CMCE 1221 - Construction

Management I

Class 3 - Project Organization & Project Delivery

Methods
Recap
Construction Industry - Employment

Risky Business

Industry Sectors - By Funding Source

By Structure Type

Project Stakeholders - Owners, Designers and Constructors

Projects, Programs and Portfolios

Project Stakeholder Management - Power Interest
Grid

(Passively Manage) (Actively Manage)

(Passively Informed) (Actively Informed)

Projects, Programs and Portfolios
Projects - Temporary endeavor undertaken to create a unique product, service or
result.

Programs - a group of related projects, subsidiary programs, and program

activities that are managed in a coordinated manner to obtain benefits not
available from managing them individually.

Portfolio - collection of projects, programs, subsidiary portfolios, and operations

managed as a group to achieve strategic objectives.

*Capital Improvement Definition-

https://www.tax.ny.gov/pubs_and_bulls/tg_bulletins/st/capital_improvements.htm
 Projects, Programs and Portfolios

Projects, Programs and Portfolio complement each other.

● Projects - doing things the right way
● Program - doing the right projects
● Portfolio - doing the right projects/programs
Project Life Cycle
A project life cycle is the series of phases that a project passes through from its
start to its completion

A project phase is a collection of logically related project activities that culminates

in the completion of one or more deliverables.

For construction project, typical phases are:

1. Pre-Design Phase
2. Design Phase
3. Procurement Phase
4. Construction Phase
5. Post-Construction/Close out Phase
Operations
Operations are the ongoing execution of activities; follow organization’s
procedures to produce the same result or a repetitive service to earn profit.

Production, manufacturing, and accounting are examples of operations.

Types of CM
Agency CM - A form of construction management performed in a defined
relationship between the CM and owner. The agency form of construction
management establishes a specific role of the CM acting as the owner’s principal
agent in connection with the project/program.

CM-at-risk (CMAR) - CM firm acts as owner’s representative during the design

phase and once design is complete and construction phase begins, CM becomes
a General Contractor and executes the project.
Organization Structure
Important to understand to know how the authority flows in an organization

1. Organization Structure - Generalist, Departmental and Matrix

2. Work Breakdown Structure (WBS)
3. Workflow
4. Levels of Specialization
5. Span of Control
6. Decision Making
7. Organization Chart
Levels of Specialization
Compartmentalization - organizing by function. It can be broad or narrow. The
narrow the compartmentalization, the more specialists are in the team.

More narrow the compartmentalization, the slower the decision making gets.

Authority - decision making power. With power comes responsibility.

Too many specialists can slow down decision making

Decision Making
Centralized - decisions come from the highest authority. E.g. President, CEO etc.
Small firms are typically centralized.

Decentralized - decisions making authority is delegated to middle to lower

management. e.g . Project Manager etc. As the firm grows, the decisions have to
be made faster and that requires decentralized structure.
Span of Control
Number of direct reports a manager has.

Narrowing span of control creates more compartmentalization.

Typically 4-6 is considered as optimal span of control.

Span of Control
Work Breakdown Structure (WBS)
Breaking work into manageable pieces to make it understandable to project
participants.

Assignment of time durations, cost and resources - labor, material and equipment

Progress of the project can be measured.

Workflow
Define procedures to allow the work to be done efficiently.

Three kinds of working relationships are:

Pooled - specialized resources grouped together to work on many projects

Sequential - one after other

Reciprocal - back and forth

Workflow
Chain of Command
Formal route by which the line of authority is established from the highest to
lowest level of worker.

Line position - directly associated with the achievement of goals of company. E.g.
Engineers, technical staff etc.

Staff position - advising or assisting positions to support line positions. E.g Human
Resources, Accounting etc.
Generalist Org. Structure
Small companies typically have this structure.

Decision making is solely upon the owner.

Top down communication is dominant.

Typically have wide span of control.

Departmentalization Org. Structure
Creation of “silos”

Narrow span of control.

Designation of a supervisor.

Slower decision making.

Matrix Org. Structure
Breaks “silos”

Breaks one boss rule

Improves lateral communication

Legal Forms of Organizations
1. Sole Proprietorship - one owner; easy to setup; income is reported on
personal income taxes
2. Partnership LLC - at least two owners
3. Corporation - owners are classified as shareholders.
Project Delivery Methods
A particular arrangement of contract that assigns risks and responsibilities to the
professionals.

Construction has too many unknowns. Owner’s intention is to minimize the risks
by selecting the right delivery method and contract

Types of risks:

1. Financial - cost overrun

2. Time - schedule overrun
3. Design - final product not performing the function it was intended for.
4. Quality - final product not conforming to required quality standards
5. Unknown Conditions
Project Delivery Methods
For construction project, typical project delivery methods are:

1. Design/Bid/Build
2. Design-Build
3. Multiple Prime Contracting
4. CM-at-risk (CMAR)
5. Integrated Project Delivery (IPD)
6. Private Public Partnership (PPP) - https://www.youtube.com/watch?v=-gyimy-UmKM
7. Job Order Contracting (JOC) https://www.gordian.com/resources/job-order-contracting-101-series/
Design/Bid/Build
Advantages:

1. Has been around for ages - well understood in the industry

2. Benefit of open market bidding
3. Final cost is known usually before beginning of the construction

Disadvantages:

1. Construction input is not there

2. Cannot take advantage of fast tracking
3. No interaction among the teams
Design/Build
Advantages:

1. Communication among design and construction teams

2. More coordination
3. One point of contact
4. Fast tracking can be done

Disadvantages:

1. Cost of construction is not available at the beginning

2. Lack of checks and balances
Multiple Prime Contracting
Same as DBB but involves multiple prime contractors

Advantages:

1. Fast tracking can be done

2. Benefit of open market bidding
3. Final cost is known usually before beginning of the construction

Disadvantages:

1. Construction input is not there

2. Coordination between different primes becomes cumbersome
3. No interaction among the teams
CM-at-risk
Advantages:

1. Construction input
2. One point of contact
3. Can also perform CM functions along with being a General Contractor
4. Fast tracking can be done
5. Final cost (GMP) is known usually before beginning of the construction phase

Disadvantages:

1. Checks and balances

2. Can be expensive
Integrated Project Delivery (IPD)
Advantages:

1. Promotes overall coordination among stakeholders right from the beginning of

the project
2. Fast tracking can be done
3. Reduces changes at the later stage
4. Final cost is known usually before beginning of the construction

Disadvantages:
1. Risk liabilities are hard to account for.
Contract Types
For construction project, typical contracts are:

1. Fixed Price
2. Unit price
3. Reimbursable Cost plus fee
Next Week Lookahead
Read Chapters 4 and 5 from book.

Read assigned readings posted on Blackboard