 36 28 56
28 7 35
Precast Span
56 28 63
0 0 5 5 5 20 25 63 5 68 68 14 82
Pile & Cap Centre Substructure Centre Surface Bridge Finishes
PS
63 0 68 68 0 82
8 8 13 13 8 33 33 30 63
0 In Situ Span
33 0 63
0 10 10 10 23 33 ES Dur EF
Pile & Cap East Substructure East Activity Name
0 0 10 10 0 33 LS TF LF
33
Bar Chart for the Bridge Based on ES and EF of Activities
(Days)
34
Lag Time and Lead Time
Lead time (‐ve lag) is overlap period between activities that have
a relationship. lead time is a negative value.
Lag time (+ve lag) is a delay (waiting time) between activities that have
a relationship. Lag time is a positive value.
lead time or lag time can be as a duration or as a percentage of the
predecessor activity duration.
Lag Lead
2 or 25% ‐2 or ‐25% B
A B A
5 days 8 days 5 days
8 days
35
Example 3: Recalculate CPM again now.
8 ‐50% 9
B D
1
5 6 8
A E G
‐2
ES Dur EF 6 50% 8
Activity ID C F
LS TF LF
36
5+(1)=6 14+(‐50%*8)=10
Solution :
6 8 14 ‐50% 10 9 19
B D
6 0 14 11 1 20
1
Min { 14 or
0 5 5 11‐ (‐50%*8)=15} 14 6 20 20 1 21
A =14 E G
0 0 5 14 0 20 20 0 21
‐2 5+(‐2)=3
ES Dur EF 3 6 9 12 3 15
50%
Activity ID C F
LS TF LF 8 5 14 17 5 20
Min { 14 or 17‐(50%*6)=14}=14 37
38
Chapter 8: Resource Management
©2015‐2016
Chapter Outline
Resource Management
Project Scheduling Classification
What is Resource Allocation
Resource Levelling
Working Example
1. Familiarity with resource management in construction project
2. categories of resources in construction project
3. Resource allocation in construction project
4. how resource levelling plays an important role in resource allocation
problem solving
Resource Management
A resource is an entity that contributes to the completion of project activities.
 Project manager will need any resource up to execute the project :
 Land
 people
 Materials
 Equipment
 Site Space
 Storage
 Traffic roads
 Money
National Stadium Construction, Warsaw, Poland, http://www.peri.com.kw 4
Resource Management
• Resources may be considered as:
1. Consumable, such as materials that may be used once only,
2. Non‐consumable, such as people which may be used repeatedly.
• In construction project, we classify resources into three categories:
1. Labor: such as skilled labor, unskilled labor, professionals, engineer, etc.
2. Materials: such as steel, cement, block masonry, gypsum, tiles, etc.
3. Equipment: such as cranes, bulldozers, excavators, etc.
Recourse management:
The process of using a company’s resources in the most efficient way possible (1).
(1) http://www.businessdictionary.com
Project Scheduling Classification
Project schedules can be classified as either:
1. Time‐Driven Schedule
o Activities whose times to completion is dependent on available time.
o Activities’ durations are function of the resources that are required.
o The schedule assumes the availability of resources
o Under project resource constraints, the schedule becomes impractical.
2. Resource‐Driven Schedule
o Activities whose times to completion is dependent on available resources.
o Activities’ durations are function of the resources that are available.
o The availability of resources controls activities’ durations
o Under project time constraints, the necessary resources needed to be allocated
What is Resource Allocation?
Resource Allocation: the assignment of the required resources to each activity
considering both project time and resource availability.
It is also called “ Resource Loading” or “ Resource Assignment”
Resources are specified in terms of:
o the number of resource rate required, e.g., 5 labors, 2 site engineers
o the hours or days that a specific resource is required, e.g., 40 hourly worker
Resource Allocation Problems:
Imbalance, Overloads , resource availability, limited resources and limited time
Resource Levelling
• Resource levelling is minimizing the fluctuations in the daily demand of a resource.
• It applies when it is desired to reduce the hiring and firing of resources.
• multiproject resource levelling is necessary when a resource shared among projects.
• It is usually done by shifting noncritical activities within their available floats.
• A mathematically complex process, Computer programs eliminated the difficulty.
Heuristic Procedure for Resource Levelling
1. Prepare a complete activity schedule.
2. Draw a bar chart of the project under study based on ES timing of the activities.
3. Critical activities to be drawn first (as these activities will not be moved).
4. Write the resource usage above or under each bar of the related activity.
5. Draw the FF as dashed line beside the upper side of the bar and the TF beside the lower side.
6. Aggregate (determine the resource sum) the resources in each time period.
7. Calculate the total usage of resources = Σ unit period usage.
8. Calculate the average resource usage = Σ usage / utilization period.
9. Shift non‐critical activities within their FF first, then their TF to decrease the peaks and raise the
valleys.
10. Revise activities floats.
11. Aggregate resources in each time period after shifting any activity.
12. When shifting activities, it is preferred to start with the activities that have no successors, as
shifting these activities will not affect other activities. Also, by shifting these activities, a float
will be created for its predecessors.
13. Shift activities only that will enhance the resource profile.
10
Working Example :
The activities , durations and resources involved in the construction of a small project are
given the Table W.E. Level (smooth) the resource so that a preferred resource usage is
obtained.
Table W.E: Project activities and resources
11
3 1 4
Solution 1: Activity D
11 8 12
0 3 3 5 7 12 12 6 18
Activity A Activity E Activity I
8 8 11 5 0 12 12 0 18
0 0 5 5 5 6 11 11 4 15 18
PS Activity B Activity F Activity J PF
0 0 0 5 8 3 14 14 3 18 18
0 1 1 1 4 5 4 3 7
Activity C Activity G Activity K
9 9 10 10 9 14 15 11 18
1 3 4
ES Du. EF
Activity H
Activity ID
14 11 15
The project network LS TF LF
12
Solution 1:
Time (week)
Critical
Activities
Non-Critical
Activities
Total resource
per week
Bar chart and resource aggregation 13
Solution 1:
To achieve a resource profile with less resource load at the beginning and build up
towards the middle of the project and decreases towards the end, the following
activities will be shifted:
• Shift activity K by 11 weeks, this activity has a free float 11 weeks.
• Shift activity H by 11 weeks (it has 11 weeks free float).
• Activity A will be shifted by one week, accordingly, activity D will e shifted by one
week. This is because activity A has no free float.
• Shift activity F by 3 weeks and accordingly, activity J will be shifted 3 weeks because
activity F has no free float.
• Finally, shift activity G by 3 weeks.
14
Solution 1:
The table shows Resource histogram

process with bar chart
15
Solution 1:
Resource histogram after leveling, max resource profile usage=25 units
16
Resource Levelling and Scheduling
For more solved examples and
problem. Look at reference reading
Chapters in Course Syllabi Table
17
18
Chapter 9: Project Time‐Cost Trade‐Off
©2015‐2016
Chapter Outline
What is Time‐Cost Trade‐Off?
Schedule Crashing
How to reduce Time in Construction Project?
What are Direct and Indirect Costs?
Project Time‐Cost Relationship
Working Example
1. How both time and cost affect each other in construction project
2. Description of direct and indirect cost in construction project
3. How to define schedule crashing
4. How to shorten original project duration and its influence on costs
What is “Time‐Cost Trade‐Off?
Reduction in both time and cost is critical in today’s market‐driven economy.
This relationship between construction projects’ time and cost is called Time‐
Cost trade‐off.
The objective of the time‐cost trade‐off analysis is to reduce the project

normal duration, determined form the critical path analysis, to meet a
specific deadline with the least cost.
Normal Duration time‐cost trade‐off analysis least Duration

+ +
Normal Cost Schedule Crashing Least Cost
Schedule Crashing
Schedule Crashing (sometimes called schedule acceleration or schedule compression)
means shortening the normal duration of the project to the least duration. (the shortest
possible duration during accelerating a project).
Normal duration is the amount of the duration required to finish the project without any
delay or acceleration.
Normal cost is the cost of a project that is performed within the normal duration.
Normal Duration time‐cost trade‐off analysis least Duration

+ +
Normal Cost Schedule Crashing Least Cost
How to reduce Time in Construction Project?
The project duration can be reduced by the following actions:

• Applying multiple-shifts work.
• Working extended hours (over time).
• Offering incentive payments to increase the productivity.
• Working on weekends and holidays.
• Using additional resources.
• Using materials with faster installation methods.
• Using alternate construction methods or sequence.
How to reduce Time in Construction Project?
In Schedule Network, we can reduce the project duration by:
• Overlapping relationship critical activities

• Using four type relationships between activities
• Reducing duration of critical activities
What are Direct and Indirect Costs?
{Project Cost = Direct Costs + Indirect Costs}
Direct Costs can be classified as those costs that are directly linked to a specific
works, including:
1. Labor
2. Material, such as ( concrete, brick, steel, paint, etc)
3. Equipment, particularly construction equipment ( bulldozer, excavator,
concrete pumps, etc)
4. Subcontractors Costs
These costs can be estimated based on detailed analysis of tender documents, the
site conditions and resource productivity data, construction methods being used
for each activity.
What are Direct and Indirect Costs?
{Project Cost = Direct Costs + Indirect Costs}
Indirect Costs; those costs that are linked to an overall project, including:
1. Project overhead: site‐related costs and includes the costs of site utilities,
supervisors, housing and feeding of project staff, parking facilities, offices. It is
estimated to be between 5% ‐ 15% of project total direct cost.
2. General overhead: These are the costs that used to support the overall
company activities. such as Main company office expenses, Main office
equipment and vehicles, and Main office staff. It can be estimated to be
between 2% ‐ 5% of the contract direct cost.
3. Profit: it is estimated by contract usually between 5%‐10% of total direct cost.
Total project Indirect costs normally ranges between 5% ‐20% of total direct cost
9
Project Time‐Cost Relationship
Cost ($)
Direct Cost
Crash Cost Indirect Cost
Total Cost
Normal Cost
Least Cost
Time (days)
Crash Least- Normal
Duration Cost
Duration
Duration
The effects of schedule crashing on total costs: General Case, in which total cost decreases
with acceleration till a certain point then starts increasing 10
Working Example
Calculate the normal, least‐cost, and crash durations for the following project. Calculate
the cost associated with each duration. Indirect (overhead) costs are $120 per day. (Hint:
accelerate the total project duration by 7 days)
DURATION (days) COST ($)
ACTIVITY PREDESESSOR
NORMAL CRASH NORMAL CRASH
A ‐ 5 4 500 600
B A 7 5 350 500
C A 8 5 800 920
D A 11 7 1200 1400
E B, C 6 4 600 700
F C 4 4 500 500
G D, F 7 5 700 1000
H E, F 6 5 300 420
11
Working Example: Solution
1. Firstly we draw the node network for the project using “normal durations”, then we
will find critical path, and we will also list all possible paths.
12
2. list all possible paths consists of five paths:
PATH DURATION (days)
ABEH 5+7+6+6=24
ACEH 5+8+6+6=25
ACFH 5+8+4+6=23
ACFG 5+8+4+7=24
ADG 5+11+7=23
We have been asked to accelerate the total project duration by 7 days. Therefore,
maximum duration required is equal to 18 days (25‐7=18 days). It means that we
need to shorten all path duration to be equal or less than 18 days
NOTE: we cannot shorten Activity F because Normal duration is equal to its Crash
duration.
13
3. Before starting to accelerate the project, let us prepare ”Time‐Cost Trade‐Off
Calculation Table” for the project, as shown in following Table . The equations used
for the Time‐Cost Trade‐Off table are listed below:
∆ Cost = Crash Cost – Normal Cost
∆ Days = Normal Duration‐Crash Duration
Increased cost per day (Crash Cost per Day) =∆ Cost /∆ Days
Direct Cost = sum of Normal Costs + Increased cost per day
Indirect Cost = Project Duration (days) × Indirect (overhead) costs ($ per day)
Total Cost = Direct Cost + Indirect Cost
14
Time-Cost Trade-Off Calculation Table for the project
DURATION (days) COST ($) ∆ Cost ∆ Days

($) ∆ Cost
ACTIVITY IPA
NORMAL CRASH NORMAL CRASH ∆ Days Days Shortened (1st →7th )
A ‐ 5 4 500 600 100 1 100 1
B A 7 5 350 500 150 2 75 1 1
C A 8 5 800 920 120 3 40 1 1 1
D A 11 7 1200 1400 200 4 50 1 1
E B, C 6 4 600 700 100 2 50 1 1
F C 4 4 500 500 0 0 0
G D, F 7 5 700 1000 300 2 150 1
H E, F 6 5 300 420 120 1 120 1
Days Cut ‐ 1 1 1 1 1 1 1
Project Duration (days) 25 24 23 22 21 20 19 18
Increased cost per day ($) ‐ 40 50 100 140 165 225 270
4950 4990 5040 5140 5280 5445 5670 5940
Direct Cost ($)
3000 2880 2760 2640 2520 2400 2280 2160

Indirect Cost ($)
7950 7870 7800 7780 7800 7845 7950 8100

Total Cost ($)
15
4. We will shorten day by day till we achieve 18 days duration
First Day Cut:
We have to start with the longest path (ACEH),
We choose Activity C because it costs $40/day,
And we cut the duration of C from 8 to 7.
ABEH 24 24
ACEH 25 24
ACFH 23 22
ACFG 24 23
ADG 23 23
16
Second Day Cut:
We choose activity E (Shared Activity) and compress it from 6 days to 5 days
at a cost of $50.
ABEH 24 24 23
ACEH 25 24 23
ACFH 23 22 22
ACFG 24 23 23
ADG 23 23 23
17
Third Day Cut:
We choose activity A (Shared Activity) and compress it from 5 days to 4 days at a cost of
$100. Now activity A is completely crashed. With this action, we spend $100 in direct
costs and saved $120 in indirect costs. The total cost decreased by $20.
ABEH 24 24 23 22
ACEH 25 24 23 22
ACFH 23 22 22 21
ACFG 24 23 23 22
ADG 23 23 23 22
18
Forth Day Cut:
We need to compress the four paths using the least‐cost combination. After simple
mathematical inspection of the table, we find the best combination to be C, D and E
with a total combined cost of $140. The duration is shortened from 22 to 21.
Note that path ACEH was cut by 2 days because it contains both C and E
ABEH 24 24 23 22 21
ACEH 25 24 23 22 20
ACFH 23 22 22 21 20
ACFG 24 23 23 22 21
ADG 23 23 23 22 21
19
Fifth Day Cut:
Now least‐cost combination is B, C, and D at a total cost of $165. In this case the total
cost has increased by $45. Now activity C is completely crashed.
ABEH 24 24 23 22 21 20
ACEH 25 24 23 22 20 19
ACFH 23 22 22 21 20 19
ACFG 24 23 23 22 21 20
ADG 23 23 23 22 21 20
20
Sixth Day Cut:
Now least‐cost combination is B and G at a total cost of $225 from 20 days to 19 days. In
this case the total cost has increased by $105. Activity B is now completely crashed.
ABEH 24 24 23 22 21 20 19
ACEH 25 24 23 22 20 19 19
ACFH 23 22 22 21 20 19 19
ACFG 24 23 23 22 21 20 19
ADG 23 23 23 22 21 20 19
21
Seventh Day Cut:
The remaining option is to combine H and G at a total cost of $270. In this case the total
cost has increased by $150.
ABEH 24 24 23 22 21 20 19 18
ACEH 25 24 23 22 20 19 19 18
ACFH 23 22 22 21 20 19 19 18
ACFG 24 23 23 22 21 20 19 18
ADG 23 23 23 22 21 20 19 18
22
HOMEWORK
Calculate the normal, least‐cost, and crash durations for the following project. Calculate the cost
associated with each duration. Indirect (overhead) costs are $200 per day. (Hint: accelerate the total
project duration by 8 days)
DURATION (days) COST ($)
ACTIVITY IPA
NORMAL CRASH NORMAL CRASH
A ‐ 1 1 800 800
B A 7 4 1000 1600
C A 6 4 300 500
D A 3 2 400 800
E B 3 1 100 200
F B, C 7 5 500 800
G D 8 4 1200 1400
H E 7 6 350 600
I F 5 3 700 850
J F, G 3 2 500 1000
K H, I, J 3 4 450 800
23
24
Chapter 10: Project Control: Time and Cost
©2015‐2016
Chapter Outline
What Does “Project Control” mean?
Basic Control Process Theory
Problems that may Arise During Construction
Time Schedule Updating
Which kind of information is needed for updating schedules?
Working Example 1
What is more important during construction stage?
What is “S – Curve” in construction management?
Earned Value Analysis
Working Example 2
2
1. The objectives of a project control
2. The basics of how a construction project control works
3. The process of preparing time and cost baseline for construction project
and how to control them
4. How to properly measure analyze project performance data
What Does “Project Control” mean?
The PMBOK® defines Project Control with the following statement:
“A project management function that involves comparing actual
performance with planned performance (Baseline) and taking
appropriate corrective action (or directing others to take this action)
that will yield the desired outcome in the project when significant
differences exist.”
Basic Control Process Theory
Problems that may Arise During Construction
• The project mostly face time delays and/or cost overruns. the factors that
may cause such problems:
o Change in activity durations and quantities.
o Sudden changes of the availability of resources.
o Change in the scope of the work
o Bad weather conditions
o Unanticipated accidents
o Technical mistakes in construction process
o Change in governmental regulations and laws
• Therefore, Controlling needs to be done for:
o project time schedule (Time Baseline)→ Regularly Time Schedule Updating
o project cost (Cost Baseline) → Bill Change Orders; Engineering Earned Value
Time Schedule Updating
What is a baseline schedule?
• Baseline schedule (target schedule) is a schedule prepared by the contractor,
usually before the start of the project, and used for performance comparison.
• The baseline schedule usually becomes a part of contract documents if it is
approved by the project owner.
What is an updated schedule?
• Updated schedule is a frequently revised schedule reflecting project information
at a given data date regarding completed activities, in‐progress activities, and
changes in the logic, cost, and resources required at any activity level.
• Data date (status date) is the date as of which all progress on a project is
reported.
Which kind of information is needed for updating schedules?
A. Past information;
It includes the followings:
1. Activities that have started, and the actual start date, percent complete, and remaining
activity durations
2. Activities that are complete, and the actual complete of each activity.
B. Future information;
this comprises any changes to the schedule or schedule related items. Such as the following:
1. Any activities that have been added with their information (duration, logic, constrains, etc).
2. Any activities that have been deleted (the schedule must be sure to maintain proper logic
after the deletion.
3. Activities that have been changed their information (duration, logic, constrains, etc).
4. Any changes to the imposed finish date for the entire project or the constraints date for
certain milestones.
8
Working Example 1
The baseline schedule has been already prepared for a project as shown in Figure 1. 10 days after the start
of the project, the following information is received:
• Activity A and D are complete (actual start and finish given).
• Activity B started on day 5. Remaining duration is 2 days.
• Activity C started on day 2. Some problems were encountered. Remaining duration is 4 days.
• The duration for activity F was adjusted to 8 days.
• Activity J has been cancelled.
• The duration for new activity O is 4 days. IPA = E and ISA (immediately succeeding activity) =K.
Do the following:
• Draw the updated network. Calculate the new project completion date.
• Tabulate the summary of information of both baseline and updated schedule.
• Show both baseline and updated schedule using bar chart graph
• Check whether any change in the critical path.
Working Example 1
10
Working Example 1: Solution
11
12
13
14
What is more important during construction stage?
• Knowing where you are on schedule?
• Knowing where you are on budget?
• Knowing where you are on work accomplished?
• Knowing if you earned or lost money.
Therefore, Various techniques are usually used
for cost control such as S‐curve method and
earned value analysis.
15
What is “S – Curve” in construction management?
It is defined as a curve of cumulative
project cost plotted against time. The S Cost
curve can be considered as an indicator
of performance achieved, baseline of
both costs and time project.
cumulative
baseline cost
time “Project Duration”
16
Earned Value Analysis
• Earned value analysis (EVA) is an integrated cost‐schedule approach used to
monitor and analyze the progress of a project.
• Earned value technique involves a combination of three measures:
1. Planned Value or Budgeted Cost of Work Scheduled (BCWS):
representing the contract baseline schedule and budget of the project.
2. Earned Value or Budgeted Cost of Work Performed (BCWP):
representing the ‘‘earned value’’ (i.e., the contract earning for performed work).
3. Actual Cost of Work Performed (ACWP):
representing actual budget spending by the contractor
NOTE: Using these three measures, different project performance indicators can be
calculated.
17
Other indicators are:
1. Schedule Variance in $ (SV, $)
it is the difference between the earned value (BCWP) and the planned budget cost
(BCWS).
SV = BCWP – BCWS; SV > 0 indicates ahead of schedule
2. Schedule variance in days (SV, days)
SV , days =SV ($)/Daily planned budget
3. Cost Variance (CV)
it is the difference between the actual cost (ACWP) and the earned value or the budget
cost (BCWP).
CV = BCWP – ACWP; CV > 0 indicates cost saving
18
4. Percent Complete (%Complete): the ratio of completed work at a data date to the total
planned work
%Complete = completed work / total work
5. Forecasted cost variance (FCV), The estimate cost variance at completion of the project
FCV= CV/ %Complete
6. Forecasted schedule variance (FSV) The estimate time variance at completion of the
project
FSV = SV in days/ %Complete
19
Illustration of measures and indicators along the project performance
days
Data date 20
Working Example 2
A subcontractor agreed to install 30 automatic garage doors in 90 days at a contract price
of $800 per unit. Twenty days later, the subcontractor has finished 8 doors with an actual
total cost (that includes his overhead and profit) of $6,800. What is the status of the
project? (Assume the subcontractor works on one unit till it is finished then starts the
next unit and so on. Assume linearity of progress)
21
Budgeted Cost of Work Schedule (BCWS):
• Total planned budget = 30 units * $800 each = $24, 000
• Daily planned production= 30 units/90 days=0.33 units per day or 3 days per unit;
• Daily planned budget = $24, 000/ 90 days = $266.67 per day
After 20 days:
the subcontractor’s plan calls for 0.33 units/day * 20 days = 6.66 units to be finished
BCWS at 20 days = 6.66 * $800 = $5,333 ( it has already been planed to be earned from
the owner)
Budgeted Cost of Work Performed (BCWP):
After 20 days; the subcontractor actually finished 8 units
so BCWP at 20 days = 8 * $800 = $6,400 ( he earned from the owner)
% complete = Complete units/ total units= 8/ 30 = %26.7
22
Actual Cost of Work Performed (BCWP):
the subcontractor actually spent ($6, 800) on 8 units
Cost Variance (CV)
CV = BCWP ‐ ACWP = 6, 400 – 6, 800 = ‐$400 (over budget at day 20)
Schedule variance in $ (SV, $)
SV= BCWP ‐ BCWS = 6, 400 – 5, 333 = $1, 067
Schedule variance in days (SV, days)
SV in days = SV in $/ Daily planned budget= $1, 067/$266.67 = 4 days
Forecasted cost variance (FCV)
FCV= CV/ %Complete = ‐$400/26.7% = ‐$1,500 ( estimate over budget at the end )
Forecasted schedule variance (FSV)
FSV = SV in days/ %Complete = 4/ 26.7% = 15 days (ahead of time schedule)
23
From simple observation, we can tell the following:
• The project is 26.7% complete.
• The project is ahead of schedule by 4 days (planned to finish 6.66 units in 20
days but finished 8).
• The project is over budget by $400 (earned $6,400 but spent11 $6,800).
• If work continues at the same pace and pattern, the contractor will finish
this project 15 days ahead of schedule but with a budget deficit of $1,500.
24
25

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ENGINEERING MANAGEMENT AND ECONOMY COURSE BOOK ©2018-2019

Civil Engineering Department

Subject: Engineering Management & Economy (EN5307)

Mr. Muhammad Arf Muhammad

Academic Year: 2018-2019

1. Course Title Engineering Management & Economy

11. Course Objective

12. Student Obligation

13. Forms of Teaching

14. Assessment Scheme

TYPE OF ASSESSMENT DURATION (MINUTE) % WEIGHTING MARK NO. OF QUESTIONS DATE

15. Student Learning Outcome

16. Course Reading List and References

▪ Key Reading References

▪ Magazines and review (internet)

▪ Useful computer programs

17. Course Topics

NO. TOPICS READING REFERENCES WEEKS

18. Practical Topics

2. True or false type of exams:

20. Extra Notes

(1) Read more: http://www.businessdictionary.com

 It gives society a wide range of work opportunities.

 Generally there are four construction industry sectors:

• This sector is highly competitive, with There are numerous high-rise apartments in Navi Mumbai, India,

Design Stage Bidding (Tendering) Stage Construction Stage

• Mistaken estimated quantities expose the owner to unbalanced bid and

• There will be change order during actual work

Owner Owner agreed to pay None, the

Cover sheet sample

Design‐Bid‐Build Construction Management Design‐Build

Price Qualifications Qualifications and Price

Low‐Bid Price Lowest Price

A 3 500,350 Pass Pass Pass Pass Pass Fail Fail

A 3 500,350 67.19 86.69

This contract form covers the following process:

1. Tendering and contract agreement process

Tendering Construction Maintenance

Tender Bonds Tender Tender Tender Bonds

Tender Bonds Test and Inspections Bill of Quantity (56)

Refuse of work Payments (62) Change Order

3. Maintenance Process Final certificate of

2 80cm Pipe m. L 1,750 60 105,000 55 96,250

o Change in material quality and drawings

GENERAL CONDITIONS FOR CONTRACTS OF CIVIL ENGINEERING WORKS‐ PARTS I & II,

General Framework for the planning process

Level 1The Project To construct a 5-unit

Level 2:Divisions Site Preparation Foundation Structural Systems Finishing

Level 3:Sub‐Divisions Survey Soils Analysis Excavate Soil Backfill & Compact

Level 4:Work Site Boundaries Elevation Building Locate

Start Finish Start Finish

Predecessor Successor Predecessor Successor

Backward Pass Calcula on (←) ES Dur. EF

Free Float and Interfering Float

For activity C: min 11, 13 11 0

For activity E: min 22 19 3

For activity C: Int. F=TF-FF=5-0=5 days=TF

A Pile & Cap West - 8

Bar Chart for the Bridge Based on ES and EF of Activities