CIVL108

UNIT II
Construction Project
Management
Site mobilization and demobilization
aspects

Mobilization:
Activation of a contractor's physical and
manpower resources for transfer to a
construction site until the completion of the
contract.
 1.1 Description: The Contractor shall provide all labor and
equipment costs necessary to move personnel, equipment, supplies
and incidentals to and from the Project Site, establish offices,
buildings, and other facilities necessary for the Work, obtain bonds,
required insurance and any other pre-construction expenses
necessary to perform the Work. This section shall exclude the cost
of construction materials.

 1.2 Arbitrary Mobilization by Contractor: The Owner shall

pay for only one mobilization and demobilization effort. Should the
Contractor demobilize prior to completing the Work, subsequent
remobilization shall be performed at no cost to the Owner.
 1.3 Ratio of Mobilization (60%) and Demobilization (40%)
Effort: Sixty percent (60%) of the mobilization/demobilization
lump sum price will be paid to the Contractor upon complete
mobilization to the Project Site. The remaining forty percent
(40%) will be paid to the Contractor upon final acceptance of the
Work and removal of all equipment and unused materials and
return property to original condition or better.

 1.4 Justification of Costs: In the event the unit cost does not
bear a reasonable relation to the amount of work for
mobilization and demobilization in the Contract, the Engineer
may require the Contractor to produce cost data to justify the
unit cost in the Bid.
 Failure to justify such cost to the satisfaction of the Engineer

will result in payment of actual mobilization costs, as

determined by the Engineer at the completion of mobilization,

and actual demobilization cost at the completion of the

demobilization, and payment of the remainder of this item in

the final payment under this contract. The determination of the

Engineer is not subject to appeal

 1.5 Measurement and Payment: Payment for mobilization
and demobilization shall be paid for at the contract lump sum
price for Bid Item No. 1, “Mobilization and Demobilization”.
Payment shall constitute full compensation for moving
personnel, equipment, supplies and incidentals to and from the
job site and establishing offices, buildings and other facilities
for the Work, obtaining bonds, insurance and any other
associated expenses.

 No payment will be made to the Contractor for final

demobilization until the accepted As-Built surveys have been
approved by the Engineer as required
 ASPECTS OF MOBILIZATION PHASE
 Legal and contractual issues: The contractor may be required to
make a number of arrangements for various kinds of ‘paperwork’ as part of
the pre-construction mobilisation. Such as: Permits, consents and
licences, Local, regional and sometimes national authorities may require the
issuance of permits for various aspects of the project.
 Approval of applications for these permits, called consents in some
countries, must be secured prior to specified stages of the project. Whether
the contractor is directly involved depends on regulations and the owner’s
wishes. If not already obtained by the design professional, the contractor will
be required to obtain a building permit; often this permit is issued by a state
public safety official. Such permits or consents are formal authorization that
the work can proceed; they contain appropriate conditions and confirm the
requirements for public authority inspections as the work is carried out.
 Work breakdown structure: To begin the preparation
of a detailed project schedule, the contractor will prepare a
work breakdown structure (WBS). Its purpose is to define the
various work tasks that must be completed.
✓ The WBS has been variously defined as ‘a product-oriented
“family tree” of work effort that provides a level-by-level
subdivision of the work to be performed in a contract’
 Bar charts: Traditionally, bar charts have been the most
popular methods for presenting construction project schedules,
especially for small projects.
✓ Even today, many contract documents require the contractor to
furnish the owner with a bar chart indicating how the various
activities will be carried out so as to complete the project by the
target completion date.
 Network schedules: Since the late 1950s, a network-

based approach to developing schedules has seen increasing use

for all kinds of projects, including construction projects. Project
activities are related to each other on a network, showing the
order in which they are intended to be performed.

▪ The duration of each activity is estimated and calculations

determine the timeframe within which each activity can be
performed and the time at which the project can be completed.
In addition, the calculations identify those activities that are
most critical in establishing that completion time.
 Resource analysis
 Cost analysis and cost control
 Operations modelling
 Organizing the worksite: An important activity as the contractor
begins work in the field is to set up the site in a manner that will
allow the work to proceed efficiently and effectively. Every job is
unique, so guidelines for efficiency and effectiveness are difficult
to spell out in general terms. However, a brief discussion of the
various elements of worksite organization will be useful.
✓ A well-organized jobsite can have a positive influence on the
productivity of the entire project, from the delivery of materials
to the handling of these materials as they are installed and from
the manner in which workers move about the site to their personal
needs and safety.
 Temporary services and facilities: Offices, Workshops
and indoor storage, Dry shacks (These temporary facilities
provide places for workers to store and eat their lunches and to
change their clothes.

✓ They need not be elaborate, but they ought to be located

conveniently to the work and be clean, adequately lit and
relatively comfortable), Temporary housing and food service,
Temporary utilities (electric power, water and communication.),
Sanitary facilities, Medical and first aid facilities, Access and
delivery, Security and signage, The site layout plan.
 Access and delivery.
✓ Like any other community, the worksite must be planned
so that it has adequate access to it and within it for the
movement of people and the delivery and handling of
materials. Access matters therefore are closely related to
the planning of temporary facilities and storage and
laydown areas. Access roads to the site must be planned
so that they give direct access to storage areas,
installation areas and entries to worksites.
✓ Especially in busy urban areas, such planning also must
consider the effect on existing traffic patterns, with the
potential for developing undesirable waiting lines of
delivery vehicles and disruptions due to oversize trucks
and loading equipment.
 Buying out the job
✓ The term buyout, in the context of construction
project mobilisation, refers to procuring the materials
and equipment that will be installed in the project and
arranging subcontracts. It includes both selecting
suppliers and subcontractors and finalising their
purchase orders or subcontracts.
✓ The process begins during the tender preparation
stage, as the contractor solicits and evaluates offers in
the process of assembling the cost estimate. If the
contractor is successful with its proposal and is
awarded the contract, it then attempts to contract
with the firms that submitted the most favourable
offers.
 Project staffing: To carry out the work in the field
requires people and those people must be organised
in effective relationships.

✓ This section considers the organisation structure at

the worksite and the sources of the labourers whose
hands, minds, tools and equipment will assemble the
final product in the field.
PROJECT DEMOBILIZATION
PHASE
The project is almost complete! Before it can be declared finished,
however, a number of activities must take place and several
responsibilities must be fulfilled. Many contractors are guilty of
putting too little emphasis on this final phase in the construction
project life cycle, choosing instead to look beyond the end of the
current project and on to the next project. A sage observer of
project management has said ‘Projects proceed smoothly until 95%
complete, and then they remain at 95% forever!’
While many explanations of the difficulties in terminating projects
effectively are plausible, we can name at least two.
(1) Wein the design and construction professions tend to try for
perfection; we want the job to be perfect before moving on,
when a standard less than perfection is sufficient.
(2) The
project environment is familiar and comfortable, so there is a
reluctance to ‘let go’ and move to the next project, especially if
there is no immediate prospect for a next project.
 Thus, the construction manager must deal with both the
tendency to look beyond the project termination activities and
on to the next project, which leads to neglect of this phase and
the reluctance to terminate the project, resulting in
inefficiencies in executing the many activities required at this
phase.
 The project closeout and termination phase can be thought of
as a project unto itself. Often termed commissioning, this phase
must be planned and programmed, tasks must be assigned, the
phase must be executed effectively and its costs, schedule and
quality must be controlled. On large projects, a specialist team
is often engaged to assure that project closeout is carried out in
the best manner possible. We have chosen to divide the tasks
into two categories:
(1) Completingthe work, which includes the physical activities
that must be accomplished on the site and
(2) Closing
out the project, involving the multitude of required
documents and other paperwork issues, some related
obviously to finances but others to certificates, project
records and provision to the owner of the required training,
operational information, spare parts and the like.
 Closing out the project
1. Subcontractor payment
2. Final release or waiver of liens
3. Consent of surety
4. Final quantities
5. Request for final payment
6. Liquidated damages
7. Final payment and release of retainage
8. Final accounting and cost control completion
9. Certificates
10. As-built drawings
11. Operating and maintenance manuals
12. Records archiving and transfer
13. Training sessions
14. Warranties, guarantees and defects liability
period
15. Post-project analysis, critique and report
16. Owner feedback
17. A closing comment
 CLOSING OUT THE PROJECT
1. SUBCONTRACTOR PAYMENT
 One of the things the contractor must do before it can receive its
final payment, including any retainage that has been withheld, is to
complete paying its subcontractors. Thus, as the project nears
completion, the contractor must work with each subcontractor to
determine the amount of work remaining and its value, the
approximate completion dates for the remaining work, the amount
of payment due, including any retainage amounts withheld by the
contractor and any disputed claims or payments.
 As noted above, remaining work in identified formally on the
subcontractor’s punch list. The contractor may have performing
services for a subcontractor, such as providing short-term use of
lifting equipment or performing cleanup or hauling services for the
subcontractor.
2. FINAL RELEASE OR WAIVER OF LIENS
 A lien is a claim against property that can be filed by material
suppliers, subcontractors, individuals and, in some cases, design
professionals, that helps to assure that the filer of the lien will be
paid.
 Lien laws vary widely in different jurisdictions as to when they
may be filed, for how long they are in effect and what rights the
various parties have in the lien process and in the USA at least,
liens cannot be filed against public property.
 If a material supplier is having trouble being paid by the
contractor, for example, the supplier may file a lien against the
facility being constructed. Because the facility has some value,
the owner of the property may be required to make the payment
if the contractor fails to pay, especially if there is no payment
bond to protect the owner.
 The astute owner does not wish to be burdened with the
possibility of such a filing after the project is completed
and therefore will insist on a lien release or lien waiver as a
condition of final payment to the contractor.

 Such release indicates that potential lien holders have been

paid in full and thus the owner will not be liable for
payments the contractor should have made.

 The owner may require lien releases from subcontractors as

well or it may require that the release provided by the
contractor cover subcontractor liens.
3. CONSENT OF SURETY
 On projects that require a payment bond from the contractor, the
owner normally requires a consent of surety for final payment
prior to making final payment to the contractor. This completed
form is issued by the bonding company and assures the owner that
the surety company approves of the payment to the contractor.
 The surety can audit the contractor’s records to verify that no
unexpected financial obligations exist prior to issuing the release.
Since the payment bond guarantees that the contractor will pay
its obligations, an owner, making final payment before the surety
has given consent, could be placed in a vulnerable position if the
contractor fails to pay its workers, material suppliers or
subcontractors.
 Protection provided by the bond ceases upon final payment and
the contractor could abandon its payment obligations if such a
release were not provided by the surety.
4. FINAL QUANTITIES
 The type of contract determines whether the contractor and owner
must monitor and agree upon quantities placed into the project. Under
a lump-sum/fixed-price contract, the contractor will be paid its
contract price adjusted for variations (change orders) regardless of the
actual quantities used. If the contract is of the cost-plus type, the
contractor must provide documentation for its actual reimbursable
costs, as provided in the contract.
 In the case of a unit-price/measure-and value contract, the parties
must measure the quantities actually put in place, for periodic
payments throughout the project and for the final payment. Means for
measuring these quantities depend on the item being measured. If
payment for a roadway embankment is based on in-place volumes of fill
material, for example, a field survey will be conducted to ascertain
final profiles and lengths of the various sections and a comparison with
the profiles before the material was placed will lead to the
determination of the embankment volume.
5. REQUEST FOR FINAL PAYMENT

 No matter what kind of contract, the contractor’s final payment

is equal to the total contract price minus the total of all
previous periodic payments made by the owner. The form of the
request is, therefore, similar to that used for all the previous
partial payment requests.
 However, as discussed in previous sections, for final payment the
contractor must comply with a number of special stipulations
and provide evidence with its payment request.
 In addition to the testing and startup work, final cleanup,
completion of punch list items, locks and keys, closure of the
construction office, subcontractor payments, lien release and
consent of surety already described, various other certificates
and documents will be needed.
 Other evidence that may be required includes affidavits
stating that all payments related to the project have been
made and a certificate indicating that any required insurance
will be in effect for the stipulated time period after project
completion.

 The work covered by the request for final payment will

include any work resulting from variations (change orders).
Claims and disputes ought to be resolved by the time of this
request; if they are not, the request must contain a
statement that it is presented subject to the resolution of
these matters.
6. LIQUIDATED DAMAGES
 Once the beneficial occupancy date has been established, the parties
can determine whether liquidated damages are to be assessed against
the contractor, by comparing that date with the completion date
established in the original contract or by any extensions thereto.

 The amount of these damages, to be assessed by reducing the final

payment, is calculated simply as the product of the daily liquidated
damages amount stated in the contract and the number of days late.
If the contract provides for a bonus for early completion, that amount
will be calculated in the same manner and will be added to the final
payment.
 In some contracts, liquidated damages are assessed against
portions of the work and bonus payments may be figured in
the same way.

 The New Zealand Conditions of Contract for Building and

Civil Engineering Construction (Standards New Zealand
Paerewa Aotearoa, 1998) include an important provision
regarding liquidated damages: ‘Payment or deduction of
liquidated damages for late completion shall not relieve the
Contractor from any of its other liabilities or obligations
under the contract.’
7. FINAL PAYMENT AND RELEASE OF RETAINAGE
 If all punch list items have been completed, all certificates,
affidavits and other documents submitted and in good order
and all other obligations completed, the contractor’s request
for final payment ought, finally, to be honored. Included with
this payment should be the retainage that has been held by
the owner pending satisfactory completion.
 Note that if 10% has been retained throughout the project
the released retainage will be a substantial portion of the
project budget. Many contracts provide, however, for
reduced amounts of retainage as the project nears
completion. When the owner makes final payment and
releases retainage to the contractor, both parties waive most
of their rights to make further claims against the other.
 Exceptions include the right of the owner to claim relief
due to faulty or defective work or failure of the work to
comply with contract requirements and the imposition of
the terms of any special guarantees required by the
contract documents. The contractor also waives its right to
further claims except any that might have been filed
previously and remain unsettled
8. FINAL ACCOUNTING AND COST CONTROL COMPLETION
 Was the project a financial success? What profit did the
contractor make from this endeavor? Which portions were
successful?
 Which did not meet budget expectations? Only after all of the
above steps have been completed can the contractor obtain an
accurate picture of the project’s final financial status from its
point of view. An effective cost control system will be able to
compare the actual cost of each work item with its estimate and
identify the reasons for any variances, which may be either
quantity or rate variances.
 A quantity variance results from an actual quantity different
from that estimated, whereas a rate variance occurs because the
cost per hour, per pound or per linear meter is different from the
estimate.
 Note that quantity variances are less important to the
contractor in unit-price (measure-and-value) contracts and
cost-plus contracts than they are in fixed-price/lump-sum
contracts.
 It is suggested that any variance of 10% or more above or below
the estimate ought to incur special analysis (Mincks and
Johnston, 1998). Because the actual costs become part of the
historic cost database, unusual conditions that led to large
variances need to be recorded, so that future tender estimates
do not rely too greatly on these abnormally high or low costs.
 The contractor’s organization ought to have a standard form on
which summaries of project costs are reported, so that
executive management personnel can make valid comparisons
with similar previous projects and use the experience to make
informed decisions about future projects.
9. CERTIFICATES
In connection with the procedures described above, several certificates
may be issued. We describe five such documents.

A. Certificate for payment

The General Conditions of the Contract for Construction (American

Institute of Architects, 1997) provide for the architect to issue this
certificate in response to the contractor’s request for payment, if the
architect believes that ‘the work has progressed to the point indicated’
and the ‘quality of the work is in accordance with the contract
documents’. If these conditions are met, such a certificate can be issued
for each periodic payment request and for the request for final payment.
B. Contractor’s certificate of completion
 Some contracts provide this form as a means for the contractor
to notify the owner formally that the project is complete. One
such format includes the following wording, to be signed by an
executive officer of the contractor’s organization:
I know of my own personal knowledge, and do hereby certify, that
the work of the contract described above has been performed,
and materials used and installed in every particular, in accordance
with, and in conformity to, the contract drawings and
specifications. The contract work is now complete in all parts and
requirements, and ready for final inspection.
 A producer statement provides the same function; one version
allows the contractor to notify the owner that either all of the
project or a portion described by appropriate attachments is
complete
C. Certificate of substantial completion
 Substantial completion is that stage in the progress of the work
when the work or designated portion thereof is sufficiently
complete in accordance with the contract documents so the owner
can occupy or utilize the work for its intended use. (American
Institute of Architects, 1997) By this definition, substantial
completion marks the beginning of beneficial occupancy. Issuance
of this certificate by the owner or its design professional follows
the final inspection. The notion of ‘substantial’ completion is that
some punch list items remain to be completed after the final
inspection; thus the project is not yet fully complete, even though
the owner can use it for its intended purpose.
The certificate of substantial completion includes this list
of items yet to be completed. As noted in the previous
discussion of beneficial occupancy, the date of
substantial completion fixes the point in time at which

 (1) warranties provided by the contractor commence

and

 (2) no further liquidated damages may be assessed.

The term practical completion is used in some
contracts to refer to this same point in the project
closeout and termination phase.
D. Certificate of completion
 When any deficiencies noted on the certificate of substantial
completion have been remedied, a certificate of completion may be
issued. This certificate is similar to the previous one, except that it
contains no list of deficiencies. If the final inspection concludes that
no deficiencies exist, the certificate of substantial completion will
not be needed.

 Many owners dispense with the certificate of completion, believing

that the certificate of substantial completion, followed eventually by
the contractor’s request for final payment when deficiencies have
been resolved and other documents are in place, provides sufficient
protection and notification.
E. Certificate of occupancy
Some localities or other jurisdictions require
inspections by public agency officials of such life
safety parts of the work as lifts, fire protection
systems, handicapped access and sewage systems. In
this case, the regulations require that the
appropriate authority issue a certificate of occupancy
prior to occupancy by the owner if it finds the facility
acceptable.
THANK YOU!