Site Organisation

TCHD 4205 CONSTRUCTION MANAGEMENT
CHAPTER ONE
1.0 Introduction
1.1 Defining Management
Management as a process refers to the act of planning, organization, staffing, directing

supervising and controlling construction activities. Management as a discipline refers to the
principles and practice of construction process. Persons who discharge managerial functions are
usually designated as “managers”.
But in simple life, Management is basically the act of getting people together to accomplish
desired goals and objectives using available resources efficiently and effectively.
1.2 Objectives of Management
Getting Maximum Results with Minimum Efforts - The main objective of management is to
secure maximum outputs with minimum efforts & resources. Management is basically concerned
with thinking & utilizing human, material & financial resources in such a manner that would
result in best combination. This combination results in reduction of various costs
Increasing the Efficiency of factors of Production - Through proper utilization of various
factors of production, their efficiency can be increased to a great extent which can be obtained by
reducing spoilage, wastages and breakage of all kinds, this in turn leads to saving of time, effort
and money which is essential for the growth & prosperity of the enterprise.
Maximum Prosperity for Employer & Employees - Management ensures smooth and
coordinated functioning of the enterprise. This in turn helps in providing maximum benefits to
the employee in the shape of good working condition, suitable wage system, incentive plans on
the one hand and higher profits to the employer on the other hand.
Human betterment & Social Justice - Management serves as a tool for the upliftment as well
as betterment of the society. Through increased productivity & employment, management
ensures better standards of living for the society. It provides justice through its uniform policies
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1.3 Principles of Management
Division of Work:
This principle tells us that as far as possible the whole work should be divided into different parts
and each individual should be assigned only one part of the work according to his ability and
taste rather than giving the whole work to one person.
Authority and Responsibility:
According to this principle, authority and responsibility should go hand in hand. It means that
when a particular individual is given a particular work and he is made responsible for the results,
this can be possible only when he is given sufficient authority to discharge his responsibility.
It is not proper to make a person responsible for any work in the absence of authority.
Discipline:
Discipline is essential for any successful work performance. This principle considers discipline
to mean obedience, respect for authority, and observance of established rules.
Discipline can be established by providing good supervision at all levels, clearly explaining the
rules, and implementing a system of reward and punishment. A manager can present a good
example to his subordinates by disciplining himself.
Unity of Command:
According to the principle of unity of command, an individual employee should receive orders
from only one superior at a time and that employee should be answerable only to that superior. If
there are many superiors giving orders to the same employee, he will not be able to decide as to
which order is to be given priority. He thus finds himself in a confused situation.
Unity of Direction:

Unity of direction means that there should be one head for one plan for a group of activities
having the same objective. In other words, there should be one plan of action for a group of
activities having the same objective and there should be one manager to control them.
Unity of Command & Unity of Direction
In this connection it feels that for the efficient running of an organization the unity of direction is
important, while the unity of command is important to enhance the efficiency of the employees.
Subordination of Individual Interest to General Interest:
This principle can be named „Priority to General Interest over Individual Interest.‟ According to
this principle, the general interest or the interest of the organization is above everything. If one is
asked to place individual interest and the general interest in order of priority, definitely the
general interest will be placed at the first place.
Remuneration to Employees:
In this principle, the opinion is that the employees should get a fair remuneration so that the
employees and the owners find equal amount of satisfaction. It is the duty of the manager to
ensure that employees are being paid remuneration according to their work. If, however, they are
not paid properly for their work, they will not do their work with perfect dedication, honesty and
capacity.
Centralization and Decentralization:
According to this principle, the superiors should adopt effective centralization instead of
complete centralization and complete decentralization. By effective centralization, it does not
mean that authority should be completely centralized.
He feels that the superiors should keep the authority of taking important decisions in their own
hands, while the authority to take daily decisions and decisions of less importance should be
delegated to the subordinates.

Positive Effect
(i) Decrease in the workload of superiors
(ii) Better and quick decisions
(iii) Increase in the encouragement to the subordinates
Violating Effect
(i) Unnecessary increase in the workload of the superiors in case of centralization and of the
subordinates in case of decentralization
(ii) Impatient and wrong decisions by the superiors in case of complete centralization and weak
decisions by the subordinates in case of complete decentralization
(iii) Decline in the encouragement to subordinates in case of complete centralization
Scalar Chain:
(i) Meaning of Scalar Chain:
It refers to a formal line of authority which moves from highest to the lowest ranks in a straight
line,
(ii) Opinion:
This chain must be followed in a strict manner. It means that each communication must move
from top to bottom and vice versa in a straight line. The important condition here is that no step
(post) should be overlooked during communication.
Order:
According to the principle of order, a right person should be placed at the right job and a right
thing should be placed at the right place. Every enterprise should have two different orders-
Materials Order for Physical Resources and Social Order for Human Resources.

Equity:
This principle tells that the managers should treat their subordinates in a just and kind manner so
that they develop a feeling of dedication and attachment for their work. All the employees should
be treated equally and impartially.
Stability of Personnel:
From the point of view of management it is absolutely harmful to change the employees as
frequently as it is a reflection of inefficient management. Therefore, according to this principle
there should be stability of tenure of the employees so that the work continues efficiently.
Initiative:
Initiative means the capacity to work while expressing one‟s thoughts. It is the duty of the
manager to encourage the feeling of initiative among his employees for doing some work or
taking some decision but within the limits of authority and discipline.
Esprit de corps:
As per this principle, a manager should continuously make efforts to develop a team spirit among
the subordinates. To do this, he/she should use the word „We‟ instead of” during the
conversation with subordinates.
1.4 Importance of Management
The need for management or its importance can be studied under the following headings
a) Management meets the challenge of change: - In recent years the challenge of change
has become intense and critical. The complexities of modern business can be overcome
only by scientific management.
b) Efficient utilization of the seven „M‟s: - There are seven „M‟s in industries:
Management, Materials, Machines, Men, Methods, Maoney and Market. Management
stands at the top and controls all other factors in industries. Just as the mind directs and

controls the body to fulfil its desires, management directs and controls the organization to
achieve desired goals.
c) Integrates various interests: - In the group efforts, there ara various interest groups and
they put pressure over other groups for their maximum share in their total output.
Management balances these pressures and integrates the various interests.
d) Provides innovation: - Management provides new ideas in organizations and visions to
the organization and necessary life for better and greater performance.
e) Provides coordination and establishes team spirit. – Management coordinates the
activities of the different departments of an enterprise and establishes team-spirit amongst
employees.
f) Tackles business problems: - Management serves as a friend, philosopher and guide in
tackling business problems. It provides a tool for doing a task in the best way.
g) A tool of personality development: - Management is not in directing things but the
development of men. It makes the personality of the people and attempts to raise their
efficiency and productivity.
1.5 Functions of Management
Construction Management is a fee-based service in which the construction management is

responsible to the owner and acts in owner‟s interest at every stage of the project.
Comprehensive management of every stage of the project, beginning with the original concept
and project definition, yields the greatest possible benefit to owners from Construction
Management.
1. Planning: Generating plans of action for immediate, short term, medium term and long
term periods.
2. Organizing: Organizing the resources, particularly human resources, in the best possible
manner.
3. Staffing: Positioning right people right jobs at right time.
4. Directing (includes leading, motivating, communicating and coordinating):
Communicate and coordinate with people to lead and enthuse them to work effectively together
to achieve the plans of the organization.
5. Controlling (includes review and monitoring): Evaluating the progress against the plans
and making corrections either in plans or in execution.
1.6 Roles of a Manager
Simple breakdown of the roles of the manager
INTERPERSONAL  Figurehead
 Leader
 Liaison
INFORMATIONAL  Monitor
 Disseminator
 Spokesperson
DECISINAL  Entrepreneur
 Disturbance handler
 Resource allocator
 negotiator
1.7 Management at different organizational levels
Kartz (1995) based his model on the skills managers need for success. Skills are abilities that can
be developed and are actually manifested in performance and that there are three types of skills,
which are important to managers: technical human and conceptual skills.
Technical skills: - This is the ability to use knowledge, methods, techniques and equipment
necessary for the performance of specific tasks; this is normally acquired from experience,
education and training.
Human skills: - This is the ability and judgement in working with and through people, including
an understanding of motivation in order to build cooperative effort that can be directed towards
achievement of common goals.
Conceptual skills: - ability to understand the complexities of the overall organization and where
one‟s own operation fits into the organization. This knowledge permits one to act according to
the objectives of the total organization rather than only on the basis of the goals and needs of
one‟s own immediate group.
1.8 The components of construction
The principal components in any construction situation are: the client (owner), the project and
the firm (contractor).
The client may be defined as the sponsor of the construction product or service. The product
may, for example, be a building, road, bridge or water source.
The project is a distinctive undertaking, drawing on the skills of a variety of people operating
within a well defined financial and contractual framework.
The firm (contractor) is the design and production unit in the construction industry. The firm is
permanent and continuing component and the base for the long term development of resources.

CHAPTER TWO
2.0 Organization Structures

2.1 Introduction
An organization is a large group of persons or associations of persons united to achieve a
common goal. It defines the responsibilities and establishes the relationship with each other as
employed in the organization. For any business, there has to be essential requirements
(Resources) such as men, equipment, materials, money, time and management. Therefore
organization can also mean the coordination of these resources in such a way that maximum
output is achieved at ease with efficiency and at minimum cost.
An organization should aim at good team building and avoiding conflict amongst line
functionaries on one hand and staff support on the other. In any organization, organizational
effectiveness Oeff can be described by the following simple model:
Oeff = [(I) (S) (S) (S)] E
Where, I – Individual in organization
S1 – Organizational structure
S2 – Systems adopted in the organization
S3 - Strategies followed by the organization
E – Environment in which the individual has to work
Though the environment in which a manager has to work can indirectly affect the efficiency of
the organization, with proper training of the individuals concerned, development of a proper
organizational structure, adoption of appropriate systems and suitable organization strategies, it
is possible to contribute to improvement in effectiveness, in spite of the environment not being
so congenial.
2.2 Structure of Organization

The organizational structure is the network of relationships between the various positions in an
organization. A clear understanding of an organizational structure is helpful in making more
frequent detailed adjustments in the organizational arrangements. Most problems occur in
organizations due to defects in their structures. To remove such defects and render organization
more effective, a systematic and thorough study of its structure must be made. The efficient

functioning of the organization is possible only when every member of the organization knows
the following facts:
 The goal of the organization
 His/her duties and responsibilities
 Delegation of authority
 To whom one is responsible
 Who is to work with whom?
2.3 Types of Organization Structures

The distribution system of authority and responsibility in any undertaking amongst its members
depends upon the type of magnitude of the work involved. Depending upon the manner in which
the authority and responsibility in an undertaking are distributed, the organization setup or
structure can be divided into the following three types:
1. Line or military structure
2. Line and staff organization and
3. Functional organization.
1. Line or military organization
This is the earliest, simplest and most important form of organization. In this type of
organization, authority descends from the top of the structure to its bottom level through a
downward delegation of authority. All major decisions are taken by the executives at the top and
passed on to their immediate subordinates for necessary action at their level. Thus a direct
relationship of authority and responsibility is established between the superiors and subordinates
as shown in figure 1.
Advantages of line organization
 It‟s simple, economical and easily understood by the employees.
 Unity of authority and control
 Provides strong discipline
 Quick decisions
 Responsibility is fixed and everybody knows to whom he is answerable
 It provides effective coordination within each department

Site supervisor
Ass site supervisor
G/ foreman
F/man brick wk F/man C&J F/man F/man concrete

formwork works
Charge hands/ gang leaders of each trade
Laborers of each trade
Figure 1: Line organization
Disadvantages
 The top executive tends to be overloaded with work as all decisions have to be taken by
him such that progress of work and its improvement may not be attended to.
 Generally, there is inadequacy of communication from lower levels upwards though there
is smooth communication from top to bottom. Thus the feedback is not received by top
executives and this affects progress of the whole work.
 The loss of one or two capable men may affect badly the whole organization.
 It‟s not possible to take advice from experts; hence all decisions have to be taken by the
person in charge himself.

 As the executives have to deal with different types of problems, expertise is not attained
and
 Due to the long channel of communication from top to bottom, there are chances of delay
and message distortion.
Applications
1. This organization structure is suitable for small and medium size factories in which
subordinate operational staff is not high.
2. It is also suitable where continuous process is required such as in sugar and paper industries,
oil refineries, spinning and weaving mills.
3. Where automatic plants are used
4. Where labour problems are not difficult to solve.
2. Line and staff organization
The line organization is suitable for large and complex enterprises, undertaking large
constructional works and heavy projects where key men need advice from expert specialists in
different fields. These specialists are normally staff with long experience. They do not have
authority to command anybody. Their functions mainly are advisory and are not directly
involved in carrying out the major objectives of the enterprise. The „line‟ personnel execute the
work to fulfill the objectives of the enterprise and maintain discipline and stability while „staff‟
provides expert opinion based on long experience; carry out research, planning, scheduling and
recording of progress.
Figure 2 shows the line and staff relationships.
Advantages
1. The advice of specialists and experts is available at all levels i.e. it‟s a planned and
specialized system.
2. Quality of products/ service is better and wastage is less

3. It gives increased economy and efficiency though extra expenditure has to be incurred on
staff personnel [experts]
4. As staff personnel do considerable general work, line personnel get sufficient time to
devote to achieve objectives of the company.
5. It provides for large variety of jobs, hence better opportunities for the advancement of
employees.
6. Discipline problem is solved due to line relationship.
Board of directors
Legal Advisor General Manager Chief Accountant
Production Engineer Production Manager Quality Control Inspector
Supervisors F/man Tool expert
Workers
Figure 2: Line and Staff Organization
The relation of each one of staff members is shown at one level. However, advice say from legal
advisor may be given not only to the General Manager but also to any other line officer.

Disadvantages
 The “staff” may not succeed in getting their ideas implemented for lack of authority as
they are not vested with any authority.
 In this system, the duties and responsibilities are difficult to understand which may cause
confusion between line and staff personnel (charts and manuals are required to indicate
clearly duties and responsibilities).
 The expert advice available is conveyed to workers through line officers which is quite a
lengthy route; there is risk of misinterpretation and misunderstanding given advice.
 The overhead cost of the product may increase due to high salaries of staff personnel.
 The slackness of any section will affect the whole working system.
This system is preferred for medium and large scale industries depending upon the internal
structure and nature of production activities-most common in automobile industries.
3. Functional Organization
In this type of organization all similar and related workers are grouped together under the charge
of one person. The idea is to divide the work in such a manner that each person has to perform a
minimum number of functions and he is fully responsible for the aspect of the work. For
example a foreman in the materials section would be responsible for the procurement and supply
of all types of materials to the workers all sections. Thus in order to perform his function
effectively, he may have to deal with all personnel in the various departments. Thus in a
functional organization, a subordinate anywhere in the organization will be commanded directly
by a number of supervisors, each having authority in his/her own field.

Managing Director
Company secretary General Manager
Personnel Production Finance Material Marketing

Manager Manager Manager Manager Manager
Administration Prodn Accountant F/man

Section superitendant
Foreman Clerical staff Workers
Workers
Figure 3: Functional organization
Advantages
1. Expert advice is available through specialists
2. It enables the division of labour on the basis of specialization of functions and in planned
manner.
3. It enables increased efficiency, as each person has to perform limited number of functions
4. Manual work is separated from mental work
5. It maintains the functional efficiency of each person
6. It helps in doing work as per specifications.
Disadvantages
1. There is no clear cut line of authority
2. As each subordinate has a number of bosses, it gives rise to disrespect and weakens the
discipline in the organization.

3. Due to overlapping of authority, it is likely to develop friction between different members

of staff,
4. The system is too complicated and is suitable, particularly for the lower departments in
the management.
This organization is found in government and private sector where much complicated operations
are involved e.g. big chemical plants, and steel plants
4. Span of Control
This is the dissemination of programmes/activities /instructions from top management to lower

levels of administration in order to provide effective supervision. Organizational structures exist
in all forms, the shape of which normally depends on the type and size. Each person generally
has a clear understanding of theirs and others responsibilities in a small firm, but in large firms,
employees tend to be unsure of exactly where they fit in and do not readily appreciate other
individuals positions regarding line, lateral, functional or staff relationships.
For a sound organization, the span should be short in the number of subordinates over whom a
manager has to exercise control. In order to control, coordinate and execute his/her duties
efficiently and successfully, a manager is normally not expected to deal with more than eight
subordinates at higher level of management but it can be 15-20, at the lower level of
management.
The span of control within an organization may be one of the two types;
 Shallow line structure
 Deep military line structure
Shallow line structure: this structure tends to be operated within a very small organization
where the entrepreneur (owner/bosses) directs the work and operations of all the employees. The
disadvantage of such a system is that the superior would find it burdensome where the structure
is not only shallow but also very wide, superior being directly responsible for too many
subordinates (figure 4)

Entrepreneur/ Boss
Secretary Clerk wages F/man driver Site engineer estimator
Mason Electrician
Figure 4: shallow structure
Small businesses use this structure but if the manager is absent, the subordinates may have
difficulty in getting some kind of decision on the problem although it is quick mode of
communication.
Deep military structure; The Managing Director in a company is the overall powerful superior
with managers; Supervisors etc being in turn as the line managers to subordinates, the more the
managers can direct their energies to more important and pressing problems.
Managing Director
General Manager Chief Contracts Manager
Personal Finance
Safety Contracts manager A Contracts manager B Plant Manager
Site engineer A Site engineer B F/man Transport officer
F/man A F/man B mechanics drivers
Workers

2.4 Responsibilities, authority and accountability

Managers delegate responsibility but remain responsible. They must either trust subordinates or
check the work. However, the more the checks, the less the subordinates feel responsible for the
work. Managers must have authority over subordinates within identified legitimate limits,
subordinates will do what their managers instruct them to do (psychological contract).
Authority comes from expert knowledge, formal position and charisma. More also, authority
depends on the ability to give or withhold rewards. Authority must be sufficient to allow a
supervisor to carry out his duties properly; otherwise it will lead to a buildup of frustration. One
must be given the powers to act and the right to enforce obedience. Responsibility without
authority leads to a confused situation and breakdown in discipline. In other words,
responsibility and authority must therefore go hand in hand. Accountability can never be
delegated and therefore accountability to someone in higher authority for decisions and actions
of subordinates is a charge to which managers and supervisors are subjected. Although
organization charts are to illustrate each individuals standing in an organization, details of each
officer‟s responsibilities, immediate supervisors, subordinates, special duties, limitations and
compulsory memberships of committees must be drawn up.

CHAPTER 3
3.0 Site Organization and Practice

3.1 Site layout:
Construction work can be considered as production in a temporary factory. The sites being a
temporary factory in which the contractor will make the product involve some form of
organization and tradition. This is because the builder requires men, materials and plant all of
which have to be carefully controlled so that the men have the right machines and materials in
the most advantageous position and not interfering with the general site circulation and adequate
storage space and site accommodation. Construction-site layout is an important construction
planning activity. The optimal arrangement of the different site activities, temporary structures
and services with the aim of achieving maximum efficiency, effectiveness, safety and
productivity is what is referred to as a site layout plan. Site layout planning has significant
impacts on productivity;-
Costs and duration of construction; Construction site layout planning involves identifying, sizing
and positioning temporary and permanent facilities within the boundary of the construction site.
Site layout planning can be viewed as a complex optimization problem.
Despite its importance, site planning is often neglected, and the attitude of engineers has been
that it will be done as the project progresses.
Good site layout, however, is important to promote safe and efficient operations, minimize travel
time, decrease material handling and avoid obstructing material and equipment movement.
The aim of Construction Site layout planning is to find convenient and feasible locations for
different temporary facilities.
When temporary site level facilities are required to be located on a construction site the locations
of buildings to be constructed are assumed to be known. These locations are used to define
available sites for temporary facilities. Then the problem can be defined as allocation of
predetermined facilities like warehouses, job offices, workshops and batch plants so as to
optimize an objective subject to lay out constraints and requirements.
The contractor‟s planning officer attempts to find the general site layout in consultation with the
estimator, construction manager and plant manager before work actually commences.

A neatly and efficiently site lay out convey to all concerned including the general public, the
sound standards by which an efficiently organized contractor operates.
To obtain maximum efficiency there is an optimum way of laying out the site and also a correct
amount of expenditure to support the proposed site layout. Any planned layout should be
reviewed periodically and adjusted to suit the changing needs of the site activities. If this is
carefully considered, planned and controlled, it will be reflected in the progress and profitability
of the contract.
The following should be given consideration when preparing site layout plans:
i. Existing services:-
The positions of each utility service must be established and should be shown on the site layout
plan or be marked out immediately on site with pegs or other suitable means to prevent damages
occurring during construction work. These utility services are:
i) Existing sewers/drains and any manholes/inspection chambers cesspits, septic tanks, catch-
pits, soak-away pits etc.
ii) Water mains or distribution pipes including any control valves or hydrant connections.
iii) Electricity cables above or below ground
iv) Gas mains
v) Telecommunication cables above or below ground.
ii. Hoardings (Fences):- to secure site, prevent noise and dust to adjoining properties.
iii. Access and Exits:
The size of access would depend on how restricted the site is or the constrainment of the locality
of the site. It also depends on the probable sizes of the delivery vehicles and the type of plant to
be used on site.
Under “access and exits” the following must inevitably be taken into consideration:-
i) Number of access-to-site points allowed by the highways authority so as to interrupt the
general public traffic minimally.
ii) Acess and exit road sizes for vehicle and plant movement, and the thickness of the base
depending whether it is permanent or temporary,

iii) Ramps which are necessary for delivery of materials where access would otherwise be
difficult.
iv) Traffic flow directions should be shown to prevent congestion and afford satisfactory flow of
vehicles.
iv. Signs and notices:
The position of important signs and should be displayed on site. Other signs can be erected at the
discretion of the site supervisor for the following reasons:-
 to direct plant and materials deliveries
 for security and to act as warnings to the public and employees
 for ease of location of administration, safety and welfare facilities,
 to show the names and organizations which are party to the contract.
v. Administration and other Accommodation:-

Accommodation is considered for each individual site but certain factors will be common to all
sites. Accommodation for staff is covered by the Construction (Health and Welfare) Regulations
1966. This document sets out the minimum amount and type of accommodation, which must
legally be provided for the No. of persons employed on site and anticipated duration of the
contract. Maximum and minimum labour and site staff must be accessed so that the optimum
facilities can be provided to satisfy the safety, health and welfare acts and regulations and to
conform to the agreements incorporated in the appropriate working rule agreements.
 Mess huts – for preparing, heating and consuming food and should be serviced with
drainage, hot and cold water supply. To provide a reasonable degree of comfort, a floor
area of 2.0 – 2.5m2 per person should be allowed. They should be sited such that they do
not interfere with the site development but in such positions that travel time is kept to a
minimum.
 Drying rooms – Used for depositing and drying wet clothes. A floor area of 0.6m2 per
person should be allowed to provide sufficient space for equipment and circulation. They
should be sited near or adjacent to the mess room.
 Toilets – Contractors are required to provide at least the necessary minimum washing
and sanitary facilities as set in Regulations nos. 12, 13 and 14. Sizing of toilet units is
governed by the facilities being provided and if female staffs are employed, separate

toilet facilities must be provided. Toilets should be located in a position that is convenient
to both offices and mess rooms, which may mean providing more than one loacattion on
large sites. Recommended: Up to 100 people 1 convenience for every 25 persons. More
than 100 people 1 convenience for every 35 persons.
vi. First Aid rooms:-
Any contractor who has more than 40 persons on site must provide this facility in accordance
with requirements of the regulations. It should be sited in a position which is conveniently
accessible from the working areas and must be of such a size as to allow for the necessary
equipment and adequate circulation which would indicate a minimum floor area of 6m2
vii. Contractor‟s office/clerk of works:-
An area of 3.7m2 for each supervisory staff is recommended and should be located in a position
which is easily and quickly found by visitors to the site and yet the same time will give a good
view of site operations.
viii. Car parking: -
Assume space per car 2.3m wide x 5.5m long and some allowance for reversing.
ix. Stores, storage facilities and compound: -
The location and sizes of space to be allocated for any particular material should be planned by
calculating the areas required and by taking into account all the relevant factors before selecting
the most appropriate position on site in terms of handling, storage and convenience. The
following should be designated on a site layout plan:-
 Hard stands for bulk, heavy materials
 Stores sheds
 Curing shed for concrete test cubes
 Cement and other essential sheds for petroleum, oil and explosives.
x. Workshops:-
Positions should be indicated to enable the site supervisor to arrange for the erection of the
following types of workshop:-
 Fitters shops and work area
 Joinery shop and machinery area
 Reinforcement and bar bending area
 Concrete mixing area.

xi. Temporary Services: -

These are; water supply, electricity, gas, telephone line and drainage. These services have to be
indicated on the site layout plan.
xii. Plant and equipment positions:-
Depending on the complexity, size of site and the rate of output expected one would consider the
positions of plant and equipment under headings: - Static & Movable.
Static Include;-
 Mixers and weight batching points
 Tower cranes
 Woodworking machines
 Hoists
 Weigh bridges
Moveable includes:-
 Vehicles – lorries, forklift trucks, dumpers
 Compressors
 Pumps
 Cranes (tracked or rubber tyred)
Other Considerations;
xiii. Parking yards for staff and operatives vehicles
xiv. Security lighting positions
xv. Viewing platforms
xvi. Temporary benchmark position and other control points
xvii. Spoil heaps or dumps
xviii. Protective measures for existing trees, gardens, pavement and other features, which are not to
be disturbed

CHAPTER 4
4.1 Technical control on construction sites

 Cost control
 Progress (time) and schedule control
 Quality control
 Construction safety control
 Functional and
 conflict
4.2 Understanding control

Effective management of any construction project requires that a well organized cost and control
system be designed, developed and implemented for immediate feedback can be obtained.
The requirements for an effective control system (for both cost and schedule/performance)
should include:
 Thorough planning of the work to be performed to complete the project
 Good estimating of time, labour, equipment and costs (capital involved)
 Clear communication of the scope of required tasks
 A disciplined budget and authorization of expenditures
 Periodic re-estimation of time and cost to complete remaining work
 Frequent periodic comparison of actual progress and expenditures to schedules and
budgets, both at the time of comparison and at project completion.
An effective control system monitors schedule and performance as well as costs by setting
budgets, measuring expenditures against budgets and identifying variances, assuring that the
expenditures are proper and taking corrective action when required.
The control systems required on construction projects fall into five categories of time, cost
quality, function and conflict.
Indeed, although this is a novel definition of control systems for construction projects, the
documentation found on most projects actually addresses all five control needs, time control is
documented in the programmes, cost in the bills or financial statement quality in the
specifications, function in the brief and conflict in the contracts and conditions of engagement, as

shown in Table 2. Clearly, then, it is not the actual control systems used in practice which are
wrong, merely the established theories that surround them.
Table 2: A framework for control of building projects

General env. Political Social Economic Physical Cultural
Task env. Policy Legal/Inst‟l Financial Technological Aesthetic
Control sys. Time Conflict Budget Function Quality
Document Programme Contracts Cost Brief Spec/drawings
plans/BQs
4.3 Elements of control

 Physical tolerances-dimensions (limits +/-; absolute values, roughness, thickness)
 Material standards (establish standard, manufacturer‟s certification, sample tests on site,
in mat. Labs). Systems for site control of materials: contractor‟s testing; engineer‟s
testing; comparison checks.
 Visual inspections/workmanship
 Documents (production standards, review/check, approval, records)
I. Cost Control
Cost control: - It should be recognized that no amount of paperwork achieves this construction
cost control. The actual control is achieved through the ultimate decision of the manager that
something should be done differently and the translation of that decision into practice.
Cost control is the activity which compares cost performance against the cost plan, adjusting one
or the other dynamically by reference to the changing circumstances in the project‟s financial
environment.
The elements of a cost control system are:
 Observation
 Comparison of observation with some desired standard
 Corrective action to take if necessary

Cost control is the process of controlling the expenditure on a construction project throughout its
construction duration from its inception till its execution and final payment. The main aim of
planning, scheduling and supervising a project is to ensure the maximum benefits from the
expenditure incurred on the project. To achieve this objective, it is necessary to have estimates of
the cost of the proposed work, and be reasonably sure that it can be done within available
resources. During the construction stage, measures should be taken to ensure that the costs are
kept within the estimated cost.
Cost control is an important aspect of construction management, not only for the owner of the
work, but for the contractor also, who has to earn profit out of it. If he does not exercise
sufficient control on costs, he may not only lose profit margin, but could incur heavy losses.
Purpose or aim of cost control

The following are the main aim or purposes for the cost control:
 To determine the estimated profit
 To locate areas of inefficient functioning and provide data for reducing cost
 To serve as a basis for future estimating
(i) To determine the estimated profit. The cost data provides the total expenditure
incurred on the work at regular interval or any given duration. The contractor can find
out his profit or loss by comparing the likely payments to him from the measurement
of completed portion of the work and actual expenditure in incurred by him.
(ii) To locate areas of inefficient functioning and provide data for reducing cost.
Cost control data indicates the day-to-day cost incurred on various items of work and
provides warning to the site engineers if expenditures are higher than the estimated
costs being incurred.
(iii) To serve as a basis for estimating. The cost control data of work provides feedback
to the estimator for up-dating the knowledge of output data of men, materials and
machines. The unit rates of cost for various items of work can be worked out after the
completion of a job, which would be helpful in preparing the realistic estimates for
the future works.

Classification of cost control systems

The cost control system to be used for a particular work depends upon the degree of details
required to be exercised.
The following methods of cost control are commonly used:
 Overall profit or loss method
 Profit or loss with reference to part payment
 Unit costing
 Comparison with standard costs
 Combination with other functions
Overall profit or loss method; in this method, the contractor waits till the work is completed and
then he compares the amount he receives for the work completed with the amount spent on it.
Such a system is useful for small contracts of short duration. This system hardly has any control
on the construction as the result of available at the end of the work. However, the experience
gained by this information can be utilized in future for the execution of similar works.
Profit or loss with reference to part payment; In this method, the contractor is paid on running
bill basis at regular intervals for the portion of the work completed by him. The he can know the
profit or loss by comparing the amount he receives for the work done with the expenditure
incurred by him for executing that portion of the work.
Unit cost method; In this method, the rate of cost of each item of work is calculated by dividing
the expenditure on the item by the quantity of work done. The comparison of the rate of cost
with the rates in the cost estimates, gives the idea of the efficiency of the work. This method
gives a clear picture of the items which are going on uneconomically and need attention.
Although limited details of cost records will not give clear idea whether the poor performance is
due to labour, materials or equipment, yet for most purposes, it is sufficient incarnations of the
items which need attention to avoid losses.
Comparison with standard costs; In this method, the cost records of the details of the rate of cost
of labour, materials and equipment are separately and compared with the rates of these items
known as standard costs. This comparison of rates of costs gives an idea of the areas of
inefficient works and the scope of improvement. Although this method is ideal, it is laborious

and costly as great details pertaining to labour, materials and equipment costs separately for each
item of work are required to be maintained.
Combination with other administrative functions; To effect economy, sometimes cost control
system is combined with some other necessary operations such as with the organization of an
incentive scheme or bonus scheme. As in profit sharing type of incentive scheme, it is essential
to know the cost efficiency of the work before the bonus is announced.
Stages of cost control

Following are the stages at which cost control is found useful:
 Pre-contract stage or at the design stage
 Procurement stage
 Post-contract stage or at the construction stage.
Pre-contract stage
 The cost of a project depends to a great extent upon its design and specifications. Hence
at the design stage or pretender stage, various alternative designs should be conscious and
out of them, the most economical as well as consistent with the requirements should be
chosen.
 The specifications should be decided judiciously, and such specifications which increase
the cost without producing commensurate benefits should be rejected.
 As far as possible local construction materials should be specified, as their use will
reduce the transportation and storage cost along with some other minor costs.
 The estimates should be prepared accurately from the detailed drawings, using standard
specifications and approved rates.
Post-contract stage or at construction stage cost control

During construction stage, costs consist of expenditure on: labour, materials,
machines/equipment and over head charges.
 Labour – In order to have cost control, there should be effective supervision of labour.
The workmen to be engaged should be selected carefully to suit the job and should be
appointed as per minimum requirements, overstaffing leads to inefficiency. The output
should be evaluated regularly.

 Materials – Construction materials form the biggest component of any construction job.
Hence cost control must be exercised at its purchasing stage. Required quantity and
quality materials should be purchased at the most competitive rates from proper sources.
Surplus materials should not be purchased as it deteriorates in storage.
 Equipment – Cost control on equipment and machinery may be exercised in the
following manner:
 Over head charges – By reducing the duration of completion of the job, the over head
charges can be reduced to a minimum.
Safety and security measures – The safety measures reduce accidents, resulting in saving time
and money paid as compensation, Thus for efficient and economical completion of any job,
proper safety and security measures are essential.
II. Time control

The policy environment of the project is the major influence around the timing of the project.
Timing is influenced by many environmental factors, but the client‟s attitude to the timing of the
project is an issue of policy. Therefore, when considering time, the policy of the client needs to
be unambiguous.
III. Functional control

The physical environment dedicates the technology which is available. Technology includes the
physical resources being utilized in the provisions of the built facility. This also ties in the
ecological issues about the effect that the construction project has upon the physical
environment. In terms of control system, it is functional control which forms the strongest link
here. The function of a building, and its parts, is a direct result of the technology of construction,
but also the technology of the client‟s organization. Therefore, the function of the building, and
the way in which the client‟s requirements are achieved, are essential elements of functional
control.
IV. Conflict control

The legal environment influences the development, or avoidance of conflict. The control conflict
is an essential part of project management, but is often neglected. There seems to be
unwillingness by many people to even consider conflict; almost as if they were being asked to
contemplate divorce when planning a marriage! However, construction projects are not

marriages, and the purpose of contracts and conditions of engagement is to make clear and
unambiguous enforceable promises. A certain amount of conflict between the members of the
team is a healthy source of new ideas. Therefore, just like cost, it needs to be controlled, not
eliminated.
Control of progress
Progress may be defined as the achievement at regular interval of time in comparison with the
estimated work. All planning of any job will fail if progress is not checked at regular intervals.
Purpose of control of progress
Construction works are full of a number of uncertainities and bottlenecks, due to which the
achievements or progress will be less than planned. If the timely corrective action could not be
taken, the work will not be completed in the planned period and its overall cost will increase
many fold than the estimated cost. The record of progress is also useful in case of dispute with
the contractor. Sometimes contractor may demand extra time to complete a certain job on the
grounds that the work has delayed due to the reasons beyond his control, such as delay in supply
of materials by the department. In such cases factual progress date is useful to settle the matter.
In summary:
 The record of progress gives an idea of payments to be made.
 It gives information to the planner whether the work is going as per schedule or behind
schedule
 It give an idea to the owner, whether he will have some profit or not
 It helps to take corrective measures well in time to bring back the work to schedule if it
has lagged behind.
Methods of recording progress
The methods of recording progress depend upon the type and size of the work as well as manner
in which it is executed. Generally the following methods of recording progress can be adopted:
 Maintaining job diary (attendance, receipt and issue of materials, number of workers
employed, inspection record, progress of work done weather conditions etc)
 Maintaining register of instructions/instruction book (communication between the
engineer in charge and contractor). The site engineer/consultant records his observations

regarding quality and progress of the work and if any change in the design of the work is
required, then he records the necessary changes to be done by the contractor.
 Maintain progress report record (prepared at site by supervisor and sent to head office
at regular interval as decided, weekly or monthly)
 Construction report (report about materials used and progress is daily entered in a
prescribed form). Test results of specimens tested, inspection notes about the work are
also recorded. The aim of construction report is to record time, quality, quantity of work
and general conditions of the work to ensure satisfactory progress as per specifications
 Abstract of quantities and cost. The quantities of various items of works executed are
recorded in the measurement books. Payments to contractors are made on the basis of
these measurements entered into the master bill, the work abstract is prepared, which
indicates the up-to-date physical progress of each item of work including the supplies of
material.
Taking corrective measures
The following corrective steps may act as a guide to site engineers:
 Procurement of materials well in advance right quality and quantity at time when
required;
 Arrangement of equipment and machinery – to be arranged in time or alternative source
to be arranged, no defective plant to be allowed on site;
 Proper watch and ward arrangements – to eliminate chances of pilferage of materials and
equipment
 Provision of incentive – to achieve a higher output and better efficiency, some incentive
schemes for workers must be announced.
V. Quality Control
Quality is defined as „fitness to purpose
The price to be paid for a building is a reflection of the expectations of quality. A cheaper
building probably uses inferior materials and is likely to be less attractive and less durable.
Quality control also aims to avoid wastage of time, materials and money by highlighting the
point at which a production process is being defective.

Three elements considered in quality control:

 To produce a building which satisfies the client
 To produce a building where quality is related to the price
 To produce a building in which sufficient time is allowed to obtain the desired quality
Like most other aspects of construction management quality control has to be planned. Planning
seeks „order‟ and a quality control system for a construction project reflects this sense or order. It
may be seen to be in five basic stages:
 Setting the quality standard or quality of design required by client
 Planning how to achieve the required quality, construction methods, equipments,
materials and personnel to be employed
 Construct the building right first time
 Correct any quality deficiencies
 Provide for long term quality control through establishing systems and developing a
quality culture.
The costs of quality
It is obvious that quality is proportional to costs associated with the construction process. Costs
associated with quality need to be identified for management decisions. The costs of quality can
be broken down as follows:
 Failure costs: The cost of demolishing and rebuilding, the cost of production time, delays
to other gangs
 Appraisal costs: The cost of inspection and testing
 Prevention costs: The costs of providing better designs, more training to reduce failure
costs, more maintenance.
Quality Assurance QA
Quality Assurance is a mechanism for ensuring that the construction process takes place within
the framework of a quality management system. Quality assurance defines the organization
structure, tasks and duties for implementing quality management. In 1987, the Building Research
surveys found that 50% of the faults were design related, and 40% of the problems arose from
faulty construction and 10% were products failing.
Design faults

 Misunderstanding the client‟s brief to develop the design

 Using information which is incorrect or out of date
 Misunderstanding of the client‟s expectations of quality standards
 Lack of co-ordination between the designers
 Loose or inappropriate specifications
Construction faults
 Not building to drawings or specifications
 Poor supervision leading to bad workmanship
 Insufficient management of the quality of construction
 In order to eliminate those potential problems many clients have looked to quality
assurance to reassure them that they will get the right building without undue quality
problems.

CHAPTER FIVE
Handling and Storage of Materials
5.1 Materials
Material storage is a very important function since material wastage can increase substantially if
care is not exercised in the selection of suitable storage points. Pre – planning is essential, and
the site supervisor who fails to store materials when they arrive on site is not operating in the
way in which he was employed.
5.2 Requisitioning and ordering

The purchase officer has a number of duties to perform before orders are placed for materials.
When schedules and requisitions have been received from various departments, enquiries are
made to suppliers to enable the most competitive prices to be accepted. Purchase orders follow
the enquiries stage to those suppliers whose quotations meet the expectations. Materials should
always be ordered for in time to give the supplier ample time to prepare for delivery. Care should
be taken where materials have been delivered too early as there is chance of damages or loss
arising due to vehicle and other mechanical damage or damage due to weather or pilfering and
theft.
5.3 Receipt and Checking of deliveries from suppliers or contractor’s own yard
Notification from suppliers of impending deliveries should be made to enable the storage area be
prepared and to allow the technical team inspect the materials from the suppliers yard. Delivery
notes should accompany delivered goods and must be presented by the delivery drivers as proof
of the consignment‟s quantity and quality. The delivery notes should not be signed until goods
are checked, and if damages have arisen during transit or there are discrepancies between the
deliveries, the amounts should be indicated on both copies.
5.4 Offloading and handling.

Careless off – loading and handling of materials adds to wastage on site, prior discussions must
be held with the supplier, perhaps an agreement on methods of delivery and off loading.
At commencement of a contract, a site layout plan should be drawn up to outline the construction
working areas and to show all the site facilities and material storage areas A storage compound
layout would also serve to highlight to everyone concerned where the various delivered materials
are to be kept so that the site supervisor is occupied when there is delivery, other supervisors,
store men e. t. c may be able to direct the delivery drivers to appropriate unloading points by
referring to the layout retained in the main site office.
The following are a few pointers regarding storage:
(i). Hardstands for heavy materials should be provided.

(ii). Provide concrete blinded area for loose, materials such as sand and gravels with separate
bays for different grades.
(iii). Show clear marks and laid out areas for different materials, such as reinforcement bars
and mesh, concrete products, blocks, tiles, timber, e. t. c.
(iv). Provide huts for bags of cement, plaster and lime, taking care to stack materials so that
the earliest deliveries are used first. (FIFO- First In, First Out)
(v). Ensure there are level beds for bricks, etc with covering provided (polythene or tarpaulin)
until materials are required.
(vi). Be sure that stacked materials should not have to be moved to allow operations to be
complete, such as roads, services and building works.
(vii). Lay drainage pipes on their sides in neat stacks, using wooden wedges to prevent
movement.
(viii). Stack steelwork, reinforcement bars and fabric flat on timber runners off the ground, with
polythene covers to prevent undue rusting and to keep them clean especially if not
required for some time.
(ix). Move the residue of any discontinued pile of material, especially bricks, along to an
existing or new work area to prevent burials, breakage or misuse.
(x). Store windows and door frames in a covered compound area, or stack the perfectly flat
off the ground on sleepers/runners and covered to protect. If standing vertically care
should be taken to prevent twisting.
(xi). Put valuable small items in the charge of a store keeper or supervisor. Individuals should
be made to sign for them when required.
(xii). Store scaffolding fittings in strong bins and not sacks, although the latter facilitates ease
of handling at the work place. Scaffold poles when not in use should be stored in racks in
the compound area.

5.5 Definition of terms
(i). “Block” means a masonry unit having 1 dimension exceeding 15 inches (375mm), and
„1 of its other 2 dimensions exceeding 7 inches (175mm)
(ii). “Brick” means masonry unit which is not a block.
(iii). “Chain” means a series of metal links connected to or fitted into, one another.
(iv). “Lay” means the lengthwise distance required by a single strand to make 1 complete
spiral around the rope.
(v). “Rigging equipment” means chain, wipe rope, fiber rope, synthetic rope, sling, and
their accessories and including hoisting lines.
(vi). “Rope” means a strand or series of strands of fiber, synthetic or wire braided woven or
twisted together.
5.6 General provisions; storage
(i). All materials shall be stacked, racked, blocked, interlocked, or otherwise secured to
prevent sliding, falling, or collapsing during storage or transit.
(ii). Structural steel, poles, pipe, bar stock, and other cylindrical materials, unless racked, shall
be stacked and blocked so as to prevent spreading or tilting.
(iii). Before a material is unloaded from a railcar or vehicle or removed from storage, the load
or pile shall be examined to ascertain if the material has shifted, binders or stakes have
broken, or the load or pile is otherwise hazardous to an employee. If a hazardous
condition is found, an attempt shall not be made to remove the load until corrective
measures are taken that will ensure the safety of the employee who is exposed to the
hazardous condition.
(iv). The maximum safe load limit in pounds or kg per square meter of a floor or roof of a
building shall be conspicuously posted in all storage areas, except a slab on grade. The
maximum safe load limit shall not be exceeded.
(v). Except for masonry and mortar, material shall not be stored within 4 feet (1.2m) of
working edge during overhand bricklaying or related work.
(vi). Gravel, sand, and crushed stone shall be withdrawn from a pile or barrow area in a
manner that prevents overhangs and vertical faces.

(vii). Storage areas, aisles, and passageways shall be kept free of the accumulation of materials
that constitutes a hazard to the movement of material – handling equipment and
employees. Such areas shall be kept in good repair.
(viii). If a different road or work levels exists, ramp, grading, or blocking shall be provided to
ensure the safe movement of material – handling equipment.
(ix). A railcar, truck, or semitrailer shall be chocked or otherwise secured during loading and
unloading if the movement of a railcar, truck, or trailer could create a hazard for the
employee.
(x). A load line shall not be wrapped around the material being lifted.
(xi). A material shall not be stored with any other material with which it could react and cause
a hazardous condition.
(xii). While roofing work is being performed, materials and equipment shall not be stored
within 6 feet (1.8m) of a roof edge, unless guardrails are erected at the roof edge.
(xiii). Material that are piled, grouped, or stacked near a roof edge shall be stable and self
supporting.
(xiv). Material stored inside buildings under construction shall not be placed within 6 feet of
any hoist way or inside floor opening, nor within 3metres of an exterior wall that does not
extend above the top of the material stored.
(xv). Non- compatible materials shall be segregated in storage
(xvi). Storage area shall be kept free from accumulation of materials that constitute hazards
from tripping, fire, explosion, or pest harborage. Vegetation control shall be exercised
when necessary.
(xvii). Materials shall not be stored on scaffolds or runway in excess of supplies needed for
immediate operations.
(xviii). Portable and powered dock boards shall be strong enough to carry the load imposed on
them.
(xix). Portable dock boards shall be secured in position by being anchored and equipped with
devices that will prevent slipping.
(xx). Handholds, or other effective means, shall be provided on portable dock boards to permit
safe handling.

(xxi). Positive protection shall be provided to prevent railroad cars from being moved while
dock boards or bridge plates are in position
5.7 Storage of bagged material, brick, and block
(i). The height of manually stacked pile of bagged material, weighing more than 13.6kg per bag,
shall not exceed 5 feet.
(ii). Bagged material on a pallet shall be all of the following
 Not more than 36 inches in height.
 Secured to prevent displacement from the pallet before moving.
 Stacked not more than 2 pallets high.
 Stacked stepping back the layers and cross – keying the bags at least every 10 bags high.
(iii). A loose brick or tile stack shall be all of the following:
 Tapered back 2 inches in every foot of height above 4 feet.
 Not exceeding 6 feet in height.
 Cross – keyed at each 2 – foot level.
(iv). A loose block stack shall be all of the following:
 Not exceed 6 feet in height.
 Cross – keyed at each 3 foot level.
(v). Brick on a pallet shall be all of the following:
 Not more than 30 inched in height.
 Secured to prevent displacement from the pallet before moving.
 Stacked not more than2 pallets high.
(vi). Block on a pallet shall be all of the following:
 Not more than 46 inches in height.
 Cross – keyed every course or secured to pallet.
 Stacked not more than 2 pallets high.
(vii). Brick or block in a banded cube shall not be stacked more than 2 cubes high.

5.8 Storage of lumber
(i). Lumber shall be stacked on level and solidly supported sills so as to be self –
supporting and stable.
(ii). The width of a pile of lumber shall be no less than ½ the height.
(iii). A pile of lumber manually stacked and a pile of lumber to be manually unstacked
shall not exceed 6 feet in weight
(iv). Lumber which is mechanically stacked shall not exceed 10 feet in height. This lumber
shall not be re-handled manually.
(v). Used lumber shall have all protruding nails removed or bent into the lumber before
stacking.
5.9 Storage of material in bins or hoppers
(i). A bin or hopper that has a bottom discharge shall have sloped sides to allow material to
flow freely.
(ii). A hopper shall have a top opening that is 42 inches or less above the ground or working
surface and shall be equipped with grill work over the opening which is capable of
supporting any intended load and which has a mesh that is not more than 6 by 6 inches to
prevent employee entry.
(iii). An employee required entering or working on stored material in a silo, hopper, bin, tank,
or similar storage area shall be provided with a personal fall arrest system for working in
hazardous spaces and confined or enclosed spaces; testing and neutralizing hazard.
5.10 Clearances
(i). Material stored near an electrical distribution or transmission line shall maintain the
following clearances:
 Line rated 50kV or less – 10feet plus length of material stored
 Line rated 50 kV or more – 10 feet plus 0.4 inch for each 1 kV over 50 kV plus
length of material stored or 10 feet plus 4 inches for each 10 kV over 50 kV plus
length of material stored.
(ii). All equipment used to store material near energized electrical lines shall conform to part
10 Lifting and Digging Equipment, and Part 13 Mobile Equipment

(iii). An employee shall be designated to observe the clearance and give timely warning if it is
difficult for the operator to maintain the prescribed clearance by visual means.
(iv). An employee storing or handling material shall not come closer than the prescribed
clearance of sub – rule (1) of this rule.
5.11 Disposal of waste materials
(i). The area onto and through which material is to be dropped shall be completely enclosed
with barricades not less than 36 inches or more than 42 inches high and not less than 6
feet back from the opening and area receiving the material. Signs warning of the hazard
of falling materials shall be posted on the barricades at each level containing the
barricades. Removal of signs shall not be permitted in this lower area until debris
handling ceases above.
(ii). If material is dropped through more than 1 level, the opening shall be enclosed between
the upper and lower levels, or an enclosed chute provided, or the intermediate levels
barricaded as prescribed in sub-rule (1) of this rule. If the drop is more than 40 feet inside
a building. Then only an enclosed opening or chute shall be used. The chute or enclosure
shall extend through the ceiling of the receiving level.
(iii). A material chute should be constructed to withstand any impact load imposed on it
without failure.
(iv). A material chute, or section of a material chute, at an angle of more than 45 degrees from
the horizontal shall be entirely enclosed, except an opening may be provided at or about
each floor level for insertion of materials. The opening shall not exceed 48 inches in
height measured along the wall of the chute. At all stories below the top floor, the
openings shall be kept closed if not in use.
(v). A material chute shall fit a floor or wall opening, or the space between the chute and the
floor or wall opening shall be covered.
(vi). If material is dumped from mechanical equipment or a wheelbarrow, then a toe board or
bumper not less than 4 inches x 6 inches high nominal size shall be secured to the floor at
each material chute opening.

(vii). A gate capable of withstanding the load imposed on it shall be installed at or near the
discharge end of a material chute. A trained employee shall be in charge of opening the
gate and loading of trucks.
(viii). If the drop is more than 20 feet outside the exterior of the building, then a chute as
prescribed in sub-rules (3) to (6) of this rule shall be used, and extend to within 8 feet of
the lower level.
(ix). Material, barricades, waste materials, or rubbish shall not be removed until material
handling ceases above.
(x). All scrap lumber, waste materials, or rubbish shall be removed from the immediate work
area as the work progresses.
(xi). Disposal of waste material or debris by burning shall comply with local fire regulations.
(xii). All solvent waste, oily rags, and flammable liquids shall be kept in fire resistant covered
containers until removed from the worksite.
5.12 Rigging equipment
(i). Rigging equipment for material handling shall be inspected at the time of installation,
before each job, and at the beginning of each shift if in use, by an employee qualified to
perform this inspection. Defective rigging equipment shall be removed from service.
(ii). If not in use, rigging equipment shall be stored in a manner which is not hazardous for an
employee.
(iii). Rigging equipment, other than a sling, hoisting line, and alloy steel chain, shall not be
loaded excess of its recommended safe working load.
5.13 Natural and synthetic fiber rope; specifics
(i). A natural or synthetic fiber rope used for hoisting, lowering, or pulling shall consist of 1
continuous piece without a knot or splice, except an eye splice at the end of the rope.
(ii). An eye splice for manila rope shall contain not less than 3 full tucks, and short splices
shall contain not less than 6 full tucks, 4 on each side of the splices center line.
(iii). An eye splice for stranded synthetic fiber rope shall contain not less than 4 full tucks, and
short splices shall contain not less than 8 full tucks, 4 on each side of the splice center

line. An eye splice for other types of synthetic fiber rope shall be made as prescribed by
the rope manufacturer.
(iv). An eye splice for natural or synthetic fiber rope shall be of a size to provide an interior
angle at the splice of not more than 60 degrees when the eye is placed over the load or
support.
(v). A natural or synthetic fiber rope eye shall be equipped with a thimble if the eye is placed
over or around an object with a sharp corner.
(vi). Strand ends tails from an eye splice not be trimmed flush with the surface of the rope
immediately adjacent to the full tucks. This applies to both eye and short splices and all
types of fiber rope.
 Tails from an eye splice for a fiber rope less than 1 – inch in diameter shall project
not less than 6 rope diameters beyond the last full tuck.
 Tails from eye splice for fiber rope 1 – inch or more in diameter shall project not less
than 6 inches beyond the last full tuck.
 Projecting tails may be tapered and spliced into the body of the rope using not less
than 2 additional tucks, which shall require a tail length of approximately 6 ropes
diameter beyond the last full tuck or they may be taped or wired down.
(vii). A natural or synthetic rope shall not be used for load carrying service if any of the
following apply:
 It is frozen or has been subjected to corrosive chemicals or extreme temperatures
 It has begun to unravel
 It has external abrasion, cuts, or broken fibers, decay, burns, softness, or variation in
size or roughness.
 It has internal presence of grit, broken fiber, mildew or mold, color change,
powdering or loose fiber.
(viii). Natural or synthetic rope shall not be used if there is exposure to corrosive substances,
chemicals, or heat.

5.14 Hooks, shackles, and other accessories
(i). A hook ring, oblong link, pear – shaped link, welded or mechanical coupling link, or
other attachment, when used with alloy steel chain, shall have a rated capacity equal to
the chain or rope to which it is attached, and the load shall not exceed the rated load.
Shackles and other accessories shall have a rated capacity equal to or greater than the
load to which it is attached.
(ii). A hook shall be discarded if either of the following applies:
 The throat opening is more than 15% greater than the manufactured size.
 The hook has more than 10 degrees twist from a vertical center line drawn through
the hook center.
(iii). A closed hook shall be used if there is a probability of the load becoming disengaged.
(iv). Special custom designed grabs, hooks, clamps, and other lifting accessories, for such
units as modular panels, prefabricated structures and similar materials shall be marked to
indicate the safe working loads and shall be proof tested to 125% of their rated load.
(v). A job or shop hook and link, or a makeshift fastener, formed from a bolt, rod, or other
such accessories, shall not be used, unless tested in accordance to subrule (4) of this rule.
(vi). A shackle and connecting pin, and other accessories, shall be discarded if the diameter is
reduced by more than 10%.
5.15 Chains.
(i). Chains used for material handling shall be made of alloy steel.
(ii). A welded alloy steel chain shall have a permanently affixed tag showing the size, grade,
rated capacity, and manufacturer‟s name.
(iii). If wear at any point of any chain link is more than that shown in table 2, then the chain
shall be repaired or replaced. The repair shall return the chain to its rated capacity.
(iv). A load – carrying chain shall be repaired only by the manufacturer.
5.16 Shackles and hooks safe working loads.
(i). Determine the safe working loads of various sizes shackles from the catalogue, except
that higher safe working loads are permissible if recommended by the manufacturer for

specific, identifiable products, provided that a safety factor of not less than 5 is
maintained.
(ii). The manufacturer‟s recommendations shall be followed in determining the safe working
loads of the various sizes and types of specific and identifiable hooks. All hooks for
which manufacturer‟s recommendations are not available shall be tested to twice the
intended safe working load before they are initially put into use. The employer shall
maintain a record of the dates and results of such tests.
5.17 Synthetic webbing (nylon, polyester, and polypropylene)
(i). The employer shall have each synthetic web sling marked or coded to show all of the
following:
 Name or trademark of manufacturer.
 Rated capacities for the type of hitch.
 Type of material.
(ii). Rated capacity shall not be exceeded.
(iii). Synthetic webbing shall be of uniform thickness and width and selvage edges shall not be
split from the webbing‟s width.

CHAPTER SIX
Organisation and Control of Site Plant and Equipment
6.1 Location of machinery and equipment on site
A large variety of equipment is used on construction projects and their location should be
properly planned to maximize their output. When preparing equipment layout, the
following points should be considered:
 Equipment should be placed near the place of its use as well as near materials it is
supposed to utilize.
 Provide shelter for costly equipment
 Repairs, maintenance should be done.
 Layout should be such that safety can be ensured by security staff.
 Sufficient space should be available for scaffolding erection and for removal and shifting
of the equipment to places where it can be fully utilized.
 There should be adequate space for parking transport vehicles.
 Adequate safety measures and fire prevention equipment should be provided in the
layout.
6.2 Maintenance of plant and equipment

Plant whether mechanical or non – mechanical should be maintained in a sound condition
if economic levels of utilization are to be obtained. This is the responsibility of the plant
department but the site supervisor cannot stand iddle if the plant brakes down on site; is
being operated in a dangerous stage; or the efficiency is below the standard expected
according to the contract programme and progress chart. Not only will the site supervisor
be accountable for the progress made on site, but also would be answerable particularly
where dangerous, unworthy road vehicles are being used.
Maintenance of all plant is essential for the following reasons;
 It contributes towards the safety of employees and third parties. Any accidents, no matter
how they are caused, are expensive and unnecessary.

 It ensures efficiency of the mechanical plant because there are fewer breakdowns, which
can reduce output.
 It prevents frustration in operatives, particularly if their earnings are affected by plant
breakdown and poor outputs.
 Site supervisors are kept happy where the plant department offers efficient services of
mechanical plant. Plant with a poor performance record should not be issued but should
be got rid of by the plant department.
 It enhances the value of plant and hence depreciation is slowed down.
 It is generally a guarantee that operatives take more care when using the plant.
Dilapidated plant is more misused and abused because operatives treat it with contempt.
 Well – kept plant is a good public relations exercise. Those from outside tend to
recognize the firm as an efficient, well managed unit where the vehicles, plant and
equipment are clean and well looked after.
 Major breakdown of mechanical plant are reduced if a sound maintenance scheme is in
operation.
 The work and responsibility of the firm‟s safety officer is simplified and management is
pleased.
 Litter or no trouble is experienced with the police as far as the firm‟s vehicles are
concerned.
If maintenance is to be effective the supervisor should understand that most plant managers
insist on the following division as far as mechanical plant is concerned:
a) Servicing and cleaning
b) Preventative maintenance
c) Planned maintenance
6.2.1 Servicing and cleaning

The responsibility for servicing is the site supervisor‟s who then generally delegates the
responsibility to the charge hands, foremen or gangers who have plant within their
control. Each should ensure that their machines are regularly SERVICED BY:
 Topping up engines and other working parts, oil levels.
 Greasing the points recommended by the manufacturer‟s catalogue.

 Filling fuel tanks.

 Providing water for the cooling systems.
 Maintain anti – freeze levels in winter or draining off water at the end of a working day.
 Inspecting for fuel, oil or water leaks.
 Tightening loose screws and bolts where the services of a trained mechanic / fitter are not
required.
6.2.2 Preventive maintenance

This is the responsibility of the plant manager or plant hire firm. Naturally the site based
engineer/fitter/mechanic acts on behalf of the plant department or plant hire firm ensuring
breakdowns are kept to a minimum. A regular servicing arrangement is provided to
prevent deterioration and breakdown of plant and the typical areas in which maintenance
is carried out relate to the following:
i) Engine oil change
ii) Replacing oil and air filters
iii) Flushing of coolant systems
iv) Sparkplugs adjustments or replacement
v) Carrying out tests
vi) Thorough body checking
vii) Exchanging other parts of the plant which are worn or have broken
viii) Carrying out tests to ensure machines etc are working correctly
6.2.3 Planned maintenance

It is obvious that sound servicing and preventative maintenance reduces breakdowns and
excessive wear and provides safe machinery. However, there comes a time where
mechanical plant ceases to work efficiently, it is therefore the plant manager‟s
responsibility to asses from experience, and record at what time vital parts require to be
adjusted or changed. This prevents expensive and inconvenient breakdowns occurring
which could seriously affect output on site and lead to further additional damage to plant.
The plant department keeps records on each piece of mechanical plant so that when the
time is right for temporary withdrawal of plant for planned maintenance, it can be

conducted with minimal disruption. Withdraw from circulation would take place when
one site has returned the plant to the yard; the planned maintenance would take place
before redistributing to another site.
6.3.0 Plant and Equipment Record
The plant manager opens up a file on each piece of plant purchased and all relevant
details are recorded regarding the plant history. Details recorded include:
manufacturer‟s hand book, date of purchase and cost, supplier‟s name and address,
modifications, fuel consumption, maintenance, expected life, depreciations, worked
hours etc. some forms associated with the use of plants are:
 Plant Utilization Sheets
 Plant Transfer Sheets
 Plant in and out Charts
 Plant hire charges
 Inspection Records and Maintenance Sheets
 Driver‟s log book
 Inspection records and testing results forms.
Site managers are advised, when requisitioning or ordering plant not to rely entirely
on phone calls but to verify the order in writing to ensure that the correct type of
equipment and size are received. This reduces disputes between plant department and
site supervisors. Also hiring out of plant is more accurately predicted when the date
of requirement is shown on the requisition form.
6.4.0 Plant and Equipment Schedule.

This schedule is prepared before the start of the project to decide the type, number and
dates on which particular equipment is needed, so that it is well arranged in advance and
brought to site as and when needed. The aim of this schedule is to take maximum
advantage of this equipment when on site and remove it immediately as soon as it is not
required in order to gain some savings financially.

TIMTEK CONSTRUCTION SERVICES LTD

Plant and Equipment Schedule/requisition
Contact no _________________________
No.________________
Job no _____________________________ Date
_______________
Prepared by _________________________
Plant type and Dates required Plant hire Remarks

Equipment Firm /
Date on site Date off site supplier
6.4.1 Monitoring of Maintenance.

In order that the maintenance policy be executed efficiently, it is necessary to install a
recording and costing system, which shall include:
 An Asset Register comprising an inventory of each plant item in the fleet, with
information on the date of purchase, registration number, purchase price etc.
 A maintenance Schedule including the type of maintenance work and servicing required
on each plant together with the time intervals between each plant maintenance operation.
 Job cards to be filled out by the fitter each time maintenance work is performed and
which should include a description of the work done, materials used, time taken,
recurring defects etc.

 History Record Cards: The information on the job cards is transferred for each
individual machine to its history card together with the hours operated and fuel used. The
monthly records are then abstracted to prepare costs for comparison with budget values.
The variances are subsequently used in controlling maintenance, adjusting the hire rate
and ultimately in making decisions with respect to replacement or sale of plant.

CHAPTER 7
Safety, Health and welfare at Construction Sites
7.01 Definitions
(i) Health – State of complete mental, physical, social and spiritual well-being
(ii) Safety – state of being safe and protected from danger or harm to the body either directly
or indirectly or state of freedom from danger.
(iii) Welfare – Health, comfort, happiness and general well-being of a person or group etc.
construction, which is an occupation, involves building operations and works of
engineering construction, excavation, earth works, transportation of materials by hand
and vehicles, movements within the site, etc. all these activities carried out at
construction sites are associated with problems, which include injury and death.
7.1.1 Construction Related Accidents

An accident can be defined as an unplanned and unexpected occurrence, which upsets the
planned sequence of events and actions, resulting in the loss of production, injury to
persons and damage to plants and equipment. Civil engineers are responsible for
infrastructure (buildings, roads, bridges and water and sewerage facilities) in planning,
design, construction, operation and maintenance. Civil constructions, which normally
range from medium to large scale, involve the use of many trades (skilled and unskilled)
along with machines and equipments, which have to be selected with care. Serious
accidents on sites result in personal injury or death of the worker on one hand and they
cause mental tension and financial burden to the employer on the other hand
Accidents don‟t just happen, 99% are caused by unsafe acts, unsafe conditions or both.
Most accidents result from a combination of contributing causes and one or more unsafe
acts or unsafe conditions
The unsafe act is a violation of an accepted safe procedure which could permit the
occurrence of an accident. The unsafe condition is a hazardous physical condition or
circumstances which could directly permit the occurrence of an accident.

7.1.2 Construction safety

Unfortunately the construction industry has become stereotyped as an accident prone
industry, in fact only mining and fishing industries have higher fatalities. Depressingly,
the accident rates experienced closely correlate to the level of activity within the industry,
indicating that when work load is high; safety tends to receive less attention.
It is argued that construction management must have a prime concern for safety on sites.
However the responsibility for safety must commence upstream of the construction phase
of a project; architects and engineers must have the technical knowledge to design
building which can be safely constructed, as well as a commitment to safe working
conditions for site workers.
7.1.3 Construction Safety policy
To generate safety consciousness within construction organizations, a firm lead must be
taken by top management. It is recognized that finance and lost production are convenient
measurements of accidents, but accidents should generate an emotional response, and if
this emotion is genuine it will carry conviction.
A safety policy which is founded upon compassion will more often succeed, since it will
impact on the shifts and changes in construction scheduling and fashion and
consequently, will be less easily diluted. Contractors should give careful thought to the
role of the full time safety officer. Two basic concepts exist about this role:
 Safety officers should be advisers to site management
 Safety officers undertake the safety responsibility on behalf of sites.
In general the role of the safety officer shall consist of the following duties:
 Formulating the company‟s safety policy
 Advising management on legislation and safety matters
 Assisting in drafting of safe working procedures and codes of practice
 Reporting and investigating accidents with the preparation and analysis of safety records
 Safety training
 Safety assessment of site management
 Inspection of sites to ensure compliance with safety measures (Safe working methods,
proper use of construction equipments, protective clothing and availability of first aid)

 Providing information to sites on accidents that have happened elsewhere on similar sites
to help generate safety consciousness within working sites.
7.2.0 Contractor safety responsibilities:

Section 2 of the Health and Safety at Work Act 1974 specifies that employers are to
ensure the health, safety and welfare of all employees. Apart from the generalized duty,
employers have detailed responsibilities:
 To develop systems of which are practicable, safe and have no risk to health;
 To provide plant to facilitate this duty, this general requirement is to cover all plant used
at the work place;
 To provide training in the matter of health and safety; employers must provide the
instruction, training and supervision necessary to ensure a safe working environment;
 To provide a working environment which is conducive to health and safety;
 To prepare a written statement of safety policy and to establish an organizational
framework for carrying out the policy; the policy must be brought directly to the attention
of all employees.
However, employees also have specific duties namely:
 To take care of their health and safety and that of other persons who would be affected by
acts or an omission at the work place;
 To cooperate with the employer to enable everyone to comply with the statutory
provisions.
The types of safety and health hazards experienced at construction sites include the
following:
 Collapse of pits, shafts, tunnels and trenches;
 Collapse of buildings and structures;
 Flooding of excavations;
 Flying of materials due to use of explosives;
 Generation of dust and fumes during building/ demolition operations and similar works;

 Accumulation of fumes and gases in excavations and tunnels, from vehicles transporting
materials;
 Overloading of scaffolds with materials;
 Unfenced platforms, gangways, runs and stairs;
 Poor stability of lifting appliances;
 Unprotected excavation, pits shafts or opening in the ground
 Poor ventilation in excavation, pits, holes, tunnels, shafts and in any other enclosed or
confined space at the site;
 Workers driving vehicles and trucks at site in insecure positions;
 Live electric cables
 Unguarded rotating parts of machinery;
 Lifting, carrying and moving excessive loads;
 Poorly constructed and maintained scaffolds, ladder and working platforms;
 Projecting nails and loose materials
 Falling materials, tools, objects or articles from height;
 Obstructed platforms, gangways, runs or stairs with materials, rubbish and projecting
nails and;
 Working on or near fragile materials.
In view of the above hazards usually encountered on construction site, some measures are
put in place to ensure safety and health of workers. The safety measures include:
 Enforcement of the factories Act and Building Construction Rules which provide guide
lines on safe work practices during building operations and work of engineering
construction;
 Registration of construction sites, to enable regular visiting of the sites;
 Awareness by contractors that when undertaking building operations or work of
engineering, the department of Occupational Safety and Health (OSH) should be notified
of the intention to commence work at the site for the purpose of registration and enable
regular inspection of the site;

 All lifting equipment should be subjected to thorough inspections periodically and

examination certificates issued. All defects be attended to immediately and rectified;
 In addition to local authorities approving architectural building plans, the department of
OSH should also review and approve them i.e. plans of major buildings;
 Any workplace with excavation, pit, hole or enclosed space with fumes, dust that may be
dangerous or injurious to health must be rendered harmless and suitability tested before
workers enter herein;
 There must be adequate ventilation to prevent workers from inhaling dust or fumes
 Materials should be stacked safely and correct quantities to reduce obstructions. Materials
for immediate use only should be evenly distributed around the scaffold to prevent
overloading
 Fix warning notices/ posters to highlight hazardous points or ares on site for the benefit
of workers and visitors;
 There should be regular inspections of platforms, runs, gangway, stairs guard-rails,
excavated tunnels by competent persons;
 There should be suitable safety nets or safety sheets well designed, constructed and
installed to prevent injury to persons falling on them;
 All excavations, pits, holes to be fenced to prevent people falling therein; and
 Well stocked First Aid Box should be in place.
7.3.0 Additional measures for Preventing Construction Accidents

Construction sites are dangerous places filled with heavy machinery, large structures and
moving objects. The conditions mean that construction workers do not have control over
every circumstance at their worksite. Like any accident, a construction accident can occur
unexpectedly at any moment. There are, however, some ways to help prevent
construction accidents:
 Attend safety training sessions
 Doubt-check all harnesses and safety equipment before use
 Get adequate rest in order to stay alert on the job
 Wear protective clothing and equipment
 Follow all rules posted at the construction site
 Remain aware of equipment conditions and report unsafe or damaged equipment

 Use extra caution when working with electrical equipment
 Follow OSHA regulations on the job.
 Create a rescue plan when working in trenches
 Work with your employer to ensure that construction safety regulations are observed
 Report accidents that do occur to help prevent them from happening again.
7.4.0 Construction Safety Costs

To many managers who have been brought up to the importance of construction
scheduling, and controlling costs, the economic aspect of safety is the most forceful. In
construction the costs associated with an accident can be immense. For material losses in
which no injury occurs the accounting of loss can be easily assessed; but where human
loss is concerned, the costing becomes more difficult since life or physical disability
cannot crudely be financially evaluated, yet it has been widely recognized that monetary
compensation payments are paid by the contractor‟s insurance company. Insurance
companies will base their premiums upon historical evidence and a poor safety record
will inevitably be reflected in insurance premiums.
However, the loss to a company by an accident can be broken into:

 Lost working hours of an injured employee
 Cost of repair or replacement of property damage, whether it is an equipment or an
element of the permanent construction
 Insurance premiums increase
 Rescheduling costs or even delay costs in some cases.
7.5.0 The following are general costs of construction related accidents on sites:
a) Economic cost;
 Loss of wages
 Loss of production due to stoppage of work
 Cost of labour replacement/training
 Time loss in helping the injured; accident investigation and reporting
 Accidents resulting in failed infrastructure mean loss of investment, retarded

economic growth and bad economic situation
 Cost in establishment of safety programmes
b) Social cost;
 Construction accidents usually result in injury or loss of life
 Hardships brought about by reduced earnings
 Human suffering and sorrow that no amount of compensation can wipe out
c) Political cost;
 An accident prone economy is bad publicity for a company and country at large
d) Environmental cost;
 Failed infrastructure often lead environmental hazards
7.6.0 Causes of the common construction related accidents and possible remedies;-
a) Work equipment and plant
 Inadequate mechanical safeguards to prevent contact with dangerous objects.
 Lack of maintenance of work equipment and vehicles (defective plants and
equipment)
 Unsuitable machines for the job
 Cuts and splinters from blades, corners, sheet metal, tool edges etc
 Electrical hazards (not properly insulated)
b) Workplace (environment);
 Poor housekeeping (bad organization)
 Poor visibility in areas where vehicles and lifting equipment are working
 Untidiness, poor stacking of materials
 Mixing of people and vehicles especially at entrances and exits
c) Workforce;
 Inadequate training of workers
 High labour turnover
 Monotony of work resulting in ignoring safety precautions,
 Lack of information, instruction, supervision,

 Poor communication of orders regarding safety.

d) Workplace transport;
 Uncontrolled movement of objects
 People being struck or run over by moving vehicles/equipment or vehicles
overturning.
e) Careless handling of dangerous substances at work
f) Psychosocial factors such as stress, fear, worry, mental tension, emotional attitude,
impulsiveness (without proper thinking), overconfidence, carelessness.
g) Physiological causes; poor eye sight for workers handling machinery like cranes,
vehicles etc, overwork, poor health, old age, intoxication and physical handicap.
Accidents caused by the above hazards can be reduced through regulation and support of the
construction industry by the government as follows:
 Strict enforcement of existing laws;
 Urgent revision of relevant laws;
 Urgent consideration of the proposed Occupational Safety and Health Bill;
 Development and enforcement of standards;
 Operationalisation of the local construction industry policy;
 Education and training of technical managers and operatives;
 Strengthening of the insurance sector ; and
 Building capacity to respond to national emergency situations of major accidents

CHAPTER 8
8.0 Construction and Employee Regulations

The construction industry falls within the scope of the Factories Act despite its nature of
operations being widely different to those pertaining in a factory. It was recognized that
the whole of the 1961 Act could not apply to construction, but it enabled specific
regulations for construction to be incorporated I.e. the Construction Regulations of 1961
and 1966. They include the following regulations:
 Construction (General Provisions) Regulations 1961
 Construction (Lifting Operations) Regulations 1961
 Construction (Working Places) Regulations 1966
 Construction (Health And Welfare) Regulations 1966
In any situation covered by the Regulations, an employer will owe duties under Health
and Safety at Work etc Act 1974, the Factories Act 1961 and the Regulations. The same
breach of duty could therefore, constitute an offence under all of these different
provisions.
In the construction industry statistics show that many accidents are caused by; falls from
ladders; scaffolds, roofs or materials falling, lighting equipment and machinery,
employees striking against objects, excavations and tunneling etc. To take account of
these special notes there are several sets of regulations in the construction industry:
8.10 General Provisions Regulations
These regulations apply whenever there are building operations or works of engineering
construction (well defined and Factories Act 1961). Building Operations – Construction,
structural alterations, repair or maintenance of building, demolition of a building and
preparation for and laying the foundations of an intended building. Works of
engineering construction – construction of railway lines or sidings or the construction,
structural alteration or repair or demolition of things like docks, harbours, tunnels,
reservoirs, sewers or gasholders
The Regulations principally cover:
 Excavations, shafts and tunnels
 Cofferdams, cassons

 Use of explosives
 Work in dangerous or unhealthy atmospheres
 Dangers connected with transport
 Miscellaneous protection e.g. fencing, protection from falling trials, lifting excessive
weights
Lifting operations Regulations 1961

These rules cover:
 Lifting appliances – these must be of good mechanical construction, sound materials,
adequate strength, properly maintained.
 Chains, ropes and lifting gear.
 Hoists
 Carrying people on lifting appliances
 Secureness of loads
 Keeping of records
8.20 The Working Places Regulations 1966
Scaffolding is one of the principal matters covered by these regulations. Their scope also
includes building operations and work of engineering construction. Among the duties
imposed are:
 Providing safe and suitable access to places of work so far as is reasonably practical,
 Providing scaffolds or ladders where work cannot be safely done from the ground or from
another part of the building,
 Erecting and dismantling scaffolding under the supervision of a competent person,
 Providing scaffolds of good construction, suitable and sound material and adequate
strength for their purpose,
 Properly maintaining scaffolds and ensuring that they are stable,
 Platforms, gangway and runs should be closely boarded, planked or plated with material
of specified thickness and width resting on sufficient supports and if the boarding
projects at one end, precautions should be taken to prevent tipping
 Duties relating to working on sloping roofs and

 Duties with regard to safety nets and belts
8.30 The Health and Welfare Regulations 1966

The main duties under these regulations relate to such matters as:
 First aid equipment and training in first aid treatment
 Shelters and accommodation for clothing and taking meals
 Washing facilities and sanitary conveniences
 Protective clothing for persons required to continue working in bad weather
8.40 Welfare facilities on sites:

a) Sanitary conveniences (latrines and urinals); -
o Separate for men and women (1 latrine for 25 people; if workers ≥ 100; then 1
latrine for 50 people). There should be consideration for the disabled.
o Well ventilated and lit
o Clean and orderly
b) Washing facilities:
o Soap, towels or other means of drying
o Separate for men and women
o Hot and cold water
c) Drinking water – container clearly labeled “drinking water”
d) Facilities for clothes, rest rooms, rooms for preparing and serving meals at cheaper rates;
if work is to run for more than 180 days and the number of workers is more than 100,
then a canteen should be provided.
e) Medical facilities; First aid/equipment\protective clothing, gumboots, jackets, eye
goggles, helmets, ear muffles etc
f) Educational facilities
g) Transportation arrangements
h) Recreational facilities (cinema, shows, indoor/outdoor games, library)
1.50 Employee Regulations
Read and Make notes

CHAPTER 9
INCENTIVE SCHEMES AND THEIR OPERATIONS
Introduction
In any organization, it‟s the duty of senior management to get work done from the work force of
the organization to achieve its objectives. Success in the application of work incentives aimed at
generating higher levels of performance and production output will largely depend on
establishing a careful balance of the many inter-related motivating factors necessary in achieving
worker satisfaction often further complicated by prevailing nature of construction itself.
Definition: The art or activity of developing desire to work amongst the workers or employees to
achieve the desired goal is known as motivation. It can as well be defined as “taking work from
persons/people, create interest in them for the work, maintain that interest and instigate them to
development.” The most important task of management, therefore, is to motivate employees so
that they may direct their energies for the accomplishment of organization goals.
9.1 Importance of Motivation
Motivation is important in the following ways:-

- It stimulates the workers to improve their performance and increase in efficiency of
operations
- It inspires action by creating interest in the work
- It gives job satisfaction and acceptance of organizational goals
- It removes frustration and improves individual relations
- It develops sense of responsibility to achieve the desired goal with maximum efficiency
and minimum wastage.
- It reduces the tendency of remaining away from work and reluctance on the part of
workers.
- Lessens labour turn over, attraction of new work force and reduces absenteeism
- Increases production and productivity
- Basis of cooperative – there is job satisfaction such that the workers‟ interest for the
organisation increases and hence a sense of cooperation is developed.

9.2 Simple Model of Motivation

The purpose of behaviour is to satisfy needs. A need is anything that is required, desired or
useful. A want is a conscious recognition of a need. A need arises when there is a difference in
self- concept (the way I see myself) and perception (the way I see the world around me). The
presence of an active need is expressed as an inner state of tension from which the individual
seeks relief.
9.3 Techniques of motivation
The following are the important techniques of motivation:
a. Monetary reward
Money as a motivator can never be passed. Whether in the form of wages, piecework or any other
incentive pay, and any other thing that may be given to a person for performance, money is
important.
Money is valuable because of the goods and services that it will purchase. This is its economic
value as the medium of exchange; however, money is also a social medium of exchange. It is also
an indication of one employee‟s relative status compared with that of other employees.
b. Job enlargement
Job enlargement seeks to motivate employees by enlarging the scope of the job. Increasing the
number and variety of tasks that an individual performs succeeds in motivating the employees
because it alters the job content and tends to remove the dullness associated with performing
repetitive operations.
c. Job enrichment
This technique of motivation was developed by Hertzberg when he pronounced his “motivation-
hygiene theory”. The assumption is that in order to motivate the workforce, the job must be
designed to provide opportunities for achievement, recognition, responsibility and growth. Job
enrichment is distinguished from job enlargement in that the latter technique attempts to make a
job more varied by removing the dullness associated with performing repetitive operations. In job
enrichment, the attempt is to build into jobs a higher sense of challenge, importance and
achievement. To enrich a job, a supervisor can introduce new or more difficult tasks, assign
individuals specialized tasks that enable them to become experts, or grant additional authority to
employees.

d. Participation
Participation is mental and emotional involvement of people in group situations that encourages
them to contribute to group goals and share responsibility for them. The motivational basis is that
people like to be asked their opinion and know that their ideas and benefits have some weight in
the ultimate management action taken. The underlying assumptions are; people derive
satisfaction from being a part of the management action, from doing as effective a job as
practicable and having self-control rather than organizational control. By using participation,
greater acceptance to change is accomplished.
e. Work accomplishment environment
This includes a work climate which has the presence of pressure to get things done. When this
exists to a high degree the chances of motivating is usually high. The need to achieve, getting
projects finished and the value of time are prominent attributes that make for high work
accomplishment environment.
f. Effective criticism
This can be spring bound for improving and employees‟ behaviour and performance. g.
Praise
Praise and credit for work done is a good and effective method of motivation. It satisfies ego and
esteem needs. It is therefore highly desirable that an employee who has done a good job should
be commended for his performance.
9.4 Theories of Motivation

The main incentive methods adopted in the construction industry are explained in the contexts of
the theories developed by Maslow, McGregor, and Hertzberg.
(i) Maslow (1954)
Suggested that people seek to satisfy needs sequentially as shown below, arguing that as each is
gratified, then a new set emerges, implying a process of self-motivation. According to him, there
are five types of needs which prompt man to action. They are as follows:
Physiological needs: In a modern society, the basic needs such as provision of food, clothing,
housing etc which lie at the root of national economic wellbeing emphasized through concerns to
generate employment, when satisfied in due course appear to lead to even greater demands like better
working conditions, shorter hours etc. Furthermore, the common desire for individuals to try and

progress in a job; gain respect both from the employer and fellow workers, and identify with a
particular skill seem to provide additional support to Maslow‟s theory.
Safety/security needs: Once physiological needs are satisfied, safety or security needs emerge and
become dominant. Safety needs are felt by people who feel threatened either by fear of physical
danger or deprivation of basic physiological needs. The operation of safety needs is in evidence on
attempts to seek job security, insurance, pensionary benefits and so on.
Social needs: The need to seek affiliation and affection (love) of one‟s fellow beings is related to the
social nature of human relationship. Social needs point to man‟s urge for meaningful companionship
with fellow beings and are concerned with mental health of the organization. The organization helps
to satisfy employees‟ social needs through sports teams, parties and celebrations. The supervisor can
help fulfil social needs by showing direct care and concern for employees.
Esteem needs: These desires for self-expression, self-respect, and respect or recognition by others.
According to Maslow, most people feel the need to be rated higher than others and seek recognition
and respect on that account. Satisfaction of esteem needs produces feelings of selfconfidence,
prestige, power and control. The organization helps to satisfy employees‟ esteem needs by marching
the skills and abilities of the employee on the job. The supervisor can help fulfil esteem needs by
showing workers that their work is appreciated.
Self-actualization needs: These are desires for self-fulfilment and the realization of an individual‟s
full potential. They represent the desire to become more and more of what one is, to become
everything that one is capable of becoming. The supervisor can help fulfil selfactualisation needs by
assigning tasks that challenge employees‟ minds while drawing on their aptitude and training.

Self-actualization ,
self-fulfilmen t.
Esteem needs; self-expression,

Confidence, - to feel worthy and
respected, Reputation, recognition etc.
Social needs; To belong, recognition,

desire for affiliation in a group or class,
friendship etc
Safety/security needs; job

security, insurance, pension
benefits, grievance handling etc.
Physiological needs : food,

shelter, clothing etc
Fig.4 Maslow‟s Hierarchy of Human needs
(ii) Hertzberg‟s two-factor Theory of Motivation.
Herzberg et al., (1960), discovered that people‟s feeling of dissatisfaction was related to the
environment in which they were working. These included such things as: Physical working
conditions, Job security, Salary/ Wages, Relation with superiors and fellow workers, Company
policy, rules and procedures, Fringe benefits etc.

Conversely, when respondents reported a feeling of happiness, they frequently described factors
related to their jobs, to events that indicated that they were successful in the performance of their
jobs and to possibility of professional growth. Hertzberg labelled the factors that prevent
satisfaction as hygiene factors and those that bring about satisfaction as motivators.
Job satisfaction (motivator factors):
• Achievement
• Recognition
• The work itself/ challenging
• Taking responsibility
• The chance to advance (growth)
Satisfaction comes from motivators that are intrinsic or job content such as achievement,
recognition, advancement, responsibility, the work itself and growth possibilities.
Herzberg uses the term motivators for job satisfiers once they involve job content and the
satisfaction that results from them. Motivators are considered job turn-ons. They are necessary
for substantial improvements in work performance and move the employee beyond satisfaction to
superior performance. Motivators correspond to Maslow‟s higher-level needs of esteem and self-
actualisation which cannot be fully satisfied and they will continue to motivate individuals for a
long time.
Job dissatisfaction (Hygiene factors)
• Working conditions
• Job security
• Salary/ Wages
• Relation with superiors
• Company policy/administration
• Fringe benefits.
He also concluded that workers could become demotivated when other factors were
unsatisfactory, these being termed “hygiene” factors and mainly relate to work environment.
Hertzberg uses the term hygiene for these factors because they are curable (preventable) in
nature. Hygiene factors are considered job stay-on because they encourage an employee to stay
on job. Unfavourable factors about the environment bring about poor job attitude and if they
deteriorate below the level employees consider acceptable, job dissatisfaction will develop.
Improvement in them will serve remove obstacles to positive job attitude.

(iii) The Theory of Douglas McGregor

There are certain conventional assumptions relating to motivation of people in the organization
that are widely accepted as valid. These assumptions are termed by McGregor as “Theory X”.
Assumptions of Theory X
• The average man by nature is indolent and has an inherent dislike for work.
• Workers do not try to do work or improve the work through interest but wait for
instructions and directives.
• There is lack of ambition. People avoid responsibility and prefer to be led.
• To get work from employee, he must be persuaded, rewarded, punished and rebuked and
hence through fear he becomes ready to do the work.
• Workers care more for security and hence they work slowly.
• Workers act on the basis of financial greed. If they are paid more wages, they will take
more interest in work.
• Management does not give importance to labour.
• Managers are poor listeners and seek culprits for failure.
• The theory has authority as supervisor – labour has no right to give opinion, neither can
do any work by his own will without directions.
Management by direction and control (Theory X), regardless of its hard or soft approach, is
ineffective to motivate people whose important needs are social and egoistic. Once lower order
needs are satisfied, rewards, promises, incentives, or threats and coercion- the devices used by
management under Theory X, cease to motivate people.
Having established the inadequacy of Theory X McGregor suggested a different theory of
managing people based on more adequate assumptions about human nature and motivation. He
labelled that attitudinal pattern of manager as “Theory Y”. He developed theory (Y) suggesting
that work is natural, people wish to achieve goals and obtain intrinsic satisfaction when
committed to the work objectives, and further more seek responsibility by contributing to
problem solving when properly motivated.
The important assumptions of Theory Y are:
a) Every work is interesting
b) Man is not inherently passive or resistant to organizational needs. The motivation, the
potential for development, the capacity for assuming responsibility, the readiness to direct
behaviour towards organizational objectives are all present in people. It‟s the
responsibility of management to make it possible for people to recognize and develop

these human characteristics for themselves.
c) Incentives, threats or external control are not only means of motivating people to work for
organizational objectives.
d) Workers are not instigated to work by fear or strict discipline; they feel responsible for the
work for which they are appointed.
e) For work executed, its necessary that it should be recognized
f) There is no tendency to escape from responsibility, and there is cooperation to solve
problems of the enterprise.
g) Theory is based on democratic principles and everybody has equal chances. (no
segregation, nepotism)
h) Manager works as a leader and gets more good results by taking advice from personnel
and management takes personnel on equal footing for advice.
Non – financial incentives – The incentives involved are fairly intangible, and related to Maslow‟s
higher needs, particularly the fulfillment of those defined by Herberg as the “intrinsic motivators”.
Thus the incentives offered acknowledge the importance of the individual and recognize the need for
group participation to provide social satisfaction.

Motivation methods
Motivation
Non-financial Financial
i.e. social, psychological
Basic wages salary Bonuses
Statutory controls
Voluntary negotiation
and bargaining
Via self-esteem and job Satisfaction
Semi financial incentives

Where jobs are difficult to measure in straight forward productive terms e.g. managerial and
supervisory positions, practical experience indicates that, as far as the financially hygiene
motivators are concerned, these appear to function best when introduced through fringe benefits
in the form of contributory pension scheme, holidays with pay, restaurant facilities, medical
insurance, sports facilities, company cars, paid telephone bills, power bills etc.
9.5 Financial incentive scheme
Since the quantity of construction output achieved by an individual production worker or crew is
measurable, the hygiene motivators can be transformed into financial incentives and used to
specifically try and encourage improvements in:
• Productivity
• Methods of working
• Operatives earnings, but without increasing unit costs.

Factors affecting construction workers‟ motivation

Major motivating and “hygiene” factors are listed below:
Job satisfaction factors: Job dissatisfaction factors:
 Fair level of pay  Poor treatment by supervisors

 Incentive corresponds to financial  Lack of recognition of good effort
reward
 Pay received on time  Reducing work opportunities
 Good facilities on site, safe and  Incompetent crew colleagues
healthy working conditions
 Good working relations with  Poor communication with

supervisors management
 Favourable promotion ladders  Under-utilisation of skills
 Job security  Lack of participation in decision making
 Good working relations with other
crew members
 Recognition for doing a good job, etc
Obviously, the specific employer needs to provide a total package embracing at least the most
important worker motivators and avoid those elements likely to irritate the workforce and cause
dissatisfaction.
Incentive schemes
An incentive is something to pay in return for motivating/encouraging workers to work more and
increase production. Many schemes are available to suit different situations; those most
applicable to the construction industry are outlined below:
Profit sharing – The Company pays out either yearly or half yearly a lump sum or shares to its
employees, based on the profit earned by the company. This system operates best where labour
turnover is low and the workforce can meaningfully contribute to the strategies for profit success.
Day work – An hourly rate is paid related to the skill required by the task; the worker is then
simply paid for attendance at work. The system is most suitable for craft operations where either
there is great complexity involved or a high level of skill is required. High rates of pay coupled
with semi financial incentives are often necessary to attract and keep the worker.

Piece work – straight piece work is the payment of a uniform price per unit of production. The
principle is that as a worker improves output, earnings increase proportionately.
Such a system would be best installed on repetitive – type activities where the standard time for
doing the work can be reasonably, accurately determined. Hence it is more popular in the
manufacturing industries but has gained favour for some of the construction finishing trades such
as flooring, plastering, electrical wiring etc.
Standard time, or hour, system – Essentially, this is the same as straight piece work system, but
the targets for the worker are expressed in time units rather than money.
Example: A worker is given a target of eight hours to complete an activity and completes it in six
hours. Thus payment = 8 x hourly rate. The next unit can now be commenced two hours earlier and
thereby the workers‟ overall earnings are proportionately increased. The advantage of the system is
that if new hourly rates are negotiated the time standards remain unchanged.
Hour saved system
Plus rate or spot bonus – A minimum bonus, sometimes called a fall – back bonus is paid
whatever the output, the incentive simply being used to generate a competitive remuneration rates
when the basic rate is low e.g. where local employment practices may be restrictive.
Job and finish
The worker is offered a lump sum of money to complete an operation, useful on for example
large concrete pours or similar work, when the gang will complete the work as quickly as
possible, but be paid for the full day‟s work and any bonus earned.
Group scheme
Many construction activities on site performed by gangs require the different classes of skilled
workers to be acknowledged in earning levels. The solution normally preferred involves
apportioning the bonus on a shares basis, usually with the gang supervisor being paid slightly
more than trades‟ members and so on through the skills.
9.6 Behaviour Modification Techniques
The methods of which the behaviour of workers in any industry can be modified to attain good
industrial relations and increased output are known as behaviour of workers in any working
environment.

• Welfare facilities – canteen, restroom, fair price shop, laundry, facilities for education
of children, transport, etc will motivate the workers to work more which will result in
increased production.
• Incentive (financial and non-financial)
Motivations
• Better environments – no quarrels.
• Removal of frustration: There should be no cause for frustration. Workers must be

satisfied with their jobs and should be given equal remuneration for equal work.
• Participation: Workers should be made to feel responsible for the work they are doing.
They should have a feeling that they have a say in the management and if something
goes wrong, they shall equally be losers and this makes them more responsible and they
will work whole heartedly.
With these activities workers may be made to feel that they are an integrate part of the industry
and any gain or loss in the industry is equally their gain/loss. If is the above techniques are
applied properly, they shall prove a good tool to modify the behaviour of workers.
9.7 Grievances and their Causes

Grievances in workers develop when they feel that injustice has been done to them or they are not
treated properly. Generally grievances develop due to feelings of dissatisfaction in the workers
towards the policies of the management. An aggrieved worker will not work properly and will
develop ill will towards management. Such a situation is undesirable and as such should be
handled at the earliest before causing strike/unrest in the industry.
Causes of grievances
Some of the causes of grievances of employees are:
1. Discrimination – in pay, gratuity, leave, welfare facilities, working hours etc.

2. Undue favouritism – if favouritism is shown either by management or other officers of
the management in the methods of promotions or in the distribution of work to the
workers, will cause grievances.
3. In human behaviour – inadequate level of supervision, flow of materials and

instructions not on time.

4. Lack of incentives – low earnings (remuneration)
5. Strict rules
6. Victimisation of supervisors
7. Personality clashes between an individual and gang/group.
Handling grievances
The following steps are recommended in handling grievances#:
(a) Listen to the aggrieved person's problem
(b) Listen to the other person's side of the story
(c) Collect any other facts from witnessed if necessary
(d) Study the facts and information
(e) Seek, if necessary, assistance from other supervisors.
(f) Make a decision (fairly and mobilised)
(g) State the decision and act on it
Any problems/grievance outside the powers of the supervisor like wages, scales, promotions, etc
should be reported immediately to the personnel officer at the office.
9.8 Principles of a good incentive scheme

The following guidelines may assist in achieving success in incentive schemes implementation:
- Bonus should be paid to workers in direct proportion to the effort applied
- The earnings of the worker should not be limited in any way
- The set targets should be attainable and there after remain unaltered.
- Unavoidable hold ups should be excluded from bonus paid hours and paid at basic rate.
- The scheme must be easily understandable to the worker so that the bonus calculation
can be easily determined.
- Bonus schemes can lead to substandard work and therefore penalties should be included
and enforced. This requires a tough minded attitude from management as there will be
opposition from the work force.
- The scheme should comply with local union arrangement.
- The scheme should be integrated with a cost control system.

Example: The site manager responsible for the construction of a large concrete pump house sets
a crew of five workers, a target of 50 man- hours to erect the form work for the concrete in the
base pour. Calculate the bonus earned by each crew member, given that the work is completed in
the times shown below: (Basic rate of payment is 500/= per hour)
Worker Shares entitled Actual time ( hours) Shares

description per hour worked worked on activity
Gang supervisor 1.5 8 12
Carpenter No.1 1.25 8 10
Labourer No.1 1 8 8
Labourer No.2 1 4 4
Solution:
Worker description Shares entitled per Actual time ( hours) Shares

hour worked worked on activity
Gang supervisor 1.5 8 12
Labourer No.1 1 8 8
Labourer No.2 1 4 4
Total 36 44
Hours saved 50 – 36 = 14 hours

Bonus 14 x 500 = 7,000/=
Bonus per share 7,000 = 159 per share.
44
Earnings of each crew member:
Gang supervisor 159 x 8 x 1.5 = 1908
Carpenter No.1 159 x 8 x 1.25 = 1590
Carpenter No.1 159 x 8 x 1.25 = 1590
Labourer No.1 159 x 8 x 1 = 1272
Labourer No. 2 159 x 4 x 1 = 636
6996 /=

CHAPTER TEN
10.0 Work Task Analysis (Work Study)
10.1 Introduction
Productivity has now become an everyday watch word. It is crucial to the welfare of industrial
firm as well as for the economic progress of the country.
High productivity refers to doing the work in a shortest possible time with least expenditure on
inputs without sacrificing quality and with minimum wastage of resources.
Work-study therefore forms the basis for work system design. The purpose of work design is to
identify the most effective means of achieving necessary functions. This work-study aims at
assisting in project planning, site layout evaluation, design of temporary works, balancing of
equipment and other resources, and improving on the re-planning of production in the proposed
ways of doing work and establishing standard times for work performance.
Work-study is encompassed by two techniques, i.e., method study and work measurement.
“Method study is the systematic recording and critical examination of existing and proposed
ways of doing work, as a means of developing and applying easier and more effective methods
and reducing costs.”
“Work measurement is the application or techniques designed to establish the time for a
qualified worker to carry out a specified job at a defined level or performance.”
Both methods have gained wide acceptance in the manufacturing industry, and are increasingly
finding favour in the construction industry by bringing improvement to the badly organized
environments that are often found on construction projects.
“Work study is a generic term for those techniques, method study and work measurement
which are used in the examination of human work in all its contexts.
Work Study
Method Study Measurement Study
Motion Study Time Study
Higher Productivity
Framework of work study

Work study is a means of enhancing the production efficiency (productivity) of the firm by
elimination of waste and unnecessary operations. It is a technique to identify non-value adding
operations by investigation of all the factors affecting the job.
10.2 Productivity
Productivity is the quantitative relation between what we produce and we use as a resource to
produce them, i.e., arithmetic ratio of amount produced (output) to the amount of resources
(input). Productivity can be expressed as:
Productivity refers to the efficiency of the production system. It is the concept that guides the
management of production system. It is an indicator to how well the factors of production (land,
capital, labor and energy) are utilized.
“Productivity is an attitude of mind. It is the mentality of progress, of the constant improvements

of that which exists. It is the certainty of being able to do better today than yesterday and
continuously. It is the constant adaptation of economic and social life to changing conditions. It
is the continual effort to apply new techniques and methods. It is the faith in progress.”
10.2.1 Factors Influencing Productivity
Factors influencing productivity can be classified broadly into two categories: (A) controllable
(or internal) factors and (B) un-controllable (or external) factors.
A. Controllable (or Internal) Factors

a. Product factor: In terms of productivity means the extent to which the product meets
output requirements product is judged by its usefulness. The cost benefit factor of a product can
be enhanced by increasing the benefit at the same cost or by reducing cost for the same benefit.
b. Plant and equipment: These play a prominent role in enhancing the productivity. The
increased availability of the plant through proper maintenance and reduction of idle time increase
the productivity. Productivity can be increased by paying proper attention to utilisation, age,
modernisation, cost, investments etc.
c. Technology: Innovative and latest technology improves productivity to a greater extent.
Automation and information technology helps to achieve improvements in material handling,
storage, communication system and quality control. The various aspects of technology factors to
be considered are:
 Size and capacity of the plant,
 Timely supply and quality of inputs,
 Production planning and control,
 Repairs and maintenance,
 Waste reduction, and

 Efficient material handling system.

d. Material and energy: Efforts to reduce materials and energy consumption brings about
considerable improvement in productivity.
 Selection of quality material and right material.
 Control of wastage and scrap.
 Effective stock control.
 Development of sources of supply.
 Optimum energy utilisation and energy savings.
e. Human factors: Productivity is basically dependent upon human competence and skill.
Ability to work effectively is governed by various factors such as education, training, experience
aptitude etc., of the employees. Motivation of employees will influence productivity.
f. Work methods: Improving the ways in which the work is done (methods) improves
productivity, work study and industrial engineering techniques and training are the areas which
improve the work methods, which in term enhances the productivity.
g. Management style: This influence the organizational design, communication in
organization, policy and procedures. A flexible and dynamic management style is a better
approach to achieve higher productivity.
B. Un-controllable (or External) Factors
a. Structural adjustments: Structural adjustments include both economic and social
changes.
Economic changes that influence significantly are:
 Shift in employment from agriculture to manufacturing industry,
 Import of technology, and
 Industrial competitiveness.
Social changes such as women‟s participation in the labour force, education, cultural values,
attitudes are some of the factors that play a significant role in the improvement of productivity.
b. Natural resources: Manpower, land and raw materials are vital to the productivity
improvement.
c. Government and infrastructure: Government policies and programmes are significant
to productivity practices of government agencies, transport and communication power, fiscal
policies (interest rates, taxes) influence productivity to the greater extent.
10.2.2 Total Productivity Measure (TPM)

It is based on all the inputs. The model can be applied to any manufacturing organization or
service company.

( )
The word tangible here refers to measurable.
The output of the firm as well as the inputs must be expressed in a common measurement unit.
10.2.3 Partial Productivity Measures (PPM)

Depending upon the individual input partial productivity measures are expressed as:
Labour input is measured in terms of man-hours
One of the major disadvantage of partial productivity measures is that there is an over emphasis
on one input factor to the extent that other input are underestimated or even ignored.
10.3 Advantages of Work Study

Following are the advantages of work study:
 It helps to achieve the smooth production flow with minimum interruptions.
 It helps to reduce the cost of the product by eliminating waste and unnecessary
operations.
 Better worker-management relations.
 Meets the delivery commitment.
 Reduction in rejections and scrap and higher utilisation of resources of the organization.
 Helps to achieve better working conditions.
 Better workplace layout.

 Improves upon the existing process or methods and helps in standardisation and
simplification.
 Helps to establish the standard time for an operation or job which has got application in
manpower planning, production planning.
10.4 Method Study

10.4.1 Method study as earlier mentioned, “Method study is the systematic recording and
critical examination or existing and proposed ways or doing work as a means or developing and
applying easier and more effective methods and reducing cost.”
It involves the breakdown of an operation or procedure into its component elements and their
systematic analysis. In carrying out the method study, the right attitude of mind is important. The
method study man should have:
 The desire and determination to produce results.
 Ability to achieve results.
 An understanding of the human factors involved.
Method study scope lies in improving work methods through process and operation analysis,
such as:
 Manufacturing operations and their sequence.
 Workmen.
 Materials, tools and gauges.
 Layout of physical facilities and work station design.
 Movement of men and material handling.
 Work environment.
10.4.2 Objectives of Method Study

Method study is essentially concerned with finding better ways of doing things. It adds value and
increases the efficiency by eliminating unnecessary operations, avoidable delays and other forms
of waste.
The improvement in efficiency is achieved through:
 Improved layout and design of workplace.
 Improved and efficient work procedures.
 Effective utilisation of men, machines and materials.
 Improved design or specification of the final product.
The objectives of method study techniques are:
 Present and analyse true facts concerning the situation.
 To examine those facts critically.
 To develop the best answer possible under given circumstances based on critical
examination of facts.

10.4.3 Steps or Procedure Involved in Methods Study

The basic approach to method study consists of the following eight steps. The detailed procedure
for conducting the method study is shown in Fig. 7.3.
Select the work to be studied and define its boundaries.
Record the relevant facts about the job by direct observation and collect such additional data as
may be needed from appropriate sources.
Examine the way the job is being performed and challenge its purpose, place sequence and
method of performance.
Develop the most practical, economic and effective method, drawing on the contributions of
those concerned.
Evaluate different alternatives to developing a new improved method comparing the cost-
effectiveness of the selected new method with the current method with the current method of
performance.
Define the new method, as a result, in a clear manner and present it to those concerned, i.e.,
management, supervisors and workers.
Install the new method as a standard practice and train the persons involved in applying it.
Maintain the new method and introduce control procedures to prevent a drifting back to the
previous method of work.
10.4.4.1 Selection of the Job for Method Study

Cost is the main criteria for selection of a job, process and department for methods analysis. To
carry out the method study, a job is selected such that the proposed method achieves one or more
of the following results:
 Improvement in quality with lesser scrap.
 Increased production through better utilization of resources.
 Elimination of unnecessary operations and movements.
 Improved layout leading to smooth flow of material and a balanced production line.
 Improved working conditions.
a. Considerations for Selection of Method Study
The job should be selected for the method study based upon the following considerations:
 Economic aspect
 Technical aspect, and
 Human aspect.
10.4.4.2 Recording Techniques for Method Study

The next step in basic procedure, after selecting the work to be studied is to record all facts
relating to the existing method. In order to improve the activities selected, it is essential to have
some means of placing on record all the necessary facts about the existing method.
The recording techniques therefore are designed to simplify and standardize the recording work.
For this purpose charts and diagrams are used.

Recording techniques for method study
Diagrams
Charts - Flow diagrams
- String diagrams
Macro motion charts

Micro motion chart
-Operations Process Chart
- Micro motion chart
-Flow process chart
- Micro motion chart
-Two handed process chart
-Multiple activity charts
a. Charts used in Method Study

This is the most popular method of recording the facts. A great care is to be taken in preparing
the charts so that the information it shows is easily understood and recognized. The following
information should be given in the chart.
 Adequate description of the activities.
 Whether the charting is for present or proposed method.
 Specific reference to when the activities will begin and end.
 Time and distance scales used wherever necessary.
 The date of charting and the name of the person who does charting.
b. Types of Charts
It can be broadly divided into Macro motion charts and Micro motion charts. Macro motion
charts are used for macro motion study and micro motion charts are used for micro motion study.
Macro motion study is one which can be measured through „stop watch‟ and micro motion study
is one which cannot be measured through stop watch.
(A) Macro Motion Charts
Following four charts are used under this type:
1. Operation Process Chart
An operation process also called outline process chart gives the bird‟s eye view of the whole
process by recording only the major activities and inspections involved in the process. Operation
process chart uses only two symbols, i.e., operation and inspection. Operation, process chart is
helpful to:
 Visualise the complete sequence of the operations and inspections in the process.
 Know where the operation selected for detailed study fits into the entire process.

 In operation process chart, the graphic representation of the points at which materials are
introduced into the process and what operations and inspections are carried on them are
shown.
2. Flow Process Chart
Flow process chart gives the sequence of flow of work of a product or any part of it through the
work centre or the department recording the events using appropriate symbols. It is the
amplification of the operation process chart in which operations; inspection, storage, delay and
transportation are represented. However, process charts are of three types:
i. Material type - Which shows the events that occur to the materials.
ii. Man type - Activities performed by the man.
iii. Equipment type - How equipment is used.
The flow process chart is useful:
 to reduce the distance travelled by men (or materials).
 to avoid waiting time and unnecessary delays.
 to reduce the cycle time by combining or eliminating operations.
 to fix up the sequence of operations.
 to relocate the inspection stages.
Like operation process chart, flow process chart is constructed by placing symbols one below
another as per the occurrence of the activities and are joined by a vertical line.
3. Two Handed Process Chart
A two handed process chart is the most detailed type of flow chart in which the activities of the
workers hands are recorded in relation to one another. The two handed process chart is normally
confined to work carried out at a single workplace. The application of this charts are:
 To visualise the complete sequence of activities in a repetitive task.
 To study the work station layout.
4. Multiple Activity Chart
It is a chart where activities of more than subject (worker or equipment) are each recorded on a
common time scale to show their inter-relationship. Multiple activity chart is made:
_ to study idle time of the man and machines,
_ to determine number of machines handled by one operator, and
_ to determine number of operators required in teamwork to perform the given job.
c. Diagrams Used in Method Study
The flow process chart shows the sequence and nature of movement but it does not clearly show
the path of movements. In the paths of movements, there are often undesirable features such as
congestion, back tracking and unnecessary long movements. To record these unnecessary
features, representation of the working area in the form of flow diagrams, string diagrams can be
made:
 To study the different layout plans and thereby; select the most optimal layout.
 To study traffic and frequency over different routes of the plant.
 Identification of back tracking and obstacles during movements.

Diagrams are of two types:

 Flow diagram and
 String diagram.
1. Flow Diagram
Flow diagram is a drawing, of the working area, showing the location of the various activities
identified by their numbered symbols and are associated with particular flow process chart either
man type or machine type.
The following are the procedures to make the flow diagram:
 The layout of the workplace is drawn to scale.
 Relative positions of the machine tools, work benches, storage, and inspection benches
are marked on the scale.
 Path followed by the subject under study is tracked by drawing lines.
 Each movement is serially numbered and indicated by arrow for direction.
 Different colours are used to denote different types of movements.
2. String Diagram
The string diagram is a scale layout drawing on which, length of a string is used to record the
extent as well as the pattern of movement of a worker working within a limited area during a
certain period of time. The primary function of a string diagram is to produce a record of an
existing set of conditions so that the job of seeing what is actually taking place is made as simple
as possible.
One of the most valuable features of the string diagram is the actual distance travelled during the
period of study to be calculated by relating the length of the thread used to the scale of drawing.
The following are the procedures to draw string diagram:
 A layout of the work place of factory is drawn to scale on the soft board.
 Pins are fixed into boards to mark the locations of work stations, pins are also driven at
the turning points of the routes.
 A measured length of the thread is taken to trace the movements (path).
 The distance covered by the object is obtained by measuring the remaining part of the
thread and subtracting it from original length.
Symbols Used in Method Study

OPERATION
INSPECTION
TRANSPORTATION
DELAY
STORAGE

10.5 Motion Study

Motion study is part of method study where analysis of the motion of an operator or work will be studied
by following the prescribed methods.
11.5.1 Principles of Motion study
There are a number of principles concerning the economy of movements which have been developed as a
result of experience and which forms the basis for the development of improved methods at the
workplace. These principles are grouped into three headings:
 Use of the human body.
 Arrangement of workplace.
 Design of tools and equipment.
(A) Uses of Human Body
When possible:
 The two hands should begin and complete their movements at the same time.
 The two hands should not be idle at the same time except during periods of rest.
 Motions of the arms should be made simultaneously.
 Hand and body motions should be made at the lowest classification at which it is possible to do
the work satisfactorily.
 Momentum should be employed to help the worker, but should be reduced to a minimum
whenever it has to be overcome by muscular effort.
 Continuous curved movements are to be preferred to straight line motions involving sudden and
changes in directions.
 „Ballistic‟ (i.e., free swinging) movements are faster, easier and more accurate than restricted or
controlled movements.
 Rhythm is essential to the smooth and automatic performance of a repetitive operation.
 The work should be arranged to permit easy and natural rhythm wherever possible.
 Work should be arranged so that eye movements are confined to a comfortable area, without the
need for frequent changes of focus.
(B) Arrangement of the Workplace
 Definite and fixed stations should be provided for all tools and materials to permit habit
formation.
 Tools and materials should be pre-positioned to reduce searching.
 Gravity fed, bins and containers should be used to deliver the materials as close to the point of
use as possible.
 Tools, materials and controls should be located within a maximum working area and as near to
the worker as possible.
 Materials and tools should be arranged to permit the best sequence of motions.
 „Drop deliveries‟ or ejectors should be used wherever possible, so that the operative does not
have to use his hands to dispose of finished parts.
 Provision should be made for adequate lightning, and a chair of type and height to permit good
posture should be provided. The height of the workplace and seat should be arranged to allow
alternate standing and seating.

Design of Tools and Equipments

 The colour of the workplace should contrast with that of work and thus reduce eye fatigue.
 The hands should be relieved of all work of „holding‟ the work piece where this can be done by a
jig or fixture or foot operated device.
 Two or more tools should be combined where possible.
 Where each finger performs some specific movement, as in typewriting, the load should be
distributed in accordance with the inherent capacities of the fingers.
 Handles such as those used on screw drivers and cranks should be designed to permit maximum
surface of the hand to come in contact with the handle.
 Levers, cross bars and wheel bars should be in such position that operator can manipulate them
with least body change and with greatest mechanical advantage.
10.6 Work Measurement

Work measurement is also called „time study‟. Work measurement is absolutely essential for both the
planning and control of operations. Without measurement data, we cannot determine the capacity of
facilities or it is not possible to quote delivery dates or costs. We are not in a position to determine the rate
of production and also labour utilization and efficiency.
It may not be possible to introduce incentive schemes and standard costs for budget control.
11.6.1 Objectives of Work Measurement
The use of work measurement as a basis for incentives is only a small part of its total application.
The objectives of work measurement are to provide a sound basis for:
 Comparing alternative methods.
 Assessing the correct initial manning (manpower requirement planning).
 Planning and control.
 Realistic costing.
 Financial incentive schemes.
 Delivery date of goods.
 Cost reduction and cost control.
 Identifying substandard workers.
 Training new employees.
10.6.2 Techniques of Work Measurement

For the purpose of work measurement, work can be regarded as:
i. Repetitive work: The type of work in which the main operation or group of operations repeat
continuously during the time spent at the job. These apply to work cycles of extremely short duration.
ii. Non-repetitive work: It includes some type of maintenance and construction work, where the
work cycle itself is hardly ever repeated identically.
Various techniques of work measurement are:
 Time study (stop watch technique),
 Synthesis data,
 Work sampling,
 Predetermined motion and time study,

 Analytical estimating.
Time study: A work measurement technique for recording the times and rates of working for the elements
of a specified job carried out under specified conditions and for analysing the data so as to determine the
time necessary for carrying out the job at the defined level of performance. In other words measuring the
time through stop watch is called time study.
Synthetic data: A work measurement technique for building up the time for a job or pans of the job at a
defined level of performance by totalling element times obtained previously from time studies on other
jobs containing the elements concerned or from synthetic data.
Work sampling: A technique in which a large number of observations are made over a period of time of
one or group of machines, processes or workers. Each observation records what
is happening at that instant and the percentage of observations recorded for a particular activity, or delay,
is a measure of the percentage of time during which that activities delay occurs.
Predetermined motion time study (PMTS): A work measurement technique whereby times established
for basic human motions (classified according to the nature of the motion and conditions under which it is
made) are used to build up the time for a job at the defined level of performance. The most commonly
used PMTS is known as Methods Time Measurement (MTM).
Analytical estimating: A work measurement technique, being a development of estimating, whereby the
time required to carry out elements of a job at a defined level of performance is estimated partly from
knowledge and practical experience of the elements concerned and partly from synthetic data.
10.7 Time Study

Time study is “The application of techniques designed to establish the time for a qualified worker to
carry out a specified job at a defined level of performance.”
10.7.1 Steps in Making Time Study
Stop watch time is the basic technique for determining accurate time standards. They are economical for
repetitive type of work. Steps in taking the time study are:
 Select the work to be studied.
 Obtain and record all the information available about the job, the operator and the working
conditions likely to affect the time study work.
 Breakdown the operation into elements. An element is a instinct part of a specified activity
composed of one or more fundamental motions selected for convenience of observation and
timing.
 Measure the time by means of a stop watch taken by the operator to perform each element of the
operation. Either continuous method or snap back method of timing could be used.
 At the same time, assess the operator‟s effective speed of work relative to the observer‟s concept
of „normal‟ speed. This is called performance rating.
 Adjust the observed time by rating factor to obtain normal time for each element
 Add the suitable allowances to compensate for fatigue, personal needs, and contingencies. etc. to
give standard time for each element.
 Compute allowed time for the entire job by adding elemental standard times considering
frequency of occurrence of each element.

 Make a detailed job description describing the method for which the standard time is established.
 Test and review standards wherever necessary.
10.7.2 Computation of Standard Time

Standard time is the time allowed to an operator to carry out the specified task under specified
conditions and defined level of performance.
Standard time may be defined as the, amount of time required to complete a unit of work:
 under existing working conditions,
 using the specified method and machinery,
 by an operator, able to the work in a proper manner, and
 at a standard pace.
Thus basic constituents of standard time are:
 Elemental (observed time).
 Performance rating to compensate for difference in pace of working.
 Relaxation allowance.
 Interference and contingency allowance.
 Policy allowance.
Abbreviations used in computation of standard time include:
 OT : Observed Time
 PRF: Performance Rating Factor
 NT: Normal Time
 PA: Process Allowances
 RPA: Rest and Personal Allowances
 SA: Special Allowances
 PoA: Policy Allowances
Allowances
The normal time for an operation does not contain any allowances for the worker. But with any
change in from the normal time, allowances must be made to enable the worker to attend to his
personal needs. The allowances are categorized as:
 Relaxation allowance,
 Interference allowance, and
 Contingency allowance.
1. Relaxation Allowance
Relaxation allowances are calculated so as to allow the worker to recover from fatigue.
Relaxation allowance is an addition to the basic time intended to provide the worker with the
opportunity to recover from the physiological and psychological effects of carrying out specified
work under specified conditions and to allow attention to personal needs. The amount of
allowance will depend on nature of the job.
Relaxation allowances are of two types: fixed allowances and variable allowances.
a. Fixed allowances constitute:
 Personal needs allowance: It is intended to compensate the operator for the time
necessary to leave, the workplace to attend to personal needs like drinking water,
smoking, washing hands. Women require longer personal allowance than men. A fair
personal allowance is 5% for men, and 7% for women.
 Allowances for basic fatigue: This allowance is given to compensate for energy
expended during working. A common figure considered as allowance is 4% of the basic
time.
2. Variable Allowance
Variable allowance is allowed to an operator who is working under poor environmental
conditions that cannot be improved, added stress and strain in performing the job.
The variable fatigue allowance is added to the fixed allowance to an operator who is engaged on
medium and heavy work and working under abnormal conditions. The amount of variable
fatigue allowance varies from organization to organization.
3. Interference Allowance
It is an allowance of time included into the work content of the job to compensate the operator
for the unavoidable loss of production due to simultaneous stoppage of two or more machines
being operated by him. This allowance is applicable for machine or process controlled jobs.
Interference allowance varies in proportion to number of machines assigned to the operator.
The interference of the machine increases the work content.
4. Contingency Allowance
A contingency allowance is a small allowance of time which may be included in a standard time
to meet expected items of work or delays. The precise measurement of which is uneconomical
because of their infrequent or irregular occurrence.
This allowance provides for small unavoidable delays as well as for occasional minor extra
work:
Some of the examples calling for contingency allowance are:
 Tool breakage involving removal of tool from the holder and all other activities to insert
new tool into the tool holder.
 Power failures of small duration.
 Obtaining the necessary tools and gauges from central tool store. Contingency allowance
should not exceed 5%.
5. Policy Allowance
Policy allowances are not the genuine part of the time study and should be used with utmost care
and only in clearly defined circumstances.
The usual reason for making the policy allowance is to line up standard times with requirements
of wage agreement between employers and trade unions.
The policy allowance is an increment, other than bonus increment, applied to a standard time (or
to some constituent part of it, e.g., work content) to provide a satisfactory level of earnings for a

specified level of performance under exceptional circumstances. Policy allowances are

sometimes made as imperfect functioning of a division or part of a plant.
Example 1:
The element times (in minutes) for 4 cycles of an operation using a stop watch are presented
below:
Elements No Cycle time in minutes
1 1.5 1.5 1.3 1.4
2 2.6 2.7 2.4 2.6
3 3.3 3.2 3.4 3.4
4 1.2 1.2 1.1 1.2
5 0.51 0.51 0.52 0.49
Calculate the standard time for the operation if;

i. Elements 2 and 4 are machine elements
ii. For other elements, the operation is rated at 110%
iii. Total allowances are 15%
Solution
Elements No Cycle time in minutes Average Rating % Normal=Av time
Cycle time x rating
1 1.5 1.5 1.3 1.4 1.425 110 1.425x1.1=1.568
2 2.6 2.7 2.4 2.6 2.575 Mach Elements =2.575
3 3.3 3.2 3.4 3.4 3.325 110 3.325x1.1=3.658
4 1.2 1.2 1.1 1.2 1.175 Mach Elements =1.175
5 0.51 0.51 0.52 0.49 0.505 110 0.505x1.1=0.555
9.531
Normal time for the cycle = 9531
Standard time = 9.531 + (0.15 x 9.531)
=10.961 standard minutes
Example 2:
The observed times and performance ratings for five elements are given below, compute the
standard time assuming rest and personal allowance as 15% and contingency allowance as 2%:
Element 1 2 3 4 5
Observed time (Min) 0.2 0.08 0.50 0.12 0.10
Performance Rating 85 80 90 85 80

Solution
Elements Time (observed) Rating Normal time
1 0.2 85 0.2x85/100=0.170
2 0.08 80 0.08x80/100=0.064
3 0.50 90 0.50x90/100=0.450
4 0.12 85 0.12x85/100=0.102
5 0.10 80 0.10x80/100=0.080
Total 0.866
Normal time per price = 0.866
Rest and Personal allowance =0.15 x 0.866 =0.1299
Contingency allowance =0.02 x 0.866 =0.0173
Standard time = Normal time + Rest and personal allowances + contingency
= 0.866 + 0.1299 + 0.0173
= 1.0132 standard minutes

CHAPTER ELEVEN
11.0 PROJECT INVESTMENT APPRAISAL
11.1 Introduction
Definition
Any act which involves the sacrifice of an immediate and certain level of consumption in
exchange for the expectation of an increase in future consumption.
 Types of capital investment
 Replacement of obsolete assets
 Cost reduction e.g. IT system
 Expansion e.g new building & equipment
 Strategic proposal: improve delivery service, staff training.
 Diversification for risk reduction
Need for investment appraisal
 Because, large amount of resources are involved and wrong decisions could be costly,
Managers are responsible for comparing and evaluating alternative projects so as to
allocate limited resources and maximize the firm‟s wealth
 Difficult and expensive to reverse
 Investment decisions can have a direct impact on the ability of the organisation to meet
its objectives
11.2 Investment appraisal process

Stages:
 Identify objectives. What is it? Within the corporate objectives?
 Identify alternatives. Use CAD, CAM or use external service.
 Collect and analyse data. Examine the technical and economic feasibility of the project,
cash flows etc.
 decide which one to undertake
 authorisation and implementation
 review and monitor: learn from its experience and try to improve future decision –
making

11.3 Investment appraisal methods
Investment appraisal methods
Considering the time value of Ignoring the time value of

money concept money concept
• Net present value • Payback period

• Internal rate of return • Accounting rate of return
11.3.1 Net Present Value

Net Present Value (NPV) - the difference between the present values of cash inflows and
outflows of an investment
Opportunity cost of undertaking the investment is the alternative of earning interest rate in the
financial market.
Present value: - the amount of money you must invest or lend at the present time so as to end up
with a particular amount of money in the future.
Discounting: -finding the present value of a future cash flow
a) Time value of money
When facing different investment proposals, the management should choose the project that can
generate the greatest addition of value to the company. For example,
Project A Project B
Initial investment $100 $100
Cash inflow at end of year
Year 1 $110
Year 2 $121
At first sight, some may think that project B is better because it has a higher cash inflow.
However, the time value of money concept states that a dollar today is always worth more than a
dollar in the future
The two projects are of equal value to the company because their present values are the same

Project A Project B
Initial investment $100 $100
Present value of cash flow
(interest rate is 10% per annum) ( ) ( )
$100 $100
The two projects are of equal value to the company because their present values are the same
b) Factors leading to the changes in value of money
 Opportunity cost of money
 Erosion of purchasing power due to inflation
 Uncertainty and risk
c) Opportunity cost of money
 Opportunity cost of money refers to the cost incurred or income forgone by not using the
money for other purpose
 For surplus cash, the opportunity cost is the interest income forgone by investing the cash
in other investments or depositing it in the bank
d) Erosion of purchasing power due to inflation
 Inflation refers to the continual increase in the general price level of goods or services
 During a period of inflation, prices of goods increase while the purchasing power of
money decrease. The purchasing power of a dollar today is greater than that of the future
e) Uncertainty and risk

 Investors tend to avoid risk. The uncertainty involved in future cash inflows is much
higher than that in present cash inflows
 If the level of risk rises, investors will expect a higher return as compensation.
 For example, suppose an investor expects $100 for return now. After adding a 10% risk
premium, he will expect $110 one year later
f) Discounting
 According to the time value of money concept, a dollar in one year is not worth the same
as a dollar in another year.
 In evaluating a multi-year investment, cash inflows and outflows are generated in

different years

 It is necessary to convert the cash flows for different years into a common value at a
common point of time, either at present or in the future
 Discounting is the process of reducing future cash flows to present values with the use of
an interest rate
( )
Where FV = Future value of an investment
n= Number of years
r= Appropriate interest rate
Example
John has won a lucky draw. He is deciding whether to receive the
Prize money of $3000 today or the following set of cash flows over the next three years:
Year Cash flow
1 $1100
2 $1210
3 $1331
Future values Discount processes Present value

Year 1 $1100 $1100/1.1 $1000
Year 2 $1210 $1210/1.12 $1000
Year 3 $1331 $1331/1.13 $1000
Calculation procedures
1. Determining the discount rate
2. Calculating the NPV:
( ) ( ) ( ) ( )

Where FV = future value of an investment
n = no. of years
r = Rate of return available on an equivalent risk security in the financial

market
I0 = initial investment
Interpreting the NPV derived as follows:
NPV Comments Reasons

<0 Reject the project The rate of return from the project is smaller than the rate
of return from an equivalent risk investment
=0 Indifferent to accept or The rate of return from the project is equal to the rate of
reject the project return from an equivalent risk investment
>0 Accept the project The rate of return from the project is greater than the rate
of return from an equivalent risk investment
Highest Accept the project If various project are considered, the project with highest
positive NPV should be chosen
A company is considering making several investments in the Production facilities for the new
products with an estimated useful life of four years. The cash inflows and outflows are listed as
follows:
Project A Project B Project C Project D

Initial investment $900000 $1000000 $303730 $1500000
Cash inflows
Year 1 120000 400000 100000 10000
Year 2 250000 400000 100000 10000
Year 3 400000 400000 100000 1000000
Year 4 1300000 400000 100000 1000000
The appropriate discount rate of this investment is 12%
Required:
(a) Calculate the NPV of each investment and determine whether to accept it or not
(assuming the company has unlimited resources)
(b) If the company has limited resources, determine which investment should be accepted by
referring to the highest NPV

Project A
( )
Project B
( )
Project C
( )
Project D
( )
With limited resources, the company should only accept project because it generates the highest
NPV
g) Advantages of NPV
 Consistency with the time value of money concept
 Consideration of all cash flows
 Adoption of cash flows instead of accounting profit

11.3.2 Internal rate of return
Internal Rate of Return - is the discount rate that equates the present values of an investment‟s
cash inflows and outflows.
The internal rate of return is the annual percentage return achieved by a project, of which the
sum of discounted cash inflow over the life of the project is equal to the sum of discounted cash
outflows
If the IRR is used to determine the NPV of a project, the NPV will be zero.
The company will accept this project only if the IRR is equal to or higher than the minimum rate
of return or the cost of capital
1. By trial and error, find out the discount rate that will give a zero NPV
( ) ( ) ( ) ( )
Where FV = future value of an investment
n = no. of years
r = Rate of return available on an equivalent risk security in the financial

market
I0 = initial investment
2. If the NPV is positive, try a higher discount rate in order to give a negative NPV and vice
versa
3. After getting one positive NPV and one negative NPV, use interpolation to find out the
rate giving zero NPV
( )
Where L = Discount rate of the low trial
H = Discount rate of the high trial
P = NPV of cash flows of the low trial
N = NPV of cash flows of the high trial

4. In evaluating an investment project, the IRR is compared with the management‟s

predetermined rate
IRRs Comments Reasons
< lowest acceptable level of return Reject NPV<0
= lowest acceptable level of return Accept NPV=0
> Lowest accepted level of return Accept NPV>0
Highest Accept If several project are considered, the

highest IRR should be chosen
Example
A project costs $400 and produces a regular cash inflow of $200 at the end of each of the next
three years. Calculate the IRR. If the minimum rate of return is 15 %, suggest with reason
whether you should accept the project or not.
( ) ( ) ( )
Assuming the discount rate is 22%
( ) ( ) ( )
Assuming the discount rate is 24%
( ) ( ) ( )
Therefore from;
( )
Where L = Discount rate of the low trial
H = Discount rate of the high trial
P = NPV of cash flows of the low trial
N = NPV of cash flows of the high trial

( )
( )
Since the IRR (23.38%) is higher than the minimum rate of return (15%),
The project should be accepted
11.3.3 Payback period
 Payback period is the period of time it takes for a company to recover its initial
investment in a project
 The method measures the time required for a project‟s cash flow to equalize the initial
investment
a) Acceptance criterion
<predetermined cut off period Accept the project

>predetermined cut off period Reject the project
Example
A company is considering making the following mutually exclusive investments in the
production facilities for the new products with an estimated useful life of four years. The cash
inflow and outflows are
Listed as follows:
Project A Project B
Initial investment 900000 1000000
Cash inflows at the end of year
Year 1 700000 600000
Year 2 100000 400000
Year 3 100000 400000
Year 4 1300000 400000
Project A: 3 years Project B: 2 years
Project B takes only two years to recover its initial investment. With
The shortest payback period, the company will accept project B
b) Advantages of payback period

 Easy to adopt
 Facilitates further evaluation

After obtaining an acceptable payback period, the project will be evaluated by

other financial capital budgeting techniques
c) Disadvantages of Payback period
 Ignore the cash flows after payback period
 Adopt an arbitrary standard for the payback period
 Ignores the timing of cash flow
11.3.4 Discounted payback period
The payback period method is criticized for ignoring the timing of cash flows; therefore,
discounted cash flows are used to calculate the discounted payback period
A company is considering making the following mutually exclusive investments in the

production facilities for the new products with an estimated useful life of four years. The cash
inflow and outflows are listed as follows:
Initial investment Project A Project B

900000 1000000
Year 1 700000 600000
Year 2 100000 400000
Year 3 100000 400000
Year 4 1300000 400000
Discount cash inflow (20%)
Initial investment Project A Project B

900000 1000000
Year 1 500000
Year 2
Year 3 231481
Year 4

11.3.5 Accounting rate of return
 The accounting rate of return compares the average accounting profit with the average
investment cost of project
 The accounting profit can be expressed either before tax or after tax
Calculation procedures
( )
a) Acceptance criterion
In evaluating an investment project, the ARR of the project is compared with a predetermined
minimum acceptable Accounting Rate of Return:
ARR Comments
< minimum acceptance rate Reject project
= minimum acceptance rate Accept project
> minimum acceptance rate Accept project
Highest Choose the highest ARR
A company is considering whether to buy specialized machines for a new production line. The
purchase price of machinery is $400000 and its estimated useful life is four years. There is no
scrap value after four years
The project income statements:
Year 1 Year 2 Year 3 Year 4

Revenue $310000 $280000 $280000 $310000
Depreciation 1000 100000 100000 100000
Other expenses 150000 100000 110000 120000
Profit before tax 60000 80000 70000 90000
Taxation (15%) 9000 12000 10500 13500
51000 68000 59500 76500

Should the company buy the new machinery if the minimum Acceptable Rate of Return is 20%?
Since the ARR is 31.875%, which is higher than the minimum acceptable rate of 20%, the
company should invest in the new machinery.
b) Advantages of ARR
 It is easy to understand and compute
 It avoids using gross figures. Therefore, it enables comparisons to be made between

projects with different useful lives
c) Disadvantages of ARR
 It ignores the time value of money
 ARR method seems to be less reliable than the NPV method. It adopts the accounting
profit instead of cash flows calculation. The change of depreciation method may also
alter the accounting profit

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TCHD 4205 CONSTRUCTION MANAGEMENT

1.1 Defining Management

Management as a process refers to the act of planning, organization, staffing, directing

1.2 Objectives of Management

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1.3 Principles of Management

Authority and Responsibility:

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Unity of Command & Unity of Direction

Subordination of Individual Interest to General Interest:

Centralization and Decentralization:

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(i) Decrease in the workload of superiors

(ii) Better and quick decisions

(iii) Increase in the encouragement to the subordinates

(iii) Decline in the encouragement to subordinates in case of complete centralization

(i) Meaning of Scalar Chain:

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1.4 Importance of Management

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1.5 Functions of Management

Construction Management is a fee-based service in which the construction management is

1.6 Roles of a Manager

Simple breakdown of the roles of the manager

1.7 Management at different organizational levels

1.8 The components of construction

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2.0 Organization Structures

2.2 Structure of Organization

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2.3 Types of Organization Structures

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Ass site supervisor

F/man brick wk F/man C&J F/man F/man concrete

Charge hands/ gang leaders of each trade

Laborers of each trade

Figure 1: Line organization

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3. Where automatic plants are used

4. Where labour problems are not difficult to solve.

2. Line and staff organization

Figure 2 shows the line and staff relationships.

2. Quality of products/ service is better and wastage is less

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6. Discipline problem is solved due to line relationship.

Legal Advisor General Manager Chief Accountant

Production Engineer Production Manager Quality Control Inspector

Supervisors F/man Tool expert

Figure 2: Line and Staff Organization

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Company secretary General Manager

Personnel Production Finance Material Marketing

Administration Prodn Accountant F/man

Foreman Clerical staff Workers

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3. Due to overlapping of authority, it is likely to develop friction between different members

This is the dissemination of programmes/activities /instructions from top management to lower

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Secretary Clerk wages F/man driver Site engineer estimator

General Manager Chief Contracts Manager

Site engineer A Site engineer B F/man Transport officer

F/man A F/man B mechanics drivers