UNIVERSITY OF GONDAR

INSTITUTE OF TECHNOLOGY
Dep’t Of Civil Engineering

Construction Management
BY TEZERA .T
 Chapter two

CONSTRUCTION INDUSTRY
• Construction Industry is an industry which is involved
in the planning, execution and
evaluation (Monitoring) of all types of civil works.
Physical infrastructures such as Building,
Communication and Energy related construction
works; Water supply and Sewerage civil
works, etc are some of the major projects / programs
in the construction Industry.
• The Construction Industry can be
categorized into three major sectors;
namely,
a) Transport and Communication (Road,
Railway, Airway, and Telecommunication
related physical works);
b) Water and Energy Works ; and
c) Buildings and Other Physical
Infrastructures. Accordingly, their capital
budget requirements vary extensively
depending on the focus the economical
trend requires for the nation development.
 Nature of the Industry
Construction Industry has long been realized as one
among the most important enablers for
social, economic and political development of
countries. Specifically this fact is strengthened
in the case of least developing countries like
Ethiopia.
 …con’t
 The execution of construction activities may be
defined as economic and social activities
engaged in producing, assembling, installing for
either new or existing physical
infrastructures. This indicates that the construction
process encompasses an industrial process
to account for its name, the Construction Industry
 CONT….

 However, most construction activities

involve considerable on site productions where the
characteristics for industry processes
could not apply. This will be more applicable in the
cases of countries like Ethiopia where use
of manufacturing construction elements for
assembly is largely minimal.
 …con’t
 That is use of Labor
Intensive and Construction On-Site dominated
the way how construction executions are
carried out. As a result, Construction Works
can more represent the case of construction
activities in the case of least developing
countries than Construction Services.
 …..Con’t

REFER FROM PDF FILE

Construction Industry is unique from
the other industries due to the
following facts:
i. Fragmented Industry
ii. Long Production Cycle
iii. Transient Organization Nature
iv. Unpredictable Work Load
v. Subject to Environmental Impact
 Role of Construction Industry in the National
Economy

Recent facts showed that while Transport

and Communication sector consumed not
less than 70% of the capital budget allotted
for the Construction industry; Buildings
covered only about 13 %. Besides, about
58.2% of the federal capital budget of
Ethiopia is channeled to the
development of Physical infrastructures.
 …con’t

Considering the allocated budget every fiscal year

and the number of workmen involved,
construction industry is second only to agriculture
in Ethiopia.
Refer to Table 2.2 for detailed budget allocation for
the different sectors between the 1997/98 –
2001/02 fiscal years.
 Main Parties in the Construction
Industry
 The main players in the construction industry:-
The Client: The client is the initiator and owner of
the project
The Consultant: The consultant transfers the wish
of the owner into realizable form and makes the
study, design and possibly the supervision.
The Contractor: The contractor is the one who
performs the work.
 Insurance Companies
A Contractor is required to provide bid
bonds as a condition of being
allowed to bid, and then they must provide
insurance for Performance bonds and
payment bond prior to award of the
contract. Insurance companies provide bid
bonds, performance and payment bonds,
Banks: Banks provide the working capital

contractors need to build the project. Banks

also provide bonds for bid and performance.

Suppliers: The quality of a construction

project is very dependent on the quality of

the suppliers used by individual contractors.

 Permitting Agencies: These agencies represent
the interests of public safety. They administer
publicly funded construction projects, and they
ensure private construction projects comply
with zoning laws and building codes.
Public: The public is impacted by every
construction activity. Impacts are both good and
bad.
 Duties and Responsibilities of main parties
The duties of the following main participants will be
dealt in the sections to follow:
• The Client – the initiator
• The Consultant – the professional advises
• The Contractor – the one who constructs
 The Client

 The client is the most important party who is active

from inception to completion and even
to post-occupancy maintenance.
Clients can be classified as Public Sector Clients
and Private Sector Clients.
 A. Public sector clients
These represent:
 Central government offices
(ministries)
 Local authorities (Regional or
town)
 Public corporations
 B. Private Sector Clients

 These are private individuals & private

companies.
 Role of the Client:
The client, as the initiator of the project
should consider the following factors, when
planning:
• Demand for the product (Bldg, road, etc) -
must see to it that it has a return
• Availability and cost of land, particularly for
bldg. projects:
 …con’t
o Size
o Location & accessibility
o Price
o Required Infrastructure
o Legal constraints
 The Consultant
 The main role of the consultant is to interpret the
client’s project requirements into a specific
design.
The consultants’ team shall:
• Ascertain, interpret and formulate the client’s
requirement into an understandable project.
• Design the project to much requirements and
constraints (imposed by statutory obligations,
technical feasibility, environmental factors, site
conditions, cost, etc)
 Assess client’s cost limit to decide on
materials & the like.
• Prepare contract documents.
• Supervise the project and constantly
inform the client on the progress
• Approve payments
• Resolve contractual disputes
• Issue provisional and final acceptance
certification
 The Contractors
 These are groups established mainly as
commercial companies, that contract to
construct development projects.
Responsibilities of Contractors:
• Carry out a full site investigation prior to
submission of tender. This helps to know
the costs of contractual risks and problems,
• Submit tender,
Plan & programme works and even re-
programme, whenever unforeseen situation
occur,
• Control directly employed works, sub
contractors, suppliers, materials and plant,
• Control project program & cost,
• See to it that completed works comply with
the specification and are to the
satisfaction of the consultant,
• Notify the consultant about delays,
discrepancies,
• Effect all payments to his employees,
suppliers, subcontractors, etc
• Rectify all defects on completion of
works,
• Provide post occupancy repair &
maintenance if required,
 Public Sector Agencies
• These are organization set with the authority
to sum public utilities or provide local service.
They are:
A. Statutory Authorities
These bodies offer technical advice during
design and construction in their respective
areas.
E.g. EEPCO, AAWSA, Fire authority - requires
meeting their specific requirements. Thus
early information to these authorities is
required.
 B. Municipalities & Government Authorities
• These bodies offer the basic Land permit
and building permit. The responsibilities of
these authorities are:
- prepare development plans (site etc) to
benefit the public
- ensure that all plots and likes are put to the
intended use
- approve and control standards
- provide land and building permits
- Check on material quality and safety
 Resources for the Construction Industry
• For most of the construction projects, the
resources to look into are the following;
1. Human Resources / Labor or Workmen
2. Financial Resources / Fund
3. Information Resources
4. Physical Resources such as Materials,
Equipment and Other Assets
• 5. Services and Management.
• Human Resources / WORKMEN / Labor: All
works involved, including the operation of
equipment can not be executed without
human labor. Labor in the form of technical
and managerial personnel and work forces in
various trades and professions are essential
to carryout projects efficiently and effectively.
All other resources are coordinated and
generally the work itself is executed by labor.
Therefore careful planning, organizing and
monitoring of workmen
are mandatory.
• These resources are very much necessary
and for the successful accomplishment of a
project, the availability of workmen from the
top management including project manger to
the daily laborer staff level is very vital. These
include professional, skilled, semi skilled and
unskilled laborers.
Human resources can be understood in two
values: Capacity and Capability. While the
first refers to the quantity of labor for the
scope defined; the second covers knowledge,
technology know-how and skill as per the
demands of the scopes ability.
Human resources need to be attracted, selected,
developed, motivated and retained if an
organization needs to successfully
accomplish project objectives. They do need
also be capable of:
 Communication – Inter - personal, group
interaction – skills
 Problem solving / Conflict resolution /
Negotiation Skills
 Facilitating / Decision – making Skills
 Writing skills for Proposals / Reports / ToRs /
MoUs; and
 Hard Skills – Planning, Implementing, Leading
• Financial Resources / FUND: It is obvious that
one of the basic resources in the construction
industry is Fund, which should be arranged
before starting any project. The project to be
conceived shall be with in the fund available for
it. Usually funds are available from among
Governmental institution, Private institutions
and Donors in the form of loan or assistance.
• Information Resources: Information can be
understood in two terms: data whether
processed or not; and its technology. Both
are vital for the successful implementation of
projects. Contextual information, data useful
for estimating duration and costs; etc are
some of informational resources used in
projects.
• Information technology both the hard and
soft wares have brought the processing and
management of such information becomes
important and helpful in facilitating the
comparison of several alternatives.
• This helps in optimization or maximization of
uses of project resources. As a result,
informational resources need to be
managed. PMIS, MProject, Thinktool, etc are
some of the soft wares developed in
managing information resources.
 :
Physical Resources
• MATERIALS: The very large portion of a
project cost is gone to material cost. As the
material cost component of the construction
industry covers between 55-70% of the total
construction cost, proper consideration shall
be given in the planning stage to design with
easily available material with out
compromising the quality for the intended
purpose and for proper flow and
storage of materials.
• Care shall be provided for materials easily
spoiled by climatic and expiry
conditions. This undoubtedly will affect the
project if not properly managed.
EQUIPMENT: These days various plants,
equipment, tools etc., are used very often
in construction activities. Provision of
equipment replace the hard work that can
be made by human labor taking much time
with in reasonable period of time.
Therefore it increases
efficiency and economy.
• Its initial cost though high, it works for long
period of time under adverse conditions
with less manpower than working in its
absence which will result to be
economical for long term investment.
Depending on the types and nature of
construction,machinery at site includes
batching plant, mixers, trucks, tractors,
excavators, dampers, cranes,
vibrators, pumps etc.
• OTHER ASSETS: Physical Infrastructures
and Owned Land are assets which can be
collaterals
for capital base enhancement and credit
facilities and are useful to develop the
scarce financial
resources and getting into business
access.
• Services and Management:
SERVICES: Services such as acquisition
of land, provisions of water supply, electric
power, communication systems, etc., are
very much necessary in the construction
industry. Without acquiring such services,
it is too hard to implement construction
activities successfully.
Therefore, well thought and due
consideration shall be given to services
and shall be considered
as one of the resources required for civil
works projects.
• MANAGEMENT: Management has come
to employ a disciplined approach to the
use of available resources. To coordinate
these resources and achieve the required
goal, a system shall be devised to plan,
organize, execute, and control, the project.
Such system which helps to achieve the
necessary goal is called Construction
Management, without which it will be a
catastrophe both in cost and completion
time to the project.
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