TYPES OF

CONSTRUCTION
CONTRACTS
Week 3 UE-405
Contract:
• An agreement between the organization and an
outside provider of a service or materials is
a contract.
• To limit misunderstandings and make them more
legally binding, contracts are usually written
documents that describe the obligations of both parties
and are signed by those with authority to represent the
interests of the parties.
Types of contracts
• The legal contracts that support the procurement
plan consist of two general types of contract:
• the fixed-price and
• the cost-reimbursable contracts
Fixed-Price Contracts
• The fixed-price contract is a legal agreement
between the project organization and an entity
(person or company) to provide goods or services
to the project at an agreed-on price.
• The contract usually details the quality of the goods or
services, the timing needed to support the project, and
the price for delivering goods or services.
• For commodities and goods and services where the
scope of work is very clear and not likely to
change, the fixed price contract offers a predictable
cost.
Fixed-Price Contracts
• Fixed-price contracts require the availability of at
least two or more suppliers that have the
qualifications and performance histories that assure
the needs of the project can be met.
• The other requirement is a scope of work that is
most likely not going to change.
• Developing a clear scope of work based on good
information, creating a list of highly qualified
bidders, and developing a clear contract that
reflects that scope of work are critical aspects of a
good fixed-priced contract.
Fixed-total-cost Contract
• If the service provider is responsible for
incorporating all costs, including profit, into the
agreed-on price, it is a fixed-total-cost contract.
• The contractor assumes the risks for unexpected
increases in labor and materials that are needed to
provide the service or materials and in the materials
and timeliness needed.
Fixed-price Contract With Price
Adjustment
• The fixed-price contract with price adjustment is
used for unusually long projects that span years.
• The most common use of this type of contract is the
inflation-adjusted price.
• In some countries, the value of its local currency can
vary greatly in a few months, which affects the cost of
local materials and labor.
• In periods of high inflation, the client assumes risk of
higher costs due to inflation, and the contract price is
adjusted based on an inflation index.
• The volatility of certain commodities can also be
accounted for in a price adjustment contract.
Fixed-price With Incentive Fee
• The fixed-price with incentive fee is a contract type
that provides an incentive for performing on the
project above the established baseline in the
contract.
• The contract might include an incentive for
completing the work on an important milestone for
the project.
• Often contracts have a penalty clause if the work is
not performed according to the contract.
• For example, if the new software is not completed
in time to support the implementation of the
training, the contract might penalize the software
Fixed Unit Price Contract
• If the service or materials can be measured in
standard units, but the amount needed is not known
accurately, the price per unit can be fixed—a fixed
unit price contract.
• The project team assumes the responsibility of
estimating the number of units used.
• If the estimate is not accurate, the contract does not
need to be changed, but the project will exceed the
budgeted cost.
Table of Fixed Price Contracts and
Characteristics
Cost-Reimbursable Contracts
• In a cost-reimbursable contract, the organization
agrees to pay the contractor for the cost of
performing the service or providing the goods.
Cost-reimbursable contracts are also known as
cost-plus contracts.
• Cost-reimbursable contracts are most often used
when the scope of work or the costs for performing
the work are not well known.
• The project uses a -reimbursable contract to pay the
contractor for allowable expenses related to
performing the work.
• Since the cost of the project is reimbursable, the
Cost-Reimbursable Contracts
• When the costs of the work are not well known, a
cost-reimbursable contract reduces the amount of
money the bidders place in the bid to account for
the risk associated with potential increases in costs.
• The contractor is also less motivated to find ways to
reduce the cost of the project unless there are
incentives for supporting the accomplishment of
project goals.
• Cost-reimbursable contracts require good
documentation of the costs that occurred on the
project to assure that the contractor gets paid for all
the work performed and to assure that the
Cost-reimbursable Contract With A
Fixed Fee
• A cost-reimbursable contract with a fixed fee
provides the contractor with a fee, or profit amount,
that is determined at the beginning of the contract
and does not change.
Cost-reimbursable Contract With A
Percentage Fee
• A cost-reimbursable contract with a percentage fee
pays the contractor for costs plus a percentage of
the costs, such as 5% of total allowable costs. The
contractor is reimbursed for allowable costs and is
paid a fee.
Cost-reimbursable Contract With A
Incentive Fee
• A cost-reimbursable contract with an incentive fee
is used to encourage performance in areas critical
to the project.
• Often the contract attempts to motivate contractors
to save or reduce project costs.
• The use of the cost reimbursable contract with an
incentive fee is one way to motivate cost reduction
behaviors.
Cost-reimbursable Contract With A
Award Fee
• A cost-reimbursable contract with award fee
reimburses the contractor for all allowable costs
plus a fee that is based on performance criteria.
• The fee is typically based on goals or objectives
that are more subjective.
• An amount of money is set aside for the contractor
to earn through excellent performance, and the
decision on how much to pay the contractor is left
to the judgment of the project team.
• The amount is sufficient to motivate excellent
performance.
Time And Materials (T&M).
• On small activities that have a high uncertainty, the
contractor might charge an hourly rate for labor,
plus the cost of materials, plus a percentage of the
total costs.
• This type of contract is called time and materials
(T&M).
• Time is usually contracted on an hourly rate basis
and the contractor usually submits time sheets and
receipts for items purchased on the project. The
project reimburses the contractor for the time spent
based on an agreed-on rate and the actual cost of
the materials.
Table of Contract Types and
Characteristics
• To minimize the risk to the project, the contract
typically includes a not-to-exceed amount, which
means the contract can only charge up to the agreed
amount.
• The final cost of the work is not known until
sufficient information is available to complete a
more accurate estimate.
CONSTRUCTION
PLANNING AND
SCHEDULING
Developing Preliminary Schedules
• Knowing the tentative dates when all the key events
are going to occur is critical to the overall success
of the project.
• Schedules are time-based plans.
• Most construction projects involve many design
professionals, financial institutions, contractors,
and end users, all of whom are keenly interested in
knowing upfront as to when they will be involved
in the project and for how long.
• These answers can only be provided through the
use of preliminary schedules.
 Types of Preliminary Schedules
• Three separate but distinct preliminary schedules
are important for effective control on most
multiple-facility projects. These include:

1. A design and procurement schedule,

2. A construction schedule summarized by individual
contracts, and
3. A construction schedule summarized by individual
facilities.
Design and Procurement Schedule
The design and procurement schedule
• shows the design and procurement phases of the
various proposed work packages
• illustrates the (time) relationships for the design and
procurement phases among the various work packages
• For best results, a schedule for each proposed bid
(work) package must be prepared separately
showing:
•

• the design and specification period,

• package review and approval period,
• bidding period, and
Design and Procurement Schedule
• This schedule must be developed early and must be
used by the designer, owner, and manager in
performing their assigned tasks, since the
construction schedule is wholly dependent upon
award contracts by the required dates.
• In general, designers will prepare an overall design
schedule and get it approved by the manager.
Design and Procurement Schedule
for an Office-Building Project
Considerations while Developing
the Design and Procurement
Schedule
•Number of work packages
• Individual work package construction completion
time requirement
• Overall project time completion requirement
• design and construction considerations (complexity,
scope etc.) for each work package
• Procurement considerations (prospective
contractors, amount of competition expected, etc.)
for each work package
Preliminary Construction Schedules
• Preliminary construction schedules are prepared to
show;
• Start and completion dates,
• the anticipated duration of each contract package and
• the interrelationships between the separate packages.
• This is a preliminary construction schedule
summarized by individual contracts.
• It will enable adjustments to be made to the design
and procurement schedule so that critical items are
taken into account by the designer, owner, and
manager.
Preliminary Construction Schedule
(summarized by contracts) for an Office-
Building Project
Establish Activity Sequencing/
Logic Relationships
• Sequencing can be performed with the aid of a
computer (e.g., by using project management
software) or with manual techniques.
• Manual techniques are often more effective on
smaller projects. Manual and automated techniques
may also be used in combination.
INPUTS TO ACTIVITY
SEQUENCING
• Activity list
• Mandatory dependencies (Hard Logic)
• Mandatory dependencies are those that are inherent in
the nature of the work being done. They often involve
physical limitations. In a road project, for instance,
placing of base course is impossible without sub base
placing.
• Discretionary dependencies (Soft/Preferred Logic)
• Discretionary dependencies are those that are defined
by the project management team based on knowledge
of:
• "Best practices".
TECHNIQUES FOR ACTIVITY
SEQUENCING
• To depict the logic dependencies amongst activities,
a project network diagram is developed using either
the Arrow Diagramming Method or the Precedence
Diagramming Method.
 Precedence Diagramming Method
(PDM)
• This is a method of constructing a project network diagram using:
• nodes to represent activities and
• full arrows to show the dependencies.
• This technique is also called activity-on-node (AON) and is the method of choice
for most project management software packages (why?).
• Like ADM, PDM can be done manually or on a computer.
Precedence Diagramming Method
(PDM)
Important parts of a PDM/AON
Network
• In a PDM diagram, a node – the “rectangular box”,
represents an activity and the “links” – the arrows,
connect activities.
• Dummies can be forgotten, almost. Only a starting
or ending dummy will be used, if needed, to ensure
that there is a single start and a single finish activity
for the project.
Precedence Relationships
• In an actual construction project, especially fast
track projects, many activities have relationships
that are not easily expressed with traditional Finish-
to-Start logic which requires that one activity must
finish before the following one can start.
• To overcome this limitation presented by ADM,
PDM allows for four types of dependencies or
precedence relationships.
• This gives more flexibility and ease in realistically
identifying and defining the activity relationships,
thereby allowing for a better model of the
construction process.
Precedence Relationships with
Lead-Lag Factor:
• Any of the precedence relationship between two
activities may require specification of a time lead
or a time lag in order to accurately define the
relationship.
• PDM, in addition to using different relationships,
allows use of lead-lag factors to indicate the
amount of time that must expire before the action
expressed by the relationship can be performed.
• For instance, in the traditional FS relationship, an
activity can start immediately when predecessor
has finished – this is equivalent of a lead-lag factor
of 0 because zero time was required between finish
Precedence Relationships with
Lead-Lag Factor:
• A positive value of lead-lag factor means a lag i.e. “wait”,
whereas a negative value indicates a lead. A zero value for the
lead-lag factor represents no time lapse needed between two
activities.
• For example, the planning team desires that there should be at
least a two-week lapse between ordering a piece of equipment
and installing it. This relationship may be represented as
follows:
Finish to Start
Start to Start
Finish to Finish
Start to Finish
CPM SCHEDULING ON
PDM NETWORKS
Steps for Forward Pass Calculations
Backward Pass Calculations:
• Assumption: Each activity starts as late as possible,
that is, without delaying the project duration.
Steps for Backward Pass
Calculations
 Activity Floats
• There is a leeway (flexibility) in the scheduling of
some activities and none at all in the scheduling of
others.
• This leeway or “slack” is a measure of the amount
of time available for a given activity by which it
can be delayed without interfering with future
events.
• This flexible time is known as float.
• We are primarily concerned with either free float or
total float.
Total Float (TF)
Free Float (FF)
Float Calculation Table

Activity Duration ES EF LS LF TF FF

A 1 0 1 0 1 0 0

B 6 1 7 1 7 0 0

C 8 1 9 2 10 1 0

D 6 7 13 7 13 0 0

E 3 9 12 10 13 1 1

F 1 13 14 13 14 0 0
A PDM Project Network With Precedence Relationships
Without Imposed Time Constraints
Forward Pass Calculations
Backward Pass Calculations
Revised Concept of Free Float
Activity Float Calculations
Activity Duration ES EF LS LF TF FF*

A 20 0 20 0 20 0 0
B 10 16 26 33 43 17 0
C 10 20 30 20 30 0 0
D 17 7 24 29 46 22 0
E 15 23 38 40 55 17 17
F 8 35 43 35 43 0 0
G 5 26 31 43 48 17 0
H 6 20 26 42 48 22 5
I 4 53 57 53 57 0 0
J 9 31 40 48 57 17 17
Important Inferences from CPM Time Computations on Networks
Without Imposed Constraints (Examples 1 and 2)

• The activities for which both the start times are

same as well as both the finish times are same do
not have any schedule flexibility and are critical
activities that form the critical path.
• One consequence of using the zero-slack
convention is that the total float along the critical
path is zero, while the total float along all other
paths is positive.
• Another consequence of using the zero-slack
convention is that the free float for any particular
activity is always equal to or less than the total float
for that activity. Consequently, if the total float for
Summary Terms
• Forward Pass Calculation results in project
(longest) duration
• Backward Pass Calculation results in
identification of critical path(s)
• Early Start/ Early Finish result of forward pass
• Late Start/ Finish result of backward pass
• Total Float Amount of time an activity can be
delayed without delaying the end date of the project
• Free Float Amount of time the early time of an
activity can be delayed without delaying the early
time of succeeding activity
A PROJECT NETWORK
WITH IMPOSED TIME
CONSTRAINT:
CPM TIME-
CONSTRAINED
SCHEDULING
Time Constraint
• A Time Constraint refers to a restriction set on the
start or finish time/ date of an activity, milestone,
project phase or entire project.
• A constraint can be either flexible or inflexible.
Flexible constraint:
• A constraint that is flexible does not have the ability
to create any scheduling conflict with logic
relationships.
• It allows time flexibility in positive time direction
and hence a time is always available that satisfies
both the logic as well as the constraint.
• The following constraints are considered flexible:
o As Soon As Possible
o As Late As Possible
o Start No Earlier Than
o Finish No Earlier Than
Inflexible Constraint
• A constraint that is inflexible possesses the ability
to create a scheduling conflict with logic
relationships.
• It does not allow time flexibility in positive time
direction and hence it may be possible that a
constraint is set that violates a logic relationship.
• The following constraints are considered inflexible:
Consider a simple conventional
AON project network
Forward and Backward Pass
Calculations (without Constraint):
Constrain Scenario
• Now suppose that there is an imposed deadline
requirement to complete the project within 12
workdays.
• This time control on the finish of activity F can be
interpreted as an imposed time constraint and read
as: Activity F should Finish No Later Than
Workday 12.
Revised Network
Activity Float Calculations
Activity Duration ES EF LS LF TF FF

A 1 0 1 -2 -1 -2 0

B 6 1 7 -1 5 -2 0

C 8 1 9 0 8 -1 0

D 6 7 13 5 11 -2 0

E 3 9 12 8 11 -1 1

F 1 13 14 11 12 -2 0
Inferences
• In consequence to the imposed constraint, we are
forced into having a negative total float of –2 along
path A-B-D-F, which is the critical path.
• This, of course, indicates that 3 days must be saved
somehow if we are to finish on time. The concept
of negative float gives a useful rule for interpreting
a network analysis of a project with imposed dates:
• All negative floats must be eliminated by speeding-
up the corresponding activities, if the required
completion date is to be met.
• Since total float can be either negative, zero, or
positive, the critical path is the “path with the least
• Activity Symbol Duration Predecessor
(Days)
Project Start A 0
Mobilization B 7 A
Site Clearance C 3 B (SS+5)
Layout & D 2 C
Marking
Excavation E 10 D
Foundation F 20 E (SS+12)
Plinth Beams G 5 F (FF+3)
Columns H 10 G (FS–2)
Beams/ Slabs I 30 H (FS–3)
Block Masonry J 20 I (FS+15)
Plaster K 20 J (FF+30)
CONSTRUCTION TIME
PLANNING AND
SCHEDULING
INTRODUCTION
• Construction Time Planning is the first step in the
construction planning process.
• It includes the planning effort required to facilitate
timely completion of a project.
• Construction Time Scheduling provides a working
time-table of project activities for completion of the
project within specified time.
• It is a direct consequence of the construction time
planning process.
 Steps Involved In Construction
Time Planning
• The steps involved in construction time planning
and scheduling process are:
1. Develop Project Work Breakdown Structures
(WBS)
2. Develop Activity List
3. Estimate Activity Durations
4. Establish Activity Logic Relationships
5. Define Project Base Calendars
6. Develop Project Time Schedule
7. Analyze and Adjust Project Time Schedule
Project Work Breakdown Structures
(WBS)
Key Idea
WBS provides the foundation for defining work as it
relates to project objective and establishes the structure
for managing the work to its completion.

A WBS is not a to-do list (consisting of everything that

needs to be done on the project). Rather it is management
structure.
WBS Definition
According to PMI:
A Work Breakdown Structure (WBS) is a deliverable-
oriented grouping of project components that defines and
organizes the total scope of the project; work not in the
WBS is outside the scope of the project.
WBS Definition
A WBS is the hierarchy of work you must accomplish
to complete a project. The WBS is structured in
levels of work detail, beginning with the end result or
product, and then divided into identifiable work
elements. Each descending level in a WBS represents
an increasingly detailed description of the project
deliverables.
 WBS Characteristics
These definitions imply that a WBS has the following characteristics:

1. It is representative of work, and this work has a tangible result.

2. It is arranged in a hierarchical structure.

3. It provides a management structure.

WBS Levels
• The WBS will include all work to be done by the
primary organization.
• While generally the WBS consists of a five-level
hierarchy describing the entire effort to be
accomplished by the primary organization (that
number may not be appropriate for all situations).
• The depth of a WBS is dependent upon the size and
complexity of the project and the level of detail
needed to plan and manage it.
WBS Levels
• The WBS levels may be broadly categorized into
five major levels. These levels, arranged in a
descending hierarchical order are:
• Level 1: Program level
• Level 2: Project level
• Level 3: Task level
• Level 4: Sub-Task Level
• Level 5: Work Package level
Hierarchical Chart for WBS
Project Control and WBS Levels
• The upper three levels of the WBS are normally
specified by the client (as part of an RFP - Request
for Proposal) as the summary levels for reporting
purposes. The lower levels are generated by the
Contractor for in-house control.
Program and Project Levels
• Program level defines the overall work program.
• A work program consists of two or more inter-
related projects with overall time, cost and
performance objectives and resource constraints.
• Each group of major works which can progress in a
systematic manner, with minimal interference from
other works, and which produces a major
deliverable can be treated as a project.
• Each project is assigned time, cost and performance
objectives and is provided with planned resources
for accomplishing the project objectives.
Case Study
• In the 100 Housing Units Residential Colony
Project, each category of construction (Categories
A to D) can be treated as a project while the whole
work can be treated as a program.
Work Breakdown Structure for
Housing Colony Project
Task and Sub-Task Levels
• A task represents a higher level significant work
output within a project (for example, feasibility
report which marks phase end deliverable for the
feasibility phase of a project).
• Each task can further be decomposed in sub-tasks
(for example, EIA study report, benefit-cost
analysis report, etc).
• This hierarchical structure of task / sub-tasks
establishes a management structure with desired
level of management control at each level of
project work.
Work Package Level
According to PMI:
• “A Work Package is defined as a deliverable at the
lowest level of the work breakdown structure, when
that deliverable may be assigned to another (work)
manager to plan, execute and control.” This may be
accomplished by further decomposing each work
package into activities.
WBS V/S ACTIVITY
• There is an important difference in the last work
breakdown structure level and an activity.
• Typically, a work package includes the outcomes of
more than one activity from more than one
department/ area of work.
• Therefore, the work package does not have duration
of its own and does not consume resources and cost
directly; the resources and cost for the work
package are simply the summation of the resources
and costs for all the activities constituting the work
package.
• Note that the lowest element of a WBS is a work
 Uses and Effectiveness of WBS
1. Represents complete scope of work in an
organized manner.
2. Sorts work in a hierarchical order.
3. Identifies major deliverables and sub-
deliverables.
4. Develops a list of work packages.
5. Thought process tool.
• WBS helps the PM and the project team visualize
exactly how the work of the project can be defined
and managed effectively. Alternative ways of
decomposing the work will be considered until an
alternative is found with which the PM is
 Uses and Effectiveness of WBS
1. Strategy Design tool.
• WBS is a picture of the work of the project and how
the items of work are related to one another.
2. Management database at various Levels.
3. Structuring of work organization.
• While WBS is developed, organizations,
organizational units, teams and individuals are
assigned responsibility for accomplishment of work
components.
 Uses and Effectiveness of WBS
1. Integration tool.
• WBS supports integrating responsibility for the
various works with various responsibility units
(organizations, departments, teams, individuals) by
having a direct relationship between the WBS
elements related to the Organizational Breakdown
Structure (OBS) identified through the Responsibility
Assignment Matrix (RAM).
2. Work Budgeting.
• WBS can be used for budget allocation on individual
work components. Using the project roll-up
approach, this budget allocation can be consolidated
into establishing the overall project budget
 Uses and Effectiveness of WBS
1. Monitoring and Reporting tool.
• Use of structure provides the opportunity to “roll up”
(sum) the budget and actual costs of the smaller work
items into larger work elements so that performance
can be measured by organizational units and work
accomplishment. These performance measurements
can then be reported to senior management at various
levels in the project organization.
2. Communication tool.
• WBS defines communication channels and assists in
understanding and coordinating many parts of the
project. The structure shows the work and
organizational units responsible and suggests where
WBS Development Procedure
• Project WBS development is based on a technique
called decomposition.
• Decomposition involves subdividing work into
smaller, more manageable components arranged in
a hierarchical order until the work is defined in
sufficient detail to facilitate management control as
well as development of project activities.
WBS development Steps
• Step 1: Identify the projects in the program, if any.
• The projects should be defined in terms of independent
major physical products of the program.

• Step 2: Identify the major deliverables of each

project.
• The major deliverables should always be defined in
terms of how the project will actually be organized and
managed.
• There are two approaches to be considered: noun-type
approaches and verb-type approaches.
Noun-type approaches
• Noun-type approaches define the deliverable of the
project work in terms of the physical components
that make up the deliverable. For example: the
physical units (areas – A1, A2, A3; sections – M1,
M2, M3; building blocks – Admin, UED, CED,
Library)
Verb-type approaches
• Verb-type approaches define the deliverable of the
project work in terms of the actions that must be
done to produce the deliverable. For example: the
phases of the project life cycle (design,
procurement, construction, handover), or the work
specialty (civil, mechanical, HVAC, etc.).
WBS development Steps
• Step 3: Decompose major deliverables to a level of
detail appropriate for management and integrated
control.
• Decide if adequate cost and duration estimates can be
developed at this level of detail for each deliverable.
• For each deliverable, proceed to step 5 if there is
adequate detail, to step 4, if not – this means that
different deliverables may have different levels of
decomposition.

• Step 4: Identify constituent components of each

deliverable (these are the sub-deliverables or sub-
Step 2: Develop Activity List
• An activity is an identifiable and measurable short duration
task that has a definite start and stop point, consumes
resources and represents cost.
• Each activity is a control point. An Activity Manager is
responsible for seeing that the activity is completed on time,
within budget and according to technical specifications.
• The resources and cost for a work package are simply the
summation of the resources and costs for all the activities
constituting the work package.
• Thus, the activity is the basic unit used for planning,
monitoring and controlling the project.
Activity Definition
• Activity definition involves identifying and
documenting the specific activities that must be
performed in order to produce the work packages
identified in the work breakdown structure.
Inputs to Activity Definition
• Work breakdown structure. Identification of work
elements
• Historical information. What activities were
actually required on previous, similar projects
• Constraints. Factors that will limit the project
team's work options.
• These constraints may include: national economic
policies, land reclamation constraints, unavailability of
sophisticated equipment for site investigation and/or
implementing construction methodologies.
• Assumptions. Factors that, for planning purposes,
will be considered to be true, real, or certain.
Technique for Activity Definition
• Decomposition of WBS work packages.
Output from Activity Definition
• Activity list. The activity list must include all
activities that will be performed on the project. A
well prepared activity list allows the project team to
separate out all activities of each trade, as well as
identify the activity types.
• Supporting Details. Supporting details for the
activity list should include documentation of all
identified assumptions and constraints.
• For instance, if during excavation water tends to come
out then it should be clearly mentioned as to whether
or not the pumping of water is included within the
scope of the project.
Activity Types
• According to Nature of Activity
• According to Planning Consideration
According to Nature of Activity
• Production Activities
• Procurement Activities
• Administrative Activities
• Milestone Activities
Production Activities
Production activities define the actual physical
construction of the project.

• Examples are:
• Erect concrete columns,
• Run electrical conduits, or
• Install sanitary fixtures.

• If the project is composed of multiple units, floors,

areas or sections, the activity would designate the
activity location, such as run electrical conduits, 1st
Procurement Activities
• Activities can also be categorized as procurement
or purchasing activities.
• These are the activities that need to occur to get all
of the materials, equipment and manpower to the
job site.
• Bid procurement activities are also included
• Examples are:
• Order tile,
• Approve flooring sample, or
• Prepare structural steel connection shop drawing
• Pre-qualify contractors
• Most material procurement activities follow a
Administrative Activities
• An activity the duration of which depends upon the
logic and relationships existing between it and the
various other activities is referred to as a hammock
activity.
• Examples are:
• Inspection activities by local officials or federal or
regulatory agencies,
• Approval activities such as land approval and acquisition, or
presentation before an architectural review commission,
• Management activities such as design or construction
supervision.
Milestone Activities
• A key event in the life of a project can be identified
by the use of a milestone activity.
• Examples are:
• The prearranged shutdown of plant operations,
• The delivery of a certain floor of a building to a tenant, or
• A road to be opened by a specific date.
• Unlike an activity, a milestone cannot be assigned
to a responsibility unit and does not consume time
or resources.
• A milestone is used to signify an important point in
the life of a project so as to “flag” significant
project accomplishments serving as a measure of
According to Planning
Considerations
• Task (fixed duration)
• Resource Driven
• Hammock
Task (fixed duration)
• “scheduling of activity determines scheduling of
resources”
• The assigned resources on the activity should be scheduled
according to the activity's schedule.
• For example, several activities must be done in the week
before the completion of house. It doesn't matter whether the
resources are available earlier than that week, or whether they
will otherwise be scheduled for time off during that week –
these activities must be scheduled during a specific time-
period, and their scheduling controls the scheduling of their
resources. Major construction activities fall in this category.
Resource Driven
• “scheduling of activity is determined by the scheduling of
resources”

• In some cases, resource availability is highly constrained.

• For instance, a contractor has access to excavator for only

three days in a week. This may be because he is sharing the
excavator on another project. In such a case, all excavation
activity on the project must be scheduled within the available
days of excavator.
Hammock
• “No specific duration, duration is calculated on
the basis of relationships”

• Duration of some activities cannot be estimated

using first principles.
• For instance, what could be the duration of
construction supervision? The answer is: It depends
on the period of construction i.e. when the contract
is awarded and when the project is handed over.
Estimate Activity Durations
• Activity duration estimating involves assessing the
work time likely to be needed to complete each
identified activity
• Duration for every activity is needed so that
planning of the project can be done with respect to
time.
• Work Time (Duration): Work time is the business
time required to complete an activity. This does not
include weekends, holidays, or other non-work
time, but includes provision for any anticipated
interruptions.
• Calendar Time: Calendar time is the total time
Example
• A client has an activity that requires him to send a
document to a government agency, where it would
be reviewed, approved, and then returned. The
client has done this on several previous occasions,
and it normally took about 10 business days before
the document was back in client’s office. The
government agency works for 5 days in a week and
the client is sending the document on Monday
morning. Now:
• What is the duration?
• What is the calendar time?
Solution

• Duration is 10 days.
• Calendar time is 12 days (Mon-Fri, Sat, Sun, Mon-
Fri).
ESTABLISHMENT OF ACTIVITY
DURATION
• Activity duration can be estimated with the aid of a
computer (e.g., by using excel spreadsheet or
project management software) or with manual
techniques.
• Manual techniques are often more effective on
smaller projects.
• Manual and automated techniques may also be used
in combination.
INPUTS TO ACTIVITY
DURATION ESTIMATION
• Quantity of Work
• Execution Methodology
• Resource Requirement
• Resource Productivities
• Time Contingency
Quantity of Work
• The amount of work that needs to be performed;
e.g. 10,000 cft of excavation, 2000 cft of
concreting, 1000 sq-ft of block masonry, etc. This
information is obtained from detailed BOQ or work
estimates in conjunction with construction
drawings.
Execution Methodology
• The execution methodology drives the resource
requirement on the activity.
• For example, the activity of placing concrete in the
foundation of a large building can be done in any of the
following ways – manually, using crane and bucket
arrangement, pumping by concrete pumps or
transporting by a conveyor system The time and cost
for each of these methods will differ considerably.
• The choice of the method of execution of an
activity depends upon
• the past experience,
• the market availability of appropriate resources,
Resource Requirement
• What type of resources (manpower, equipment and
material) are required and in what quantity?
• Resource estimates are normally made using the
planning norms developed from:
• Organizational records of previous projects
• Project team knowledge and experience
• Commercially available databases (if any)
• Expert advice
Resource Productivities
• The capabilities of the humans and equipment
resources assigned to activities – e.g. if both are
assigned full-time, a senior staff member can
generally be expected to complete a given activity
in less time than a junior staff member.
• Resource productivity is normally determined
from:
• Organizational records of previous projects
• Project team knowledge and experience
• Commercially available databases (if any)
• Expert advice
• Field research
Time Contingency
• This includes any possible time variation that
needs to be incorporated for any anticipated and
unanticipated interruptions, e.g.
• Interruptions might include a phone call with a
question to be answered, an equipment breakdown,
power interrupts, random events of nature, untimely
delivery of material, bad weather forecasts,
absenteeism, strikes, etc. Few of these interruptions
may be anticipated (e.g. bad weather forecast,
procession, strike etc.) while others may be
unanticipated (e.g. random event of nature).
TECHNIQUES FOR ACTIVITY
DURATION ESTIMATION
• The following techniques can be used for initial
planning estimates:
• One-time estimate
• Three-times estimate
One-time estimate
• In most of the construction works, it is generally possible to assess the
duration of an activity with reasonable certainty by using
• organizational planning data records,
• experience,
• commercially available databases, or
• expert advice.
• The one-time estimate for activity durations is usually used for Production
activities.
Example
How many hours will be needed to excavate 10,000
cu-ft with the provided data?
• Excavator’s Productivity = 1000 cu-ft/hr

• Number of Excavators = 2

• Contingency factor =0.2

Solution
Three-time estimate
• To use three-time estimate technique, three estimates of
activity duration: optimistic, pessimistic, and most likely are
needed.
• The optimistic time is defined as the shortest duration one has or
might expect to experience given that everything happens as
expected.
• The pessimistic time is that duration that would be experienced (or
has been experienced) if everything that could go wrong did go
wrong and yet the activity was completed.
• Finally, the most likely time is that time usually experienced (most
expected).
Formula
• The following relation is used to calculate the
expected duration of such an activity:
• Te = a+4m+b
• 6
• where,
Te = expected activity duration
a = optimistic time,
b = pessimistic time,
m = most likely time
Uses of Three-Time Estimates
• The three-time estimate is usually used for some types of
Procurement and Administrative activities.
• It can effectively be used in certain areas of construction
projects where major uncertainty in duration estimation exists.
• Some of these are as follows:
• The sanctioning of a government project
• The necessary project approvals
• The feasibility stage of a project
• The closeout stage of a project
• Procurement of long-lead items
Three-Time Estimate
Example:
• Consider the activity of sanctioning of a
government project. It has to pass through many
channels and depends upon many factors.
• Assume that the sanction is most likely to take 8
weeks, and if all goes well, the earliest it can
happen is 6 weeks, but in any case, it will certainly
come through in 16 weeks.
• The expected duration of the activity can then be
calculated as follows:
Te = 6+(4 x 8)+16 = 9 weeks
6
APPROACHES TO
IMPLEMENT
CONSTRUCTION
PROJECTS
Week 4 Lecture 1
CHARACTERISTICS OF
PROJECT LIFE CYCLE
• Cost and Resource usage are low at the start, higher
towards the end, and drop as project closes.

• Probability of project success is low at the start of

the project and gets progressively higher as the
project continues.
APPROACHES TO IMPLEMENT
CONSTRUCTION PROJECTS
• To successfully complete any project many tasks
need to be accomplished by the project team.
• The owner must define the requirements,
• the designer needs to translate the requirements into
contract documents, and
• the construction professionals need to organize and
manage the physical construction in accordance with
the contract documents.
Normal-Track Construction
• The normal way to accomplish these tasks is to
complete each phase, then move on to the next.
• Concept/ Feasibility is first, then design, then
procurement, then construction, then start-up and
finally operation
• Each project phase builds on the last; the owner
communicates needs to the designer, and the designer
clarifies those needs through contract documents to the
builders.
• This approach is understood fairly well by the project
participants and is logical, but is very time consuming.
• This usual practice is termed as normal tracking or
Normal-Track Construction
Fast-Track Construction
• In a fast-tracked (also called phased) arrangement,
the project is approached in overlapping fashion
• In a fast-tracked approach the project is broken
down into smaller pieces (called work packages),
with each package designed and constructed
separately.
• By breaking the project down the work that can
logically be done first (e.g., site clearing and
excavation) can be designed and performed while
later work (paving, roofing, finishes) is still being
designed.
Fast-Track Construction
Comparison of Approaches
Selection Criteria
• The selected approach depends on the client/ owner
priority and requirements.
• For example, the owner may hire an architect to design
a shopping mall and a contractor to build it after it has
been totally designed. Because a total design has been
completed, the owner can ask for a fixed price bid
before construction begins.
• This arrangement is the traditional or conventional method
of delivering a project (normal track or linear construction).
Selection Criteria (Cont..)
• Another possibility might be for the owner to hire both
an architect and a construction manager before design
begins. The advantage to the owner of following this
route is that by coordinating design with construction
the actual building of the shopping mall can begin
before the design is finished, saving project time (and
possibly money).
• This is the phased or fast-tracked construction.
Normal Track Approach
• Pluses
• Less Risk
• Traditional - understood fairly well by the project
participants
• Easier to implement in all phases
• Less coordination and cooperation requirement
• Less chances of errors, omissions and
misinterpretations
• Client can know project cost upfront of construction
• Less construction price to client/ owner
Normal Track Approach
• Minuses
• Design-Construction integration
• Value Engineering can not be applied
• More time requirement
Fast Track Approach
• Pluses
• Speed
• Design-Construction integration
• Value Engineering application during design,
procurement and construction
• Possibly more project value at less project cost
Fast Track Approach
• Minuses
• More Risk
• Difficult to implement due to phase interactions
• Immense coordination and cooperation requirement
• More chances of errors, omissions and mis-
interpretations
• Client can not know project cost upfront of
construction
• More construction price to client/ owner
FAST TRACK CHALLENGES
• The greatest risk stems from the fact that the owner
must begin construction without a complete design
and a detailed and complete estimate. If
construction begins and design problems occur on
the later stages of the project, forcing a budget
increase, the owner is at that point committed to
more than a simple redesign.
• Good communication between the designer and
construction manager is also essential since they
and the owner are often working on concurrent
tasks that must be coordinated.
• The designer's design schedule must be precisely
PROJECT PLANNING
INTRODUCTION
PLANNING DEFINITION
• A project plan is a workable program, strategy,
scheme, method or process devised to attain
specified project goals and objectives.
• Planning involves the process of selecting the one
method and sequence of work to be used from
among all the various methods and sequences
possible.
PLANNING AIM-
WHY WE SHOULD PLAN?
• To make sure that all work and only the work
required completing the project gets done:
• at the right time
• in the correct sequence
• at the right place
• by the right resources (people and equipment)
• at the right quality
• in the most economical, safe and environmentally
acceptable manner
PLANNING QUESTIONS
WHO, WHAT AND WHEN?
• Who should Plan?
Everyone
• What should they Plan?
Whatever work they are responsible for
• When they should plan?
Continuously
PLANNING ASPECTS-
WHAT TO PLAN?
Planning Scope (what?)
• What are the project objectives – quantifiable success
criteria (time, cost and quality)
• What are the major intermediate deliverables – project
deliverables
• What are the intermediate deadlines – project
milestones
• What are the limits and exclusions
Planning Time (when, how, in what
sequence?)
• What work items need to be performed – (the
activities),
• How the work items will be performed – (the
methodology),
• How long will it take for each work item to be
performed (the activity duration), and
• When and in what sequence the work items will be
performed – (the project schedule/ time table)
Planning Resources (By whom?)
• What is needed to perform the work items - (the
equipment and material resource requirement –
quantity and quality)
• Who will perform the work items – (the manpower
resource requirement – quantity and quality),
Planning Cost (how much?)
• How much cost will be incurred on each work item
(the activity budget).
Planning Quality (at what
standard?)
• What are the intermediate project performance
objectives (quality milestones).
PLANNING NATURE
Planning is not completely scientific
• It is important to realize that planning process is a

combination of science and art.

• It generally involves approximately 80 percent

memory of historic procedures (experience) and 20

percent creative thought.
• Note: Normally, we tend to follow work patterns used
previously and try new approaches only when the old
way will not work or a traditional method is not
apparent. Construction is a high-risk enterprise, and the
taking of additional risks by using unproven methods is
not well accepted. Modifying or using totally new
PLANNING NATURE
Planning is dynamic
• We expect the project plan to change, either due to

changing client requirements or owing to strategy

changes. The PM needs to be vigilant in order to
anticipate and confirm changes in project plan and
make appropriate adjustments.
• Planning is all about anticipating actions and

anticipating performance.
PRECONSTRUCTION
PLANNING
• The success of a project largely depends on sound
planning, aimed at developing a workable program
that will achieve project goals.
• It forms the standard upon which the project control
system is based and by which future performance is
judged.
PRECONSTRUCTION
PLANNING AREAS
• The manager's preconstruction planning can be
divided into following:
• Area and Site Investigation
• Project Feasibility Studies
• Development of Project Scope Statement
• Project Priority Definition
• Drawings and Specifications Review
• Development of Project Preliminary Work Plan
Sample Project
• Consider a 100 unit housing colony construction
project in North Karachi to be developed by the
city development organization. The scope of the
project includes construction of 100 residential
houses. The value of works is estimated to be Rs.
160 million and the project is to be contracted to
complete in 36 months using fast track approach
(design, procurement and construction). The
residential accommodation falls in four
construction categories (25 units in each category):
Category A – Double storey one unit houses with
high class finish; Category B – Double storey one
AREA AND SITE
INVESTIGATION
AREA SITE
Review local work practices and jurisdiction
•

(permits/ licensing etc.) • Site Description

• Ascertain local craft productivity, availability
and wage rates (topography, topsoil,
• Determine locally favored methods and
materials sub-soil, water table,
•

•
Ascertain key local prices for standard items
Ascertain local equipment rental prices drainage, existing
• Obtain climate information for use in
developing weather constraints
structures,
• Screen local contractor capabilities, workload,
and interests which will be helpful in deciding
accessibility, etc.)
on recommended contractors
• Visit other local contacts - key local contractors • Utilities Serving Site
and other knowledgeable local industry
representatives (Electricity, gas, water,
• Visit other projects noting productivity, favored
methods, favored materials, subcontractors, sewers, etc.)
etc.
• Interference with
PROJECT FEASIBILITY
STUDIES
Need Analysis Requirement Analysis

• Surveys to analyze the • For what social

need of a housing category of people the
colony project is intended
for?
• For how many
families we are
developing the project
for?
• What categories
should we break the
PROJECT FEASIBILITY
STUDIES
Conceptual Analysis Technical Analysis

• What are the alternate • What are the alternate

locations for the methods of
colony? construction that can
• What are the land cost, be used (with their
accessibility, advantages)?
approachability (to • What sort of skill set
important locations (labor and equipment)
like schools, hospitals, do we need for each
shops etc.) concerns? category? Their
• What should be the availability,
PROJECT FEASIBILITY
STUDIES
Benefit Cost Analysis
Financial Analysis

• How much cost are we • What are the

talking about? quantifiable and
unquantifiable benefits
Environmental Impact Analysis of this project?
• How the • What is the B/C ratio?
environmental health
will be affected?
• What will be the
social and
community aspects
PROJECT SCOPE STATEMENT
• Project scope statement provides a documented
basis for defining as clearly as possible the
deliverables and developing common
understanding of project scope among stakeholders
for making future project decisions.
• Research shows that a poorly defined project scope is
the most frequently mentioned barrier to project
success.
• Scope definition should be as brief as possible but
complete. Close liaison with client is needed to
develop a complete scope statement.
Components of Project Scope
Statement
• Project justification – the need the project was
undertaken to address.
• Project justification provides the basis for evaluating
future trade-offs.
• Project Inclusions
• Project’s product – a brief summary of the product
description.
• Project objectives – the quantifiable criteria that must
be met for the project to be considered successful.
Project objectives must include at least cost, schedule
(time) and quality measures. Project objectives should
have an attribute (e.g. cost) and an absolute or relative
Components of Project Scope
Statement
• Project Limits and Exclusions
• When known, scope limits and exclusions should be
identified. Failure to do so can lead to false
expectations and to expending resources and time on
the wrong problem.
• Limits: Example may be excavation work to be done
but no backfill included; finishing work with no tiling.
• Exclusions: Example may be material provided by
client, not the contractor; a house that will be built but
no security devices installed.
PROJECT PRIORITY
DEFINITION
• One of the primary jobs of the MANAGER is to
manage the trade-offs among time, cost and quality.
• To do so, the MANAGER must define and
understand the nature of the priorities of the
project.
• He needs to have a candid discussion with the client
to establish the relative importance of each
criterion.
• One technique that is useful for this purpose is
completing a project priority matrix that identifies
which criterion is constrained, which should be
enhanced, and which can be reduced:
Project Priority Matrix
• Constrain.
• The original parameter is fixed. The project must meet
the completion date, quality specifications, or budget.
• Enhance.
• Given the scope of the project, which criterion should
be optimized? In the case of time and cost, this usually
means taking advantage of opportunities to reduce
costs or shorten the schedule. With regards to
quality, enhancing means adding value to the
project.
• Reduce.
• For which criterion is it tolerable not to meet the
 Example
Time Quality Cost

Constrain X

Enhance X

Reduce X

Because time is important for benefit reaps, the construction manager may be instructed to take
advantage of every opportunity to reduce completion time.
In doing so, going over budget is acceptable though not desirable.
At the same time, the original quality requirements cannot be compromised.

During the course of a project, priorities may change. The client may suddenly need the
project completed one month sooner, or new client directives may emphasize cost saving
initiatives. The MANAGER needs to be vigilant in order to anticipate and confirm changes in
priorities and make appropriate adjustments.
Project Priority Matrix
• Constrain on all three criterion (time, cost and
quality) would put the construction manager in a
highly inflexible position.
• It is extremely rare that everything would go nearly
perfect on a project and no major problems or
setbacks are encountered.
• Construction managers are often forced to make
tough decisions that benefit one criterion while
compromising the other two.
• The purpose of priority matrix is to define and
agree on what the priorities and constraints of the
project are so that right decisions can be made.
DRAWINGS AND
SPECIFICATIONS REVIEW
• The manager should ensure that all necessary
drawings and specifications are provided in
completion to the contractors.
• Drawings
• Construction drawings should elaborately show the
location, dimensions, and details of the work to be
performed.
• They should preferably be organized and numbered
according to specialty, such as structural, electrical,
and mechanical.
SPECIFICATIONS REVIEW
• The two basic ways in which the requirements for a
particular work may be specified are by method
specification or by performance specification.
SPECIFICATIONS
• A method specification states the precise equipment
and procedure to be used in performing a
construction work.
• Use of method specifications will enhance control .
• A performance specification specifies only the
result to be achieved and leaves to the contractor
the choice of equipment and method.
• Use of performance specifications will provide more
value engineering opportunities.
DEVELOPMENT OF PROJECT
PRELIMINARY WORK PLAN
• After the manager has obtained a thorough knowledge of area
and job-site conditions that will affect performance of the
work, preparation of the preliminary work plan for the project
can begin.
• An early work plan for overall project execution is important
in creating a team effort among the designer, owner, and
manager, and it forms the basis for planning that will continue
throughout the project as additional information becomes
available.
 CONSTRUCTION
PLANNING &
MANAGEMENT
Week 1 UE-405
CONSTRUCTION PROJECTS
• A project is a temporary endeavor consisting of a
sequence of connected activities undertaken by
limited resources to create a unique product or
service that must be completed within specified
time, within budget, and according to specification.
Temporary Endeavor
• Temporary means that every project has a definite
beginning and a definite end.
• The end is reached when the project’s objectives
have been achieved, or when it becomes clear that
the project objectives will not or cannot be met and
the project is terminated.
• Temporary does not necessarily mean short in
duration (many projects last for years), nor it
applies to the product or service created (many
projects are undertaken to create lasting results
• for example, a project to erect a national monument
will create a result expected to last for centuries).
Sequence of Connected Activities
• A project comprises of a number of activities that
must be completed in some specified order, or
sequence.
• An activity is a defined chunk of work.
• The sequence of the activities is based on technical
requirements.
• Activities within a project are interconnected.
• To determine the connectedness, it is helpful to
think in terms of inputs and outputs.
• The output of one activity or set of activities
becomes the input to another activity or set of
Undertaken by limited resources
• Projects have resource limits, such as a limited
amount of people, materials or equipment that are
dedicated to the project.
Unique Product or Service
• Unique means that the product or service is
different in some distinguishing way from all
similar products or services.
• A product or service may be unique even if the
category it belongs to is large.
• For example, many thousands of office buildings have
been developed but each individual facility is unique –
different location, different owner, different design,
different contractor, and so on.
• The presence of repetitive elements does not
change the fundamental uniqueness of the project.
• For example, a real estate development project may
Within Specified Time
• Projects have a specified completion date. This date
can be self-imposed by management or externally
specified by a client or government agency.
Within Budget
• Projects have cash inflow constraints. The source of
finance may be public funds, bank loans or private
investments.
According to Specification
• The client expects a certain level of functionality
and quality from the project.
• These expectations can be self-imposed, such as the
specification of the project completion date, or
client-specified, such as use of wall paper for wall
finishing in a bungalow, or law imposed, such as
environmental considerations.
PROJECT SUCCESS
PARAMETERS
• Five constraints operate on every project:
• Quality/ Performance
• Resources
• Time
• Cost
Quality/ Performance
• Two types of quality are part of every project.
• The first is product quality.
• This refers to the quality of the deliverable from the project.
• The second type of quality is process quality,
• The quality of the project management process itself.
• A sound quality management program not only contributes
to customer satisfaction, but also helps organizations use
their resources more effectively and efficiently by reducing
waste and rework.
• The payoff is a higher probability of successfully
completing the project in accordance with customer
requirements.
• Quality to be achieved in accomplishing tasks is
normally stated in terms of standard specifications.
Resources
• Resources are assets, such as people, equipment,
physical facilities, or materials, which have limited
availabilities, can be scheduled, or can be leased
from an outside party.
• Resources are central to the scheduling of project
activities and the orderly completion of the project
in their availability as well as productivity.
• Productivity, in its broader sense, measures the
ratio of planned effort of resources to produce a
unit quantity of work divided by the actual effort of
resources employed to achieve this unit of work.
Time
• The client specifies a timeframe or deadline date
within which the project must be completed. This
may be due to several reasons:
• The capital turnover (revenue) forecasted to be realized
from early facility completion (e.g. shopping mall,
school)
• The need of the client to occupy, use or rent the facility
on a particular timeframe (e.g. bungalow).
• A public client requiring completion of the project by a
particular deadline so as to open it to service for public
(e.g. road, bridge, hospital).
Cost
• Cost is the expenditure which the client has agreed
to commit for creating the desired construction
facility.
• Cost is a major consideration throughout the project
management life cycle.
• It is best thought of as the budget that has been
established for the project. This is particularly
important for projects that create deliverables that
are sold either commercially or to an external
customer. Cost is a major element in leading the
client to a go/ no-go decision.