[Year]

CONSTRUCTION
PROJECT
MANAGEMENT

CONSTUCTION MANAGEMENT
DEPARTMENT OF CIVIL ENGINEERING

COLUMBIA UNIVERSITY | NEWYORK

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Table of Contents
1. INTRODUCTION TO THE ENGINEERING AND CONSTRUCTION INDUSTRY.........................................2

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 1. INTRODUCTION TO THE ENGINEERING AND
CONSTRUCTION INDUSTRY
Hello and welcome to the Introduction to the Engineering Construction Industry. 
My name's Gregory Sauter, president of Crossroads Advisory, founder of Smart City Works
Infrastructure Accelerator and an Adjunct Professor at Columbia University. It's a pleasure for
me to talk on this topic today. 
A topic that I am passionate about. I've had the good fortune to work in this industry for over 30
years, starting with a construction company nearly 30 years ago. And then having worked with
some of the biggest and best architecture engineering construction firms in the world. 
And an opportunity to participate in and be part of some of the greatest projects of our
generation.
When we think about the engineering and construction industry, it is one of the most important
industries in society. No other industry has a bigger impact on the human condition than the
engineering architecture and construction industry.
Today I'm gonna talk just a little bit about the history. We're gonna go through some key projects
that were some of the turning points in the industry, and introduce us to the modern world of
engineering and construction. We're gonna talk about the various types of construction. So when
we talk about construction projects, what do we mean? What kind of buckets and categories do
they fit into and what are the industry characteristics? How would we describe this
industry? We're then gonna talk a little bit about some of the challenges and 
opportunities in the industry. And then I'm gonna spend a few minutes just talking about what's
next, what's to come.
This is a special industry. It impacts each and every one of us on a daily basis. It puts roofs over
our heads, it brings clean water into our homes, it provides us electricity for all of our daily
activities. It's responsible for our skylines, it's responsible for our landscapes, energy, 
transportation. So many things that we as a society take for granted but 
it's also not a very well-known industry.
This industry is hugely important to commerce. It is the backbone that allows us to have
[COUGH] global economies, to be able to share resources, for us to be able to get to work, for us
to be able to create centers of manufacturing.
Also the importance to our health and welfare. Some of the most photographed items in the
world are the great structures of the world. If we were to create a bucket list of those places that
we'd like to see in our lifetimes, think about where you would go and what you'd like to see. So
in addition to those great landscapes,  think about places like the Roman Colosseum, 
the Taj Mahal in India, the Great Wall of China. Places like Machu Picchu, going to the top of
the Empire State Building in New York and taking in the skyline.

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Those are the things that stir the hearts of man, that excite us and those are the things that attract
people to this industry time and time again. Since the dawn of man, we've been building
structures for warmth, for protection.
The Bronze Age, some 5,000 years ago, ushered in a new era, allowing us to use effective tools
to build much more precisely, much bigger, and much more consistently. But as man started to
gather in collective towns and small cities, other problems grew out of this, the need to address
sewage, the ability to provide clean water to larger and larger communities. 
The need to make their infrastructure more dependable, more resilient.
With the advent of writing and advanced mathematics, the ability to engineer solutions on a
much grander scale became more and more significant. While the pyramids were created as a
tomb and a monument, the scale, the precision, the size, what they were able to accomplish, is
just incredible. And it stands as a testament to what man can do.
These pyramids stood as the tallest man-made structures for nearly 4,000 years. It's just
incredible what they were able to accomplish.
Now let's look at a few iconic projects which ushered in the modern era of engineering and
construction.
The Brooklyn Bridge. 
You look at the Brooklyn Bridge and it is just an absolutely beautiful structure. Built in 1883,
took 20 years to build. New York had wanted to build something that could connect the island
of Manhattan with the borough of Brooklyn, but heretofore hadn't had the technology and the
ability to do it. The Roebling family came in, was able to do this.
Look at those beautiful granite towers and you think about what they had to go through placing
that in the East River, connecting a span of 1,600 feet from tower to tower. The longest steel
suspension bridge in the world. Absolutely incredible what they went through. 
24 people died in the creation of the Brooklyn Bridge, including John Roebling, who was the
original inspiration of the bridge. His son wound up taking over and finishing the bridge along
with his wife, who was also instrumental in the construction of the bridge. This is a bridge I've
got a particular personal connection to.

As part of the overall integrity reviews on the bridge a number of years ago, the organization I
was with was responsible for doing bridge inspections on it up close. And the way that was done
was actually by rappelling bridge inspectors from the top of the bridge to look at all of the
masonry, all of the stones, and all the masonry joints in between it. It was an incredible
undertaking, but it gave me such an appreciation for what went into the making of this incredible
iconic bridge. 
The Panama Canal, one of the greatest engineering and construction feats of the 20th century,
absolutely incredible. I had an opportunity to visit the Panama Canal a couple of years ago. And
standing there at the entrance to the sea and seeing the size, the grandeur, what they were able to
accomplish, the effort that went into it. And when you look at the history of what it took, 40,000

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men at that time, working in incredible conditions, 50 miles across. And an absolutely incredible
feat and you have to be there to appreciate what it takes to accomplish an incredible feat like this.

When you consider the technologies that were available in the late 1800s and the ability to do
this. The stories of George Washington Goethals, the chief engineer on the project, and what it
took to achieve this great feat are just inspirational. In 1889, Paris hosted the World's Fair, 
celebrating the 100 year anniversary of the French Revolution. Gustaf Eiffel won a competition
to make this the centerpiece of the event. The thing that's interesting is this was supposed to be a
temporary monument. But if you've ever been to Paris, this calls to you from across the entire
city. 
The Hoover Dam. 
Wow, what an incredible undertaking. I mean, this is on par with, and if you think about when
this was constructed in the 1930s, I mean, this is on par with pointing to the moon at the time
and saying yes, we're gonna put the man on the moon. I mean, this is absolutely incredible. 
Built in the 1930s during the Great Depression, the stories of the physical and engineering effort
that went into the structure are just incredible. 660 feet wide at the base, 700 feet high, 
6.6 billion tons of material in the dam. And what this created, it provides energy for 20 million
people.

It opened up the West to the growing number of people in the US and really became one of the
things that provided a gateway to the development of the West.

2. Construction projects and industry characteristics

Now let's spend a few minutes talking about the types of construction projects. So when people
talk about the construction industry, what are they talking about? So, we can put them in a few
different buckets. For the purposes of discussion, let's put them in these four buckets. Industrial,
heavy, residential and building construction. And let's start with the residential, because that
makes up the largest portion of revenue across the construction industry. So residential
construction's probably what most people are familiar with. It's the building of individual homes,
multi-family homes, condominiums, or high-rise apartments. That makes up nearly 40% of the
industry. Then building construction, so if you think of other buildings. Other types of structures
that need to be built to support global infrastructure. Things like schools, universities,
manufacturing plants, recreation centers. All of those types are other elements of building
construction. And you may also hear the term sometimes vertical construction or horizontal
construction. And the residential construction and the building construction are vertical
construction. Why do we call it that? Well, if you think about how the projects go and the
structures that are built, they're built vertically out of the ground. That's the reason we call it
vertical construction. Contrasting that is horizontal construction. So looking in the category of
heavy engineering construction. Things like tunnels, bridges, highways, transit systems, those
things are built horizontally along the ground, referred to as horizontal construction. The reason
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they're segregated sometimes is the tools, the techniques, the knowledge that are required to
build in a vertical environment or a horizontal environment can be a little bit different. That
category of heavy engineering construction is referred to as heavy because of the equipment
that's required to do this type of work. As we had just talked about, in the case of the Hoover
Dam and the incredible effort it takes to carry out a project like that, the size of the equipment.
So we're thinking about very heavy equipment. Earth moving equipment, graters, excavators,
massive cranes. This is the equipment required to do this kind of work and hence referred to as
heavy engineering construction. It includes those major elements of water treatment plants.
Ports, airports, seaports, or harbors, bridges, tunnels, all of those fall into that category. That
makes up approximately 30% of the industry. And last but not least, making up about 13% of the
industry is industrial construction. So things like refinery steel mills, power plants, synthetic fuel
plants. And what makes these a little bit different on the industrial side? If you wanna contrast
social infrastructure versus economic infrastructure, economic infrastructure is those things that
support and allow and provide the ability to drive economics. That drives our commerce.
Industrial construction focuses on those facilities, and typically has elements of them associated
with high pressures, high temperatures, and the moving of materials through the facilities. Now,
let's spend a few minutes talking about Industry characteristics. So when we talk about this
industry, what's unique about it, what's special? And when we think about how the world is
changing today, what makes that unique and special at this point in time? The World Economic
Forum, along with the Boston Consulting Group, put a report out in May of 2016, which
provided some interesting insight into the industry. One of them, the size of the industry, $10
trillion, employing 100 million people globally. So you get an appreciation for the size of this
industry. The importance. And the importance goes beyond the industry itself and the people it
employes. But the importance is how it helps drive economies around the world and the critical
service that it provides the people of the world. Another statistic coming out of this and anybody
that works in the industry knows and appreciates how fragmented it is. One of the most
fragmented industries there are has over, if you look at an example too, which they pointed out in
the US, the US has 700,000 engineering and construction companies with 80% having ten or few
workers. So if you think about how work gets done and how work is divided up across the
industry and the fact that each one could have a slightly different approach on how they would
approach a project, you get an appreciation of how fragmented it is and some of the challenges
that that can present to the industry and those that it supports. Something else that's somewhat
unique to the industry is the fact that it's project based. So we talked about some of the major
projects in the introduction. But if you think about the fact that every project is unique in it's own
way. So think about where the project is, who it's being built for. If you think about the
environmental conditions, the demand, whose doing the work, what the expectations are, what
the specifications are. Every project is somewhat unique. So unlike a manufacturing process
where you're able to set the condition, set the environment, and get a repeatable process. You're
not able to do this to the same degree in this industry, which makes it much more challenging
when we think about delivering projects. Another challenge, and something unique to the
industry is that projects are largely created on site. So when we think about structures. When we
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think about buildings and bridges and airports, you don't create them somewhere else and bring
them and set them down. It has to be built on site. Which means you have to bring all of the
expertise and all of the equipment to that site. Again, unlike manufacturing where you have the
ability to have it under controlled and repeatable conditions. This is new every time, which
makes it much more challenging. And the industry is making some really big strides with respect
to prefabrication or actually moving more of a factory type setting in building structures, but
there's a very long way to go. And again, it's another one of those significant challenges. Another
industry characteristic is multiple stakeholders with changing priorities. So every project has a
unique set of stakeholders from the public that may be impacted by it to those that are going to
use it. So in the case of a transit system. The riders, those that are gonna be impacted by the right
of way, where that transit system is going to be placed. Those that are gonna help build and
construct it. The governments that are helping fund it. All of those have their own set of
priorities, in many cases different priorities, and those priorities are changing over time. So you
have kind of a moving target when we talk about engineering and construction projects. And
some of the challenges that goes with delivering excellence in that type of environment. Another
characteristic of the industry is low profitability. And this has been consistent for many, many
years and this is both on the engineering and construction side. But typical profitability on
projects is less than 5%. So when you think about the margin for error and the ability to have to
go back and do rework, do parts of a project again, or unsuccessful projects, and not having a
large margin for error. It also makes it a very tough industry to be successful. And we see over
time, it's part of the reason for the fragmented nature of the business. It also impacts the ability
then, to invest back into the industry. I would contrast this as well with typical profitability in the
S&P 500 companies, which is typically over 15% on an annual basis. And related to that,
research and development has not been a priority for the industry either. And part of that is
because of the availability of funding in the industry to drive into research and development and
part of it is the nature of the industry. The industry was built on the notion of always looking
after the public interest and to design and build in a very conservative way, which drives
thinking around using techniques and methodologies that have been tried and true, tested out,
and been used many times before. And that drives a certain mentality on how projects are
designed and constructed. Those thought processes have led us to the last industry characteristic.
Which is the industry is conservative by nature. So if you think about how decisioning is done,
how innovation can find its way into the industry, it's tough. Because the industry has been and
continues to be very conservative by nature.

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