MoD.

1: Introduction To Project, Its Stages And Construction Project Management:

Project: Project is a unique process, consist of a set of coordinated and controlled activities with
start and finish dates, undertaken to achieve an objective confirming to specific requirements,
including the constraints of time cost and resource.

Construction is defined as creation, renovation, repair and demolition of immobile structures and
the alteration of natural typography of the ground. It is the process of translating the plans,
specifications and resources into a physical facility to meet the specific requirements of owners
within schedule, cost and quality. Construction activity by nature is impermanent as it shifts from
one project and employer to another. Construction process is a hybrid of both manufacture and
service functions. Management is defined as the accomplishment of results through the effort of
other people. It is also defined as decision making.

DEFINITION:-
“A Project is typically an assignment that has an identifiable start and a finish and consists of
a series of discreet, finite tasks. It is a one-shot, time limited, goal directed major undertaking
requiring commitment of varied skills and resources.
It is a combination of human and non human resources pooled together in a temporary
organisation to achieve a specific purpose”.

Project Performance Dimensions

Three major dimensions that define the project performance are scope, time, and resource.
These parameters are interrelated and interactive. The relationship generally represented as
an equilateral triangle.
Performance = f(Scope, Cost, Time)

PHASES OF PROJECT MANAGEMENT :

The process of project management may be broadly divided into four phases as detailed below:

i. Feasibility ii. Design iii. Execution iv. Termination

1: Project life cycle phases Project management can also be viewed from the angle of different
functional specialisations in management. Every project would have the above phases relating to
technical, market and demand, financial and managerial. The level of effort that any project
receives is not uniformly distributed throughout its life span but varies from phase to phase. The
projects may have to pass through the above four phases. Ideally these phases are to be in
sequence. In practice, however, there may be some overlapping. The level of effort during the
execution phase is about 85% and that inproject

PROJECT LIFE CYCLE PHASES:

One of the most fundamental concepts in project management is the It is completed as soon as the
mission is fulfilled. The life cycle of a project with respect to the intensity of activity that is
associated with a particular project may be divided into four distinct phases as detailed in Section 4

i. Feasibility: This phase begins with the identification of some unfulfilled need in the economy or
the market. The investor gets an idea to design and establish a project to fulfill that need.
Technical feasibility to meet demand and supply gap and willingness to risk funding are examined. If
project idea is found feasible, investment decision is taken and resources are mobilised to go ahead
with the project.

ii. Design: Design relates to planning phase of the project. In this phase, technical parameters are
frozen and the basic designing of the project is completed. In this phase, technical specifications,
cost estimates, time schedules and steps to mobilise funds and other resources are finalised for
successful completion of the project. There is a significant increase in activities and number of
people are involved and large amount of money is spent. At the end of design phase, one is ready
with a blue print for execution of the project. The output of design phase is usually called detailed
project report (DPR).

iii. Execution: After the design phase, the project moves into the execution phase where the
emphasis is on giving a physical shape to the ideas detailed in DPR.

iv. Termination: As the execution phase reaches its end, the termination phase starts. Handling over
of constructed facilities, identification of operation crew, necessary training, etc. are the activities in
this phase. Transfer of leftover materials, reassignment of project team to a new project are

Qualities of Good Management :

• Creation of congenial environment to enable people to contribute to productivity willingly and

voluntarily

• Good leadership (ability to turn vision into results)

• Making effective decisions considering future needs, their impact, quality and acceptability
factors

• Responsibility for performance

• Making strengths of employees productive and their weaknesses irrelevant

• Team building to achieve positive synergy

• Deployment of human and capital resources to create and satisfy markets in the most effective
way

• Motivate people to get desired level of performance

• Balancing competing goals and set priorities

• The set goals should be SMART (specific, measurable, attainable, relevant and trackable).

„ BUSINESS ORGANISATION :

Forms of business organisation based on ownership is as given below:

i. Sole proprietorship
ii. Partnership
iii. Company
iv. Private company
v. Public limited company

Partnership Firms :

Partnerships are governed by the Indian Partnership Act 1932. For nonbanking business, number of
partners may vary from 2 to 20. Formal partnership deed is necessary. Liabilities of partnership firm
can be recovered from any or all partners even from their personal properties. Share transfer is
possible only with the consent of other partners. Each partner is individually and jointly responsible
for the liabilities of the firm. Usually, net profits are shared among partners in the ratio of their
investment. Here, decision making can be slow. Further, conflicting opinions among partners can
affect decision making. But, it can generate more capital and access to specialised manpower and
technology to take up variety of projects.

iii. Company : Registration is compulsory. Company is formed by the choice and consent of the
members. Minimum number is 7 and there is no upper limit for the number of members. A
company is regarded by law as a single person. It has a permanent existence. It is managed by
Board of Directors through Chairman cum Managing Director or Managing Director. The liability of
shareholders is usually limited to their shareholding investment.

• A private company. It will not have more than 50 members. Invitation to public for subscription to
share capital is prohibited. There is restriction on rights of members for transfer of shares.

• Public limited company. All companies other than private companies are public limited companies.
Minimum number of members is 7. It can raise capital through public subscription. Percentage of
shareholding is decided by the government guidelines.

 •Government company: Government holds not less than 51% of share capital. Usually, it
operates in monopoly areas, e.g. very large projects like dams, townships, etc. It has access
 to high technology and large capital. It is accountable to government and parliament or
legislature. It is rigid in its transactions. Eg: BMRCL, KIAL, BESCOM, KSRTC, etc.

 Foreign company: It is incorporated outside India. But it has to follow the rules of the land,
while executing the project. Arbitration procedures as specified in the contract should be
followed. It can bring in exclusive technologies both in design and execution; not available
in the country, either individually or by hiring specialists. It can take up projects with global
reach involving multidisciplinary skills and tec Foreign company: It is incorporated outside
India. But it has to follow the rules of the land, while executing the project. Arbitration
procedures as specified in the contract should be followed. It can bring in exclusive
technologies both in design and execution; not available in the country, either individually
or by hiring specialists. It can take up projects with global reach involving multidisciplinary
skills and technologies. Eg: GENSLER, Parsons& Brinkerhoff, etc.

TYPES OF BUILDING CONTRACTS: There are several types of contracts. Following types are detailed
below. Classification of engineering contracts:

(A) Based on purpose

i. Full contracts: Contracts for entire scope of work, e.g. building work with all services (internal
sanitary, electrical, air conditioning, lifts, roads and all external services).

ii. Labour contract: Owner supplies all materials and contractor provides labour required for
execution of contracted work.

iii. Turnkey contract: Adopted for complex and specialized works. Entire responsibility rests with the
contractor for

iv. Procurement contract: For procurement of materials for a work. It may be a rate contract for a
year, or entire period of contract or for a specified period.

vi. Transport contracts: For transport of materials from rail head to works site or owner’s
warehouse.
vii. Erection contracts: For installation and erection and commissioning of plant and
machinery given by the owner.
viii. Consultancy contracts: To avail the services of a consultant for project formulation, DPR,
construction, supervision and progress monitoring.

(B) Based on economic classification:

i. Nonturnkey contract: Owner provides design and contractor executes the work. Payment is made
at agreement rates for the work done on the basis of measurements.

ii. Turnkey contracts: Total responsibility of design, construction and commissioning of the project is
entrusted to contractor.

• Measurement contracts (Item rate and% rate) • Lumpsum contracts • Cost plus fee contracts •
Turnkey contracts • Build—Own—Operate and Transfer (BOOT) contracts • Design, finance, build,
own, operate and transfer (DFBOOT) contracts i. Measurement contracts: a. Percentage contracts:
For small works and works of repetitive nature, percentage rate contracts are adopted. Owner
indicates quantities and estimated rates for all items of work. The estimated cost is reflected in

The tenderer quotes% above or % below the estimated cost put to tender. Payment is made on the
basis of actual quantities executed and measured.

b. Item rate contracts: For major works, item rate contracts are adopted. Owner indicates quantities
and units only for all items of work and the tenderer quotes rates for each individual item. Payment
is made for actual work done based on measurements. This type of contract is useful for works
where all items are not finalised at the beginning. Item can be modified within certain limits on the
basis of detailed planning and design.

ii. Lumpsum contracts: Scope of work, construction drawings and detailed specifications are given to
tenderer along with terms and conditions of contract. Schedule of quantities may or may not form
a part of tender documents. Even if they are supplied they are not contractually operative and
informative only. The tenderer quotes a fixed price for the whole work tendered. If this type of
contract is adopted, the owner will be knowing cost of work on the eve of award of contract.
However, this is subject to the condition that there is no variation in scope of work subsequently.
Provision can be made for escalation in this type of contract also. Detailed measurement of work
done may not be necessary when contract specifies stage payment to effect interim payments. This
type of contract can be considered when scope of work is frozen; when planning, designing and
working drawings are completed before inviting tenders. It is a normal practice to incorporate a
provision in the contract document for additions, deletions, etc. during execution to facilitate
release of interim payments.

iii. Cost plus fee contract: This method of contract is adopted for: (i) emergency works, (ii) for
miscellaneous works and (iii) for works for which scope cannot be defined properly at tender stage.
Contractor is paid his actual cost of materials labour, hire charges of machinery and a fee towards
his profit and overheads. This fee may be a percentage of total cost with or without a ceiling or a
lumpsum amount. Here contractor’s risk is minimum and owner’s liability is not known on the eve
of commencement of works.This type of contract is adopted in government or private sector works.

iv. Turnkey contracts: In a turnkey contract, the contractor takes full responsibility for design,
construction and commissioning of the facility of defined scope for a fixed fixed lumpsum price.
This is an area of high risk for the contractor. The contractor has to bear the normal risk of
unforeseen site conditions, poor weather and foundation problems. Time over-runs will adversely
affect his profitability particularly in cases where there is no provision for escalation. A bonus or
penalty clause may be included as an incentive or disincentive to the contractor to complete the
work on time. This type of contract is suitable for projects where all the functional parameters are
finalized and changes and extras are not made later. Such type of contracts are seen more in
commercial, defence and interior projects of multidisciplinary character. When timely completion is
important as any delay in completion results in economic loss for everyday of delay (e.g. commercial
projects or revenue yielding projects). Turnkey contractor selected must have an excellent track
record in management of projects. The schedule or cost quoted by him should be of secondary
consideration.
v. BOOT contract: With the liberalisation and opening up of the economy, private sector is
encouraged to execute public works, own them, operate for a specific period and transfer the same
to public authority. The entrepreneur will recover his investment during the period he owns and
before the transfer of asset. This type of contract is adopted for highway projects, airports,
convention centres, IT parks, power plants and bridges. Government avoids funding and allows a
private person or a group to invest, build and transfer the facility after recovering their investment.
Government acts as a facilitator in terms of legal issues, acquisition of land and enforcement of
issues. This is ideal where the government itself is unable to raise huge resources to take up such
big projects.

DFBOOT contract: It is similar to BOOT contract except the entrepreneur will also be responsible for
the designing, and financing of the project. Government’s responsibility is same as that in BOOT
contract.