Construction Management, 4th Edition

Chapter 1 History and Basic Concepts 1

Bridges and History 1

1.1 Historical Perspective 2

1.2 Great Captains of Construction 3

1.3 Panama Canal 5

1.4 Other Historic Projects 9

1.5 Construction versus Manufacturing Processes 9

1.6 Project Format 11

1.7 Project Development 12

1.8 Construction Technology and Construction Management 13

1.9 Construction Management Is Resource Driven 14

1.10 Construction Industry 14

1.11 Structure of the Construction Industry 15

1.12 Differing Approaches to Industry Breakdown 16

1.13 Management Levels of Construction 16

Chapter 2 Preparing the Bid Package 20

Online Plan Rooms 20

2.1 Project Concept and Need 21

2.2 Establishing Need 22

2.3 Formal Need Evaluation 23

2.4 Conceptual Drawings and Estimates 23

2.5 Preliminary and Detail Design 24

2.6 Notice To Bidders 30

2.7 Bid Package 32

2.8 General Conditions 34

2.9 Supplementary Conditions 37

2.10 Technical Specifications 38

2.11 Addenda 41

2.12 The Estimate and the Decision to Bid 41

2.13 Prequalification 42

2.14 Subcontractor and Vendor Quotations/Contracts 42

2.15 Bid Bond 43

2.16 Performance and Payment Bonds 44

2.17 Cost and Requirements for Bonds 45

Chapter 3 Issues During Construction Phase 48

Project Rework Reduction 48

3.1 Acceptance Period/Withdrawal 49

3.2 Award of Contract/Notice to Proceed 49

3.3 Contract Agreement 50

3.4 Time Extensions 50

3.5 Change Orders 52

3.6 Changed Conditions 52

3.7 Value Engineering 53

3.8 Suspension, Delay, or Interruption 56

3.9 Liquidated Damages 56

3.10 Progress Payments and Retainage 57

3.11 Progress Reporting 58

3.12 Acceptance and Final Payment 58

3.13 Summary 59

Chapter 4 Construction Contracts 62

Web-Based Contracts 62

4.1 Contract Environment 63

4.2 Process of Purchasing Construction 63

4.3 Major Construction Contract Types 65

4.4 Competitively Bid Contracts 65

4.5 Stipulated-Sum Contracts 66

4.6 Unit-Price Contracts 67

4.7 Negotiated Contracts 70

4.8 Project Delivery Methods 72

4.9 Design-Build Contracts 73

4.10 Design-Build in a Consortium Format 74

4.11 Construction Management Contracts 75

4.12 Construction Management At-Risk 76

4.13 Comparing Project Delivery Methods 76

Chapter 5 Legal Structure 79

Joint Venturing 79

5.1 Types of Organization 80

5.2 Legal Structure 80

5.3 Proprietorship 82

5.4 Partnership 82

5.5 Corporation 84

5.6 Comparison of Legal Structures 86

Chapter 6 Impact of Taxes 91

Taxation in Ancient Egypt, Greece, and Rome 91

6.1 Introduction 92

6.2 Why Taxes? 92

6.3 Types of Taxes 93

6.4 Income Tax Systems 93

6.5 Taxation of Businesses 94

6.6 Business Deductions in General 95

6.7 Taxable Income: Individuals 96

6.8 Itemized Deductions, Standard Deductions, and Personal Exemptions 96

6.9 The Tax Significance of Depreciation 97

6.10 Marginal Tax Rates 99

6.11 Tax Credits 100

6.12 Tax Payroll Withholding 101

6.13 Tax Payment Schedules 101

6.14 Marginal, Average, and Effective Tax Rates 102

6.15 Net Operating Losses 102

6.16 Summary 103

Chapter 7 Project Planning

Building Information Modeling 105

7.1 Introduction 106

7.2 Developing the Work Breakdown Structure 108

7.3 A Work Breakdown Example 109

7.4 Work Packages for the Gas Station Project 110

7.5 Determining Sequence of Work Packages 112

7.6 Estimate Development and Cost Control Related to the

Work Breakdown Structure 113

7.7 Role of Code of Accounts 114

7.8 Summary 116

Chapter 8 Project Scheduling 117

Four-Dimensional Modeling 117

8.1 Introduction 118

8.2 Estimating Activity Durations 119

8.3 Bar Charts 120

8.4 Activity Precedence Diagrams 122

8.5 Generalized Relationships 127

8.6 Overview of the Critical Path Method Scheduling Procedure 131

8.7 Forward Pass (Traditional Relationships) 132

8.8 Backward Pass (Traditional Relationships) 133

8.9 Critical Path 135

8.10 Activity Floats 136

8.11 Scheduling the Small Garage Project 138

8.12 Generalized Relationship Scheduling Computations 141

8.13 Working to Calendar Dates 147

8.14 Summary 148

Chapter 9 Scheduling: Program Evaluation and Review Technique Networks and Linear Operations 153

Lean Construction 153

9.1 Introduction 154

9.2 An Example Program Evaluation and Review Technique Network 156

9.3 Program Evaluation and Review Technique Shortcomings 158

9.4 Linear Construction Operations 159

9.5 Production Curves 160

9.6 Line of Balance Concepts 162

9.7 Line of Balance Applied to Construction 165

Chapter 10 The Mathematics of Money 171

Using Life Cycle Cost to Assess Sustainable Construction Costs 171

10.1 Introduction 172

10.2 Interest in Action 173

10.3 Time Value of Money 174

10.4 Interest 174

10.5 Simple and Compound Interest 175

10.6 Nominal and Effective Rate 176

10.7 Equivalence and Minimum Attractive Rate of Return 177

10.8 Discount Rate 178

10.9 Importance of Equivalence 178

10.10 Sunk Costs 178

10.11 Cash Flow Diagrams 179

10.12 Annuities 180

10.13 Conditions for Annuity Calculations 181

10.14 Calculating the Future Value of a Series of Payments 181

10.15 Summary of Equivalence Formulas 183

10.16 Worth Analysis Techniques: An Overview 185

10.17 Present Worth Analysis 186

10.18 Equivalent Annual Worth 187

10.19 Internal Rate of Return 188

10.20 Limitations of the Internal Rate of Return Method 189

10.21 A Practical Example Using Present Worth Analysis 189

10.22 Comparison Using Equivalent Annual Worth 190

10.23 Summing Up 192

Chapter 11 Project Cash Flow 195

Scenario Testing 195

11.1 Cash Flow Projection 196

11.2 Cash Flow to the Contractor 197

11.3 Overdraft Requirements 198

11.4 Comparison of Payment Schemes 199

Chapter 12 Project Funding 207

Build Operate and Transfer (BOT) 207

12.1 Money: A Basic Resource 208

12.2 Construction Financing Process 209

12.3 Long-Term Pro Forma Example 210

12.4 Mortgage Loan Commitment 212

12.5 Construction Loan 213

12.6 Owner Financing Using Bonds 215

Chapter 13. Equipment Ownership 218

Radio Frequency Identification Application in Construction 218

13.1 General 219

13.2 Equipment Owning and Operating Costs 220

13.3 Depreciation of Equipment 221

13.4 Straight-Line Method 223

13.5 Declining Balance 224

13.6 Production Method 226

13.7 Depreciation Based on Current Law 227

13.8 Depreciation Versus Amortization 228

13.9 Interest, Insurance, and Tax Costs 229

13.10 Operating Costs 231

13.11 Overhead and Markup 232

Chapter 14 Equipment Productivity 234

Laser-Based Machine Control 234

14.1 Productivity Concepts 235

14.2 Cycle Time and Power Requirements 237

14.3 Power Available 239

14.4 Usable Power 242

14.5 Equipment Balance 246

14.6 Random Work Task Durations 249

Chapter 15 Construction Labor 253

Biometric Identification Recognition 253

15.1 Labor Resource 254

15.2 Short History of Labor Organizations 254

15.3 Early Labor Legislation 255

15.4 Norris-LaGuardia Act 256

15.5 Davis–Bacon Act 257

15.6 National Labor Relations Act 257

15.7 Fair Labor Standards Act 258

15.8 Union Growth 259

15.9 Labor Management Relations Act 259

15.10 Other Labor Legislation 262

15.11 Vertical Versus Horizontal Labor Organization Structure 263

15.12 Jurisdictional Disputes 263

15.13 Union Structure 265

15.14 National Unions 266

15.15 State Federations and City Centrals 267

15.16 Union Locals 267

15.17 Union Hiring Halls 268

15.18 Secondary Boycotts 268

15.19 Open-Shop and Double-Breasted Operations 270

15.20 Labor Agreements 270

15.21 Labor Costs 271

15.22 Average Hourly Cost Calculation 275

Chapter 16 Estimating Process 279

Estimating Using Handheld Devices 279

16.1 Estimating Construction Costs 280

16.2 Types of Estimates 280

16.3 Detailed Estimate Preparation 282

16.4 Definition of Cost Centers 284

16.5 Quantity Takeoff 286

16.6 Methods of Detailed Cost Determination 288

16.7 Problems with Unit-Cost Method 290

16.8 Resource Enumeration 291

16.9 Work Package or Assembly-Based Estimating 294

16.10 Summary 297

Chapter 17 Cost Control 300

Leadership in Energy and Environmental Design Certification 300

17.1 Cost Control as a Management Tool 301

17.2 Project Cost Control Systems 301

17.3 Cost Accounts 302

17.4 Cost Coding Systems 304

17.5 Project Cost Code Structure 304

17.6 Cost Accounts for Integrated Project Management 308

17.7 Earned Value Method 310

17.8 Labor Cost Data Collection 313

17.9 Charges for Indirect and Overhead Expense 316

17.10 Project Indirect Costs 317

17.11 Fixed Overhead 320

17.12 Considerations in Establishing Fixed Overhead 321

Review Questions and Exercises 322

Chapter 18 Materials Management 325

Fiber Reinforced Polymer Rebar 325

18.1 Material Management Process 326

18.2 The Order 326

18.3 Approval Process 333

18.4 Fabrication and Delivery Process 335

18.5 Installation Process 336

18.6 Material Types 336

Chapter 19 Safety 340

Safety in Trenches 340

19.1 Need for Safe Practice 341

19.2 Humanitarian Concerns 342

19.3 Economic Costs and Benefits 342

19.4 Uninsured Accident Costs 345

19.5 Federal Legislation and Regulation 346

19.6 Occupational Safety and Health Administration Requirements 348

19.7 How the Law Is Applied 348

19.8 Safety Record Keeping 352

19.9 Safety Program 352

Chapter 20 Construction Operations

Appendices 361

Appendix A Typical Considerations Affecting the Decision to Bid 362

Appendix B Performance and Payment Bond 365

Appendix C Standard Form of Agreement Between Owner and Contractor On the Basis of a Stipulated Price 370

Appendix D Standard Form of Agreement Between Owner and Contractor on the Basis of Cost-Plus 383

Appendix E Arrow Notation Scheduling Calculations 397

Appendix F AGC Builders Association of Chicago: Typical Agent Job Descriptions 403

Appendix G Compound Interest Tables 409

Appendix H Plans for Small Gas Station 435

Appendix I Site Reconnaissance Checklist 438

Appendix J The Cumulative Normal Distribution Function 440

Appendix K WebCYCLONE Users Manual