1.

1 Introduction

Construction and the ability to build things is one of the most ancient of human skills.
In contrast to other manufacturing industries that fabricate large numbers of units, such as automobiles or
television sets, the construction industry is generally focused on the production of a single and unique end
product. That is, the product of the construction industry is a facility that is usually unique in design and
method of fabrication.
Once a project has been defined, one of the most critical questions facing the construction manager is
‘‘What construction technique or method should be selected?’’ The types of methods for placing
construction are diverse. New methods are continuously being perfected and a construction manager must
weigh the advantages and disadvantages of a given method or technique.

Definition of Project

 an endeavor that is undertaken to produce the results that are expected from the requesting party
 may be design only, construction only, or a combination of design and construction
 consists of three components: scope, budget, and schedule

When a project is first assigned to a project manager, it is important that all three of these components be
clearly defined. The term Scope represents the work to be accomplished, i.e., the quantity and quality of
work. Budget refers to costs, measured in dollars and/or labor-hours of work. Schedule refers to the
logical sequencing and timing of the work to be performed. The quality of a project must meet the owner's
satisfaction and is an integral part of project management as illustrated in Figure 1.1.
Figure 1.1 is shown as an equilateral triangle to represent an important principle of project management: a
balance is necessary between the scope, budget, and schedule.

For any given project there is a certain amount of work that must be performed and an associated cost and
schedule for producing the work.
Any adjustment in budget and/or schedule requires a corresponding adjustment in scope.
This simple concept of a balance between scope, budget, and schedule is sometimes not fully recognized
during early project development as well as during design and construction.
WHY??? The source of many problems associated with a project is failure to properly de- fine the project
scope. Too often the focus is just on budget or schedule. Not only should the scope, budget, and schedule
be well defined, but each must be linked together since one affects the other, both individually and
collectively.

 The manager must be clever and innovative in the utilization of resources available. Somewhat like a
general in battle, the manager must develop a plan of action and then direct and control forces
(resources) in a coordinated and timely fashion so that the objective is achieved.

Since the project scope defines the work to be accomplished, it should be the first task in the development
of a project, prior to the development of either the budget or the schedule. Too often, top management
specifies a project budget or schedule and then asks the project team to define a scope to match the
budget. This is the reverse order of defining a project and is not a good project management practice. 'It is
the duty of a project manager to ensure that the project scope, budget, and schedule are linked together.

Management Concepts and Levels of Organization in Construction

At its most fundamental level, construction project management handles the planning, coordination, and
execution of a construction project, whether it’s agricultural, residential, commercial, institutional, industrial,
heavy civil, or environmental. Construction project management typically includes complicated tasks that
can shift wildly, depending on the work at hand, and it requires strong skills in communication, deep
knowledge of the building process, and the ability to problem-solve. Construction project management is a
complex field, requiring knowledge in many different areas like finance, mediation, law, business, and
more.

The Role of a Project Manager in Construction Management

Construction project managers shoulder the responsibility of keeping the project moving according to plan.
The goal is to manage the project so that it finishes on schedule and within budget, while still meeting
building codes, plans, and specs.
 Management Concepts

Systematic management is an approach to management that focuses on the management process rather
than on the final outcome. The goals to this approach to management were:

 To create specific processes and procedures to be used in job task completion

 To ensure that organizational operations were economical
 To ensure that staffing was adequate for the needs of the organization
 To maintain suitable inventory so that the demands of consumers could be met
 To establish organizational controls

This type of management approach was the first to directly link orderly operations, human resource
management, and communication to organizational success.
The scientific management approach developed by Taylor is based on the concept of planning of work to
achieve efficiency, standardization, specialization and simplification. Acknowledging that the approach to
increased productivity was through mutual trust between management and workers, Taylor suggested that,
to increase this level of trust, the advantages of productivity improvement should go to workers, physical
stress and anxiety should be eliminated as much as possible, capabilities of workers should be developed
through training, and the traditional ‘boss’ concept should be eliminated.
Taylor developed the following four principles of scientific management for improving productivity:

 Science, not rule-of-thumb. Old rules-of-thumb should be supplanted by a scientific approach to each
element of a person’s work.
 Scientific selection of the worker. Organizational members should be selected based on some analysis,
and then trained, taught and developed.
 Management and labour cooperation rather than conflict. Management should collaborate with all
organizational members so that all work can be done in conformity with the scientific principles
developed.
 Scientific training of the worker. Workers should be trained by experts, using scientific methods.

Humanistic management is an approach to management theory based on the idea of human needs and
human values. Employees are seen not merely as economic assets valued primarily for their productivity
but as people with complex needs and a desire for meaningful and varied daily tasks.
Humanistic management is a people-oriented management that seeks profits for human ends. It
contrasts with other types of management that are essentially oriented toward profits, with people seen as
mere resources to serve this goal.
 Management Levels of Construction
Organizational considerations lead to a number of hierarchical levels that can be identified in construction.
This derives from the project format. Decision making at levels above the project relate to company
management considerations. Decisions within the project relate to operational considerations (e.g.,
selection of production methods) as well as the application of resources to the various construction
production processes and work tasks selected to realize the constructed facility. Specifically, four levels of
hierarchy can be identified as follows:

1. Organizational. The organizational level is concerned with the legal and business structure of a firm,
the various functional areas of management, and the interaction between head office and field
managers performing these management functions.
2. Project. Project-level vocabulary is dominated by terms relating to the breakdown of the project for the
purpose of time and cost control (e.g., the project activity and the project cost account). Also, the
concept of resources is defined and related to the activity as either an added descriptive attribute of the
activity or for resource scheduling purposes.
3. Operation (and Process). The construction operation and process level is concerned with the
technology and details of how construction is performed. It focuses on work at the field level. Usually a
construction operation is so complex that it encompasses several distinct processes, each having its
own technology and work task sequences. However, for simple situations involving a single process,
the terms are synonymous.
4. Task. The task level is concerned with the identification and assignment of elemental portions of work
to field units and work crews.
 Structure of Organization
The focus of construction management is the planning and control of resources within the framework of a
project.
The study of construction as a discipline can be broadly structured into two general themes:

1. Construction technology
2. Construction management

As the name implies, construction technology relates to the methods or techniques used to place the
physical materials and elements of construction at the job site. In contrast to construction technology,
construction management addresses how the resources available to the manager can be best applied.
Typically, when speaking of resources for construction, we think of the FIRST four M’s of
construction: manpower, machines, materials, and money. Management involves the timely and efficient
application of the four M’s to construct a project. The types of methods for placing construction are diverse.
New methods are continuously being perfected and a construction manager must weigh the advantages
and disadvantages of a given method or technique. Hence, the 5th M is the method.

1.2 Project Management Concept

Responsibilities of Parties
Each of the three principal parties in a project has a role to fulfill in the various phases of design
development and construction. A team approach between the owner, designer, and contractor must be
created with a cooperative relationship to complete the project in the most efficient manner. Too often an
adverse relationship develops that does not serve the best interest of anyone.
Quality is the responsibility of all participants in a project, including all levels of management and workers in
each of the principal parties. An attitude of achieving quality must be instilled in everyone and perpetuate
throughout the work environment. The attitude should not be "what can we do to pass quality control or final
inspection? Instead, it should be "what can we do to improve our work and what is the best way we can
furnish a project that meets the needs and satisfaction of the owner?"

Owner

o Responsible for setting the operational criteria for the completed project
o NEED TO identify their level of involvement in the project, e.g., the review process, required
reports, and the levels of approval.
o responsible for setting parameters on total cost, payment of costs, major milestones, and the
project completion date

Designer

o producing design alternatives, computations, drawings, and specifications that meet the needs of
the owner
o designers usually prepare an estimate of the probable construction cost for the design they have
prepared

Contractor

o responsible for the performance of all work in accordance with the contract documents that have
been prepared by the designer. This includes furnishing all labor, equipment, material, and know-
how necessary to build the project
o must prepare an accurate estimate of the project, develop a realistic construction schedule, and
establish an effective project control system for cost, schedule, and quality
 Project Teams
Technically speaking, project management may be defined as the art and science of coordinating people,
equipment, materials, money. and schedules to complete a specified project on time and within approved
cost.
The project manager is provided with resources such as labor, equipment, and materials and is expected to
build a facility that meets the specifications and is consistent with the drawings provided for the project.
Much of the work of a project manager is organizing and working with people to identify problems and
determine solutions to problems. In addition to being organized and a problem solver, a manager must also
work well with people.It is people who have the ability to create ideas, identify and solve problems,
communicate, and get the work done. Because of this, people are the most important resource of the
project manager. Thus, the project manager must develop a good working relationship with people in order
to benefit from the best of their abilities.

It is the duty of a project manager to organize a project team of people and coordinate their efforts in a
common direction to bring a project to successful completion. Throughout the project management process
there are four questions that must be addressed: Who? Does what? When? and How much?
Project teams must be assembled to accomplish the work necessary to complete engineering and
construction projects. Team members are vital to the success of the project. The project manager must
make sure that his or her team understands and is focused on the desired out- come of the project. The
project manager also acts as a facilitator in project communications for conflict resolution and team
performance. For a successful project, the project manager must build and lead an effective project team.
When managing multiple small projects, the project manager is usually required to share team members
with other project managers. Generally, the project duration is short with minimal contact between the
project manager and team members. Only minimal staffs can be afforded on small projects, thus, few
individuals assigned must take responsibility for multiple functions. Although managing multiple small
projects may not have the formality of man- aging a single large project, the principles of working with
people in the spirit of cooperation and teamwork still applies

Working with wide projects involved managing several teams. Although each of these teams have their own
objectives, the diverse expertise that each possesses must converge into an overlapping environment.
Although each team performs a different function, each team must develop an attitude of shared ownership
in the project. Regardless of the size and number of teams, there must be a single head project manager to
make final decisions and keep focus on the project.

Key Concepts of Project Management

Although each project is unique, there are key concepts that a project manager can use to coordinate and
guide a project to completion.

1.
1. Ensure that one person, and only one person, is responsible for the project scope, budget, and
schedule
2. Don't begin work without a signed contract, regardless of the pressure to start
3. Confirm that there is an approved scope, budget, and schedule for the project
4. Lock in the project scope at the beginning and ensure there is no scope growth without approval
5. Make certain that scope is understood by all parties, including the owner
6. Determine who developed the budget and schedule, and when they were prepared
7. Verify that the budget and schedule are linked to the scope
8. Organize the project around the work to be performed, rather than trying to keep people busy
9. Ensure there is an explicit operational work plan to guide the entire project
10. Establish a work breakdown structure that divides the project into definable and measurable units
of work
11. Establish a project organizational chart that shows authority and responsibilities for all team
members
 12. Build the project staff into an effective team that works together as a unit
13. Emphasize that quality is a must, because if it doesn't work it is worthless, regardless of cost or
how fast it is completed
14. Budget all tasks; any work worth doing should have compensation
15. Develop a project schedule that provides logical sequencing of the work required to complete the
job
16. Establish a control system that will anticipate and report deviations on a timely basis so corrective
actions can be taken
17. Get problems out in the open with all persons involved so they can be resolved
18. Document all work, because what may seem irrelevant at one point in time may later be very
significant
19. Prepare a formal agreement with appropriate parties whenever there is a charge in the project
20. Keep the client informed; they pay for everything and will use the project upon completion

1.3 Contracts and Specifications

What is Contract Management?

Contract Management could be defined as a multi-stage process that goes on through the entire duration of
the contract and ensures that the parties meet their contractual obligations in order to deliver the specific
objectives provided in the contract.
From a legal point of view, contract is A mutual agreement between two or more parties that something
shall be done, an agreement enforceable at law.
According to Fédération Internationale Des Ingénieurs – Conseils (from French, the International
Federation of Consulting Engineers) or FIDIC, A contract means the General Conditions, the
Supplementary Conditions, the Specifications, the Drawings, the Bill of Quantities, the Tender, the Letter of
Acceptance and the Contract Agreement.
When any construction or real estate project is concerned, contracts are an important part of the process. A
construction contract provides important protections for the parties to the contract and for both contractors
and homeowners or the owners of the project or building if the project is a commercial construction project.
The most important aspects of a construction contract – and from where most of disputes arise are:

o The definition of the scope, i.e. what exactly has to be done, and what happens if the changes are
required or desired along the way;
o When the works have to be concluded and what happens if they are concluded on time;
o When payments are due and what happens if they are not paid on time;
o Technical specifications and quality and performance requirements and what happens if the
agreed standards are not met

Types of Construction Contract

Construction contract types are usually defined by the way, the disbursement is going to be made and
details other specific terms, like duration, quality, specifications, and several other items. These major
contract types can have many variations and can be customized to meet the specific needs of the product
or the project.
Lump Sum or Fixed Price Contract Type
This type of contract involves a total fixed priced for all construction-related activities. Lump sum contracts
can include incentives or benefits for early termination, or can also have penalties, called liquidated
damages, for a late termination. Lump Sum contracts are preferred when a clear scope and a defined
schedule has been reviewed and agreed upon.
This contract shall be used when the risk needs to be transferred to the builder and the owner wants to
avoid change orders for unspecified work. However, a contractor must also include some percentage cost
associated with carrying that risk. These costs will be hidden in the fixed price. On a lump sum contract, it is
harder to get credit back for work not completed, so consider that when analyzing your options.
Cost Plus Contracts
This type of contract involves payment of the actual costs, purchases or other expenses generated directly
from the construction activity. Cost Plus contracts must contain specific information about a certain pre-
negotiated amount (some percentage of the material and labor cost) covering contractor's overhead and
profit. Costs must be detailed and should be classified as direct or indirect costs. There are multiple
variations of Cost Plus contracts and the most common are:

o Cost Plus Fixed Percentage
o Cost Plus Fixed Fee
o Cost Plus with Guaranteed Maximum Price Contract
o Cost Plus with Guaranteed Maximum Price and Bonus Contract

Cost plus contracts are used when the scope has not been clearly defined and it is the owner responsibility
to establish some limits on how much the contractor will be billing. When some of the aforementioned
options are used, those incentives will serve to protect the owner's interest and avoid being charged for
unnecessary changes. Be aware that cost-plus contracts are difficult or harder to track and more
supervision will be needed, normally do not put a lot of risk in the contractor.
Time and Material Contracts (When Scope is Not Clear)
Time and material contracts are usually preferred if the project scope is not clear, or has not been defined.
The owner and the contractor must establish an agreed hourly or daily rate, including additional expenses
that could arise in the construction process.
The costs must be classified as direct, indirect, markup, and overhead and should be included in the
contract. Sometimes the owner might want to establish a cap or specific project duration to the contractor
that must be met, in order to have the owner’s risk minimized. These contracts are useful for small scopes
or when you can make a realistic guess on how long it will take to complete the scope.
Unit Pricing Contracts
Unit pricing contracts is probably another type of contract commonly used by builders and in federal
agencies. Unit prices can also be set during the bidding process as the owner requests specific quantities
and pricing for a pre-determined amount of unitized items.
By providing unit prices, the owner can easily verify that he's being charged with un-inflated prices for
goods or services being acquired. Unit price can easily be adjusted up and/or down during scope changes,
making it easier for the owner and the builder to reach into agreements during change orders

Conditions and Specifications of Contracts

Contract conditions, usually included in the book of specifications (or in the accompanying architectural
drawings) of a contract, that set the minimum performance requirements for the contractor. These
conditions also include the rights and responsibilities of the parties involved
Contract conditions set out the principal legal relationship between the parties to a construction project,
determining the allocation of risk and consequently, price.
Specifications is the part of the Contract that consists of written requirements for materials, equipment,
systems, standards, and workmanship as applied to the Work, and certain administrative requirements and
procedural matters applicable to the Work.

2.1 Introduction

Construction project management requires a broad variety of skills, along with the ability to interface with a
diverse range of agencies and people in order to lead the project from concept to build. It’s important that
construction project managers follow the principles of project management during every phase of the
project.

Conceiving and Initiating the Project

You can’t start a project unless you know you’ll be able to finish it. First comes the due diligence to
determine if the project is even feasible. How do you figure this out? You want to go through a feasibility
study or what is often called a business case, in which you look at the goals, cost and timeline to see if you
have resources to reach a successful project end within those constraints. You also want to define the
reasoning behind the project and make sure it’s sound. If so, then you create your project charter to help
initiate the project. You’ll also identify potential issues and risks in this phase.
 Define and Plan the Project
You have approval, now how are you going to achieve success? Outline the tasks within the timeline,
noting project milestones, and the resources needed to do those tasks within the budget allotted. Be
transparent in your plan, so everyone is on the same page and understands what needs to be done over
the life cycle of the project. That includes detailing the cost, scope, duration, quality and communications
used in the project. This is also when you’ll be able to conceptualize the best team for the project and begin
the process of assembling them.

Launch the Project

Now you’re executing the project, taking the plan and implementing it, along with all the changes and
issues that can arise during such a process. Whatever deliverables you promised must come through in the
timeframe you noted. Now you must deal with stakeholders and customers and teams. The latter have
tasks must be completed, which means workload management and resource allocation. You’ll be setting up
meetings and reporting frequently throughout this stage. This is where your project management tool will
really be tested, but more on that later.

Track Project Performance

You can’t know the progress of your project if you don’t have a way to monitor it. You’ll be doing this during
the previous stages of the project, but it’s important enough to demand its own separate stage in your
management. You’ll want to have a way to note the progress, which is why you need to set up key
performance indicators for cost, time and quality. If you can stay on top of these figures, it’s less likely you’ll
manage a failing project. Therefore, stay flexible and communicative throughout so you can adapt quickly
to change when it occurs, and it always occurs.
Management is often summarized into four basic functions: planning, organizing, directing, and controlling.
Although these basic management functions have been developed and used by managers of businesses,
they apply equally to the management of a project.

2.2 Project Initiation

Planning is the formulation of a course of action to guide a project to completion. It starts at the beginning
of a project, with the scope of work, and continues throughout the life of a project. The establishment of
milestones and consideration of possible constraints are major parts of planning. Successful project
planning is best
accomplished by the participation of all parties involved in a project. There must be an explicit operational
plan to guide the entire project throughout its life.
Since the construction sector is so diverse, it is helpful to look at the major types of projects typical of
construction to understand the structure of the industry. Construction projects can be broadly classified as
(a) building construction, (b) infrastructure construction, and (c) industrial construction, depending on
whether they are associated with housing, public works, or manufacturing processes.

Contracting Arrangements
There are different procurement systems and several ways of classifying them. On the basis of how the
interaction between design and construction, how funding and operations are managed, mode of
reimbursement of the contractor, level of information available or required before a construction contract ,
and the magnitude of risk taken by participating parties. To deliver a quality construction project on time
and on budget, you must successfully coordinate the efforts of the Owner, Architect and General Contractor
in an accepted and appropriate contract form. There are three basic project delivery methods:
Design/Bid/Build, Construction Management, and Design/Build. Each method has its own advantages and
disadvantages, and some methods are better suited for certain kinds of projects than others.
Design, Bid, Build
This method usually starts with the Owner selecting and entering into a contract with an Architect or other
design professional. The Architect fully develops the design and creates “bid documents” that are then
made available to general contractors for competitive bids. The bid process can either be an open bid or by
invitation. Once a suitable Contractor is selected, the Owner and Contractor execute a separate contract to
build. The Contractor, in turn, engages subcontractors and suppliers to perform the work.
The Design/Bid/Build approach is best when the Owner wishes to be actively involved in the design
process, requires a fixed cost before commencement of construction, and has sufficient time to permit the
design to be fully completed before construction bids are obtained. This method is often used for very large,
complex projects. Since the design is fully developed, an “apples to apples” comparison of multiple bids
can be made.
The primary disadvantage of the Design/Bid/Build process is the Architect’s limited ability to establish an
accurate cost estimate; consequently, the Owner may not know the cost of his project until the bids are
received. If the bids are higher than the budget, costly redesign is often required. Other disadvantages
include:

o Owner is responsible for the completeness and accuracy of the Architect drawings
o Contractor has no input regarding more cost-efficient materials or construction methods
o Adversarial relationships can occur between the Architect and the Contractor
o Contractor is forced to use the least cost approach to be low bidder

Design/Build
In the Design/Build method, the Owner contracts with a single entity to provide both the design and
construction of the building. The intent of the Design/Build form of construction is to foster teamwork
between the Architect and the Contractor early in the project and facilitate early budgeting, programming,
and financing. It also promotes review of the design as it proceeds for constructibility and cost of
construction. Well-suited for fast-track construction, design/build projects are often more cost-effective and
less susceptible to delays in the work than traditional projects.
Perhaps the greatest advantage for the Owner is that the Owner only has to look to one party for the design
and the construction. If a problem arises, the Design/Builder is responsible, whether it is a design or
construction issue. Because the Architect and the Contractor are on the same team, many Owners observe
a reduction in disputes, and insurance companies have noted a reduction in claims with Design/Build
projects.
The two primary disadvantages to the Design/Build method are:

o
 The Owner does not receive the benefit of the system of “checks and balances” that exist
when it contracts separately with an Architect and a Contractor
 It is difficult for the Owner to verify that the best price has been achieved for the work
Construction Management
One variation of the Design/Bid/Build method is to secure the services of a Construction Manager. A
Construction Manager At-Risk may be used instead of bidding the project to General Contractors. An
Agency Construction Manager acts as an advisor to the client. It is important to understand the “risk shift”
inherent in these two Construction Management methods.
The most common form of Construction Management is CM At-Risk, where an independent professional
reduces the risk to the Owner because a Construction Manager At-Risk (CMAR) holds the subcontract
agreements. Often, the Construction Manager is also the Contractor. Other advantages include:

o Owner is provided advice on budget, schedule, and constructability during design phase
o CMAR can provide value-engineering advice to save client time and money
o CMAR is responsible for schedule and budget
o CMAR typically provides a Guaranteed Maximum Price (GMP)
o Owner knows the Contractor’s profit on the project and any change orders
o Construction can begin without the design being fully completed

Disadvantages:

o This method requires a high level of communication between the Owner and the CMAR
o Requires cooperation of the Architect to work out details of design before or during construction
o Construction costs may run over if design mistakes are not detected early
o Involves negotiation of two separate contracts and requires careful contract language establishing
responsibilities of each party

The delivery method referred to as Construction Manager – Agency or CM (Agency) is a fee-based service
in which the CM (Agency) acts as the Owner’s representative during each stage of the project. The CM
(Agency) is the Owner’s trusted construction expert who advises the Owner and acts as a “go to” person for
all aspects of the project including design, constructibility, value-engineering, scheduling, negotiations with
Architect and Contractors, and qualification of design professionals, Contractors and subcontractors. It is
important to note that the CM (Agency) is an advisor, but is not accountable for schedule and budget and
that the Owner enters into the trade contracts, not the CM (Agency). Depending on how the contract is
structured, the CM (Agency) may be compensated for some general condition items. This agreement
places the majority of the risk during construction on the shoulders of the Owner.
The mission of construction is constrained in terms of the available time and amount of available money.
The challenge faced by the construction manager is to apply the resources of workers, machines, and
materials within the limited funding (money) and time available. This is the essence of construction.
The job of a construction manager is to efficiently and economically apply the required resources to realize
a constructed facility of acceptable quality within the time frame and budgeted cost specified. Among the
many watch words within the construction industry is the expression ‘‘on time and within budget.’’ More
recently, the concept of quality as a requirement has become an increasingly important aspect of the
construction process. So this old adage can he expanded to say ‘‘a quality facility on time and within
budget.’’
Since the construction sector is so diverse, it is helpful to look at the major types of projects typical of
construction to understand the structure of the industry. Construction projects can be broadly classified as
(a) building construction, (b) engineered construction, and (c) industrial construction, depending on whether
they are associated with housing, public works, or manufacturing processes.

Contract Development
People often associate engineering with the invention and construction of infrastructure such as industrial
plants, roads and bridges, but there is more than meets the eye when it comes to this profession. Of the
many fields of study, Detailed Engineering Design is perhaps one that needs more exploration.
Detailed engineering is the phase in project implementation that applies all technical disciplines needed
(i.e. mechanical, civil, electrical, piping, automation, telecommunications, instrumentation, etc.) to establish
the set of deliverables.
Legally, “No bidding and award of contract for Infrastructure Projects shall be made unless the detailed
engineering investigations, survey and designs, for the project have been sufficiently carried out and duly
approved in accordance with the design standards and specifications prescribed by the Head of Procuring
Entity concerned…”
Detailed engineering is a very important process in any project that requires the application of knowledge
into action. It is significant and invaluable in any project. Properly developing every part of the design
ensures that the end-user can enjoy the safety and satisfaction that a well-designed engineering project
can produce.
2.3 Estimating and Value Engineering

During development of a project the client normally looks for construction cost estimates. It is advisable to
provide a probable cost of construction at completion of the schematic design, design development, and
construction document phases. A design contingency is usually carried in cost estimates. It can be reduced
as the documents are further developed. At completion of the construction documents, the architect
prepares, or has a consultant prepare, a final and most accurate estimate of construction cost, which can
be used for comparison with the bids submitted to perform the work.
Value engineering may be performed by consultants and construction managers during the development of
the construction documents. Value engineering should address operating and maintenance costs as well
as first costs, to provide true life-cycle cost estimates for comparative analysis.
Value engineering is a systematic method to improve the “value” of a product or service that the project
produces. It is an integral component of project quality.

What is Estimating?
Estimation (or estimating) is the process of finding an estimate, or approximation, which is a value that is
usable for some purpose even if input data may be incomplete, uncertain, or unstable.

o In construction, it is an approximation of cost of a project to the contractor.
o A process of calculating costs of a construction project based on a design proposal and using
comparisons with similar projects to establish budgets prior to final pricing.

Purposes Of Estimates
Estimates are used for a number of different purposes in construction:

o Determining the feasibility of a project
o Calculating an approximate price of a project
o Providing value analysis
o Calculating & establishing bid prices
o Determining project budgets in cost control
 Types Of Estimates

o Detailed Estimates
o Square-Foot Estimates
o Parametric Estimates
o Project Comparison Estimates

Detailed Estimates

o Determination of the quantities and costs of everything that is required to complete the project.
o This includes materials, labor, equipment, insurance, bonds and overhead, as well as an estimate
of the profit.
o To perform this type of estimate, the contractor must have a complete set of contract documents.

Square Foot/Approximate Estimates


o Prepared by multiplying square footage of a building by a cost per square foot and then adjusting
the price to compensate for differences in the building heights, length of the building perimeter,
and other building components.

Parametric Estimates

o Parametric estimates use equations that express the statistical relationship between building
parameters and the cost of the building.
o The building parameters used in the equation may include the gross square footage, number of
floors, length of perimeter, percentage of building that is common space and so forth.

Project Comparison Estimates


o Prepared by comparing the cost of a proposed project to a completed project.
o When preparing an estimate using this method, the estimator starts with the costs of a comparable
project and then makes adjustments for differences in the project.

Role Of An Estimator
To be an estimator, an individual needs to go a step further. He or she must:

o Be able, from looking at the drawing, to visualize the project through its various phases of
construction.
o Have enough construction experience to possess a good knowledge of job conditions, including
methods of handling materials on the job, the most economical methods of construction and labor
productivity.
o Have sufficient knowledge of labor operations and productivity to convert them into costs of a
project.
o Be able to keep a database of information on costs of all kinds.
o Be computer literate and know how to manipulate and build various databases.
o Be able to meet bid deadlines and still remain calm.
o Have good writing and presentation skills.

Simplified Estimating Process

Measuring Quantities and Items of Works in Buildings
The Quantity Take-Off

o Refers to the scaling or transferring of critical dimensions of construction components from
drawings to paper or software that are quantified as units of measurement.
o This also includes a description of works that are influenced by the appropriate measurement
guide.

Organization Of Quantity Take-Off


o The order of the take-off will generally follow the sequence of work activities of the project and,
conveniently for the estimator, the contract drawings are usually presented in this sequence.
Methods of Measurement

o Principles of Measurement – International (POMI)

o Philippine Standard Method of Measurement (PSMM)
o Standard Method of Measurement of Building Works: 7th edition (SMM7)

Measuring Items of Works in Building Projects

 Excavating and Filing

o Site clearance/preparation

- It is the removal of natural obstruction across the site such as grass, bushes, shrubs and trees.
Rules of Measurement: Site preparation is measured in terms of area, m2.

 Excavations

- It is the removal of earth from its natural position.

Rules of Measurement: All excavation is measured net with no allowance for increasing in bulk after
excavation or for the extra space required for working space or to accommodate earthwork support.

 Disposal

- It is defined as the action or process of throwing away or getting rid of something.

Rules of Measurement: Disposal is based on all excavated material off site and measured in terms of
volume, m3

 Fillings

- It is defined as a quantity of material that fills or is used to fill something.

Rules of Measurement: Filling is obtained from excavated material which includes topsoil and any other
material arising from the excavations that have been specified to remain on site and measured in terms of
volume, m3.

 In Situ Concrete Works

 In situ concrete

- It is concrete deposited in the place where it is required to harden as part of the structure.
Rules of Measurement: Concrete volume is measured net. Deductions are not made for the reinforcement,
steel sections and voids smaller than 0.05 m3 (except voids in troughed and coffered slabs)

o Formwork
- It is a temporary construction to contain wet concrete in the required shape while it is cast and setting.
- This can be made of steel, wood, aluminum and/or prefabricated forms.
Rules of Measurement: It is measured to the faces of all cast in place concrete which requires to be
supported while the concrete sets. No deductions shall be made for voids smaller than 5.00 m2.

o Reinforcement

A. Types of Steel Bar

 Mild steel bars are plain in surface and are round sections of diameter from 6 to
50mm.
 High yield steel bars are rods of steels provided with lugs, ribs or deformation on the
surface of the bar, these bars minimize slippage in concrete and increases the bond
between the two materials.

Rules of Measurement:

1. Measure separately for different types of steel bar.

2. Measure separately for different size/diameter.
3. Forming hooks, tying wire, spacers, cutting/splicing and bending are deemed
included.
4. Chairs and connectors are deemed included unless not at discretion of contractor.

B. Concrete Cover Provision

 Concrete cover is the distance from the outer face of an element to the outer girth of
reinforcement and is provided to ensure that there is adequate protection to steel reinforcements
that are not exposed from the concrete and thus prevent rusting.
C. Anchorage & Lap Splice Length

 Lap length is the length of bar overlap when bars are tied together for extending the reinforcement
length.
 Anchorage length is the additional length of steel required to be inserted from one structural
member into another structural member at the junction.

D. Hooks

 These are very significant especially when measuring links or reinforcement that is
bent up or bent around another bar. These are usually given as multiples of bar
diameter or given as specific lengths in tabulated form.

Rules of Measurement:
 1. Make sure to read the specifications or general notes and checked all notes on
plans you will be using and all other relevant documents.
2. Study carefully the drawings and details given. Make sure that you understand
clearly the details given.
3. Check if there is enough information given to be able to measure lengths. Be
sure to check specifications and general notes.
4. Tick off or loop through bar marks measured to check if all reinforcement for the
particular element has already been taken or measured.
5. If there are any uncertainties in the details, make a query on this.
6. Check for any assumptions made to be put in measurement notes.
7. Unit weight of rebar per meter is calculated by the surface area of steel multiply
by the density of steel. Thus, kg/m = (π D2/4) x 7850 kg/m3 or simply kg/m = D x
D x 6165 kg/m3

E. Measurement of Beam Reinforcement

 Typically, reinforcement to ordinary beams will comprise of top bar reinforcement,

bottom bar reinforcement, links or stirrups and side bars.
 End conditions for beams are usually given with anchorage length, either given
lengths in tabulated form or given as multiples of bar diameter.
 Pay particular attention where anchorage length is measured from, which is usually
from the inner face of support or from the centerline of support.

F. Computation for Lengths & Number of Stirrups

 Computation for length of outer stirrups / links:

S = 2 x (w + d) – 8 x cc + hook
where:
s = stirrup / link
w = width of beam
d = depth of beam
cc = concrete cover
hook = specified length or as multiples of stirrup diameter

 Computation for the number of outer stirrups / links:

N = (L – 2 x cover from face of support) / spacing + 1

where:
 N = number of stirrups / links
L = clear length

G. Measurement of Slab Reinforcement

There are two general types of slabs with regards to its load carrying capacity:

 One-way slab – slab supported by beam / wall support (parallel to the long span) and
whose reinforcement runs in one direction only, i.e. from support to support.

S/L < 0.50 : S = SHORT SPAN, L = LONG SPAN

 Two-way slab – slabs which are supported on four sides and are reinforced in two
directions. Reinforcement is placed in such a way to transmit loads to the four supporting
beams.

S/L > 0.50 : S = SHORT SPAN, L = LONG SPAN

Rules of Measurement:

1. Always check if distribution bars have been provided, especially for top bars.
Unless top bars are continuous from support to support, there will always be
distribution bars to main top bars.
2. Pay careful attention that spacing for bars are not interchanged between the two
directions.
3. Pay attention for slabs that have drops in them. Extra details may be provided or
adjustments are to be made.

H. Measurement of Column Reinforcement

Basically, column reinforcement is made up of vertical bars and links.

 Computation for vertical bars:

When measuring vertical bars, always check the end conditions of the bars and check for location of laps /
anchorage lengths. Floor to floor height must be verified from the framing plans, especially at termination
points.

 Computation for links in column:

Length of links – can be computed in similar way as the links / stirrups in beam
Number of links - There are two (2) conditions to consider when computing for number of links:

1. when links are to be provided at clear height only

2. when links are provided at entire floor height including at intersections with other
members
I. Measurement of Wall Reinforcement

 Reinforcement to walls comprised primarily of horizontal bars and vertical bars. For
thicker walls, links or binders may be provided.
 Measurement of reinforcement will still be generally the same as the column.
 Adjustment to wall reinforcement due to openings in walls:

- Always check from elevation or from framing plans for locations of wall openings like openings for doors,
windows, etc. and make sure that all necessary adjustments are made.
- When measuring walls with openings, treat walls as if there is no openings in it, and later make the
adjustments.
- Adjustment to opening in walls can be dealt with similarly to adjustment for slabs with voids or openings.

J. Measurement of Stair Reinforcement

 Reinforcement to stair comprised primarily of the main bars, secondary bars, nosing
and chairs (as required).
 Measurement of reinforcement to stair stringer and stair landing is similar to the one
way slab.
 Computation for the length of nosing bar and chair bar:

Nb = w – 2 x cc
Cb = t + r – 2 x cc + 2 x AL
where
Nb = nosing bar
w = width of stair
cc = concrete cover
 AL = anchorage length
Cb = chair bar
t = stair tread
r = stair riser

 Computation for the number of nosing bar and chair bar:

Nosing bar = as per number steps

#Cb = [round((w – 2 x cc) / spacing) + 1] x number of steps

o Finishing And Miscellaneous Works

 Finishes

- Work shall be measured flat without addition for laps or seams. Internal and external work shall each be
so described.
Rules of Measurement:

1. Finishing shall be measured by area, classified as follows:

 Floors, which shall include landings

 Walls, which shall include returns, reveals of openings or recesses and attached and
unattached columns
 Ceilings, which shall include attached and unattached beams and soffits of staircases.
 Staircases, which shall include treads, risers and edges of landings but exclude
soffits.
 2. Skirtings, coverings to kerbs, or the like shall be measured by length
3. Suspended ceilings shall be measured by area, classified as follows:

- Ceilings stating the drop

- Sides and soffits of beams or upstands

 Doors and Frames

- Doors and door frames shall be enumerated stating their size and type of material.

 Windows

- To measure this work, individual windows shall be enumerated and fully described together with the rough
opening sizes for the units.

 Miscellaneous Metals

- The miscellaneous metals trade has a wide scope that in very general terms can be defined as metal
items that are neither part of the structural steel work nor part of any other trade section. Some of the
common items contained in this section and their measuring methods are as follows:

1. Measure miscellaneous angles and channels in linear feet or meters, stating the size and
location of the items.
2. Measure in square feet or square meters and fully describe grates, grilles, grillwork and
louvers that are not part of the mechanical system. Measure frames for this works in linear
feet or meters, stating size and type of section.
3. Measure in linear feet or meters and fully describe metal handrails, railings and balusters.
4. Enumerate and fully describe ladder rungs.
5. Enumerate and fully describe metal corner guards.
  Specialties

The specialties trade is another wide-ranging trade section of the specifications that includes items of work
as the following:
- Bulletin boards
- Signs
- Folding partitions
- Storage shelving
- Mail boxes
- Toilet partition
- Bathroom accessories
Enumerate and fully describe the following items:
- Shower curtain rods
- Soap dispenser units
- Grab bars and towel bars
- Mirrors
- Napkin dispensers
- Toilet roll holders
- Towel dispensers
- Waste receptacles
- Medicine cabinets
- Coat hooks

 Finish Hardware

Finish hardware includes the following items that shall be enumerated and fully described:
- Hinges
- Flush bolts
- Bumper plates
- Deadlocks
- Doorstops
- Lock sets
- Latch sets
- Kick plates
- Panic hardware
- Push plates
- Pull bars
- Door closers

o Masonry Works
 Includes construction with clay bricks, concrete ricks and blocks, clay tiles, and natural and
artificial stone.
 Hollow Block Sizes

400 X 200 X 200 mm (8” thick)

400 x 150 x 200 mm (6” thick)
400 x 100 x 200 mm (4” thick)
Rules of Measurement:

1. Masonry work is measured “net in place” and the necessary allowances for waste and
breakage are considered later in the estimating process when this work is priced.
2. The units of measurement for masonry are generally the number of masonry pieces such
as concrete blocks.
3. Calculating the number of masonry units involves a two-stage process:
 The area of masonry is measured
 A standard factor is applied to determine the number of masonry units required for
area measured.
4. Measurement for mortar in cubic meters is deemed included.

o Structural Metal Work

Unless otherwise stated, structural metalwork shall be measured by weight, classified as follows:

 Grillages (wiremesh)
 Beams
 Portal frames (steel columns & rafters)
 Roof trusses
 Support steelwork

o Thermal and Moisture Protection

Rules of Measurement:
 1. Work shall be measured flat without addition for laps or seams.
2. Coverings & linings:
 Unless otherwise stated, roofing, tanking, waterproof coverings, linings or the like shall be
measured by area, classified as follows:
 Flat coverings
 Sloping coverings
 Vertical coverings

3. Insulation:
 Insulation shall be measured by area; alternatively, it may be described with items of
composite roofing.

Pricing Direct and Indirect Items

Direct Items

o Materials
o Labor And Equipment
o Labor Hours And Productivity
o Subcontractor’s Work

Material Rates
The materials used in a construction project fall into two broad categories:
 Materials that form part of the finished structure such as concrete
 Materials that are consumed in the construction operations such as fuel oil

Most unit prices used to price materials are based on quotations from the suppliers of these materials,
seldom are the unit prices used in the estimate obtained directly from the suppliers. Even where suppliers
do quote prices for the same unit of measurement as the estimate, like concrete, the suppliers’ prices need
to be adjusted to account for wastage of materials.
When pricing any materials, there are a number of questions that should be answered before the prices
are used in an estimate:

 Do the materials offered by the supplier comply with the specifications?

 Do the prices quoted include delivery of the materials to the site?
 Can the contractor rely on the supplier’s prices to remain firm until the owner awards the contract?
 Does the supplier’s price include state or city sales taxes?

Labor And Equipment Rate

There are two basic methods of pricing labor and equipment:

 First method: the estimator uses productivity rates to convert the take-off quantities into labor-hours
and equipment hours, and then applies wage rates and equipment rates to the total hours to obtain the
estimated labor and equipment prices for the project.
 Second method: the estimator makes use of unit prices that are applied to listed take-off quantities to
calculate the total labor or equipment price for the work involved.

Whichever method of pricing is used, it is clear that there is a high risk factor in pricing labor and
equipment because each involves two components that are subject to variations that can be difficult to
predict. The two factors are as follows:

 The hourly wage rate of labor or hourly cost of equipment

 The productivity of the labor or equipment

Labor Hours And Productivity

Estimating labor requires determining the number of labor hours to do a specific task and then applying a
wage rate. A labor hour is defined as one worker working for one hour. Determining the labor hours
requires knowing the quantity of work to be placed and the productivity rate for the specific crew that will
perform the work. The productivity rate is often expressed as a number of labor hours per unit of work,
although it may also be expressed as the quantity of work performed by a crew during a standard eight-
hour day.
The productivity rates can come from a number of sources, but the most reliable source is historical data.
General formula is expressed as:
Productivity Rate = Labor Hours ¸ Quantity
Labor Hours = Quantity x Productivity Rate
The productivity rate that is used, if derived from historical data, is for the average or standard conditions
for the projects used in calculating the historical production rate. On many occasions, the project that is
being bid deviates from these standard conditions. Therefore, the number of labor hours needs to be
modified to take into consideration how the project that is being bid deviates from the standard condition.
This is done by using a productivity factor.
Adjusted Labor Hours = Labor Hours x Productivity Factor

 When the conditions slow the progress of the work, a productivity factor greater than one is used, thus
increasing the number of labor hours to complete a unit of work.

 When the conditions increase the speed at which the work progresses, a productivity factor less than
one is used, thus decreasing the number of labor hours to complete a unit of work.

Following are some variables that need to be considered when determining the productivity factor:

 Availability and productivity of workers

o When there is plenty of work available and workers are scarce, less trained craft persons are
accepted. These less-trained persons will require more time or labor hours to complete the
required task, and a productivity factor greater than one is used.
o Conversely, when construction projects are scarce, workers may become motivated, and the
contractor can be selective and hire only the most qualified workers. This will result in producing
more work per labor hour, and a productivity factor less than one is used.

 Climatic conditions

- cold, hot, winds, rain, snow and combinations of these all affect the amount of work that can be
produced in an hour. Typically, any weather extremes will slow down the work pace and may require
additional precautions that add labor hours to the project.

 Working conditions

- the job site working conditions can have a great effect on the rate of work. A project being built in the
city with little working space, limited storage space and difficult delivery situations typically has less work
accomplished per labor hour just due to the difficulty of managing the resources.
To price labor, first the estimator must estimate the labor hours required to do the work. These labor hours
can then be multiplied by the hourly wage rate to develop the labor costs.
Labor cost = Adjusted Labor Hours x Hourly Wage Rate
Pricing Indirect Items
Indirect Items

o Overhead And Supervision
o SSS / ECC / MC / VL / SL
o Bond Premium
o Contingencies And Miscellaneous
o Contractor’s Tax

Overhead And Supervision

– to be computed on the estimated manpower requirement as prescribed in the contract conditions

Bond Premium
(i.e., the given Bid Amount is PHP 5,000,000.00)

o Bid bond (based on surety bond)
 Bid bond = 10% x PHP 5,000,000.00 = PHP 500,000.00
o Contractor’s All Risk
 Bid amount x 3% = amount of premium
 Php 5,000,000.00 x 0.003 = PHP 15,000.00
o Performance bond (20% of Bid Amount)
 20% x PHP 5,000,000.00 = PHP 1,000,000.00