Construction Planning, Project

Management and Economics

Organization of Construction industry
Organization of Construction industry
• Types of Players in the Construction Industry
 Owners
 General contractors
 Subcontractors or Specialty Contractors
 Designers-Architects and Engineers
 Construction Managers
 Trades
 Labor force and Labor Unions
 Insurance Companies
 Banks
 Suppliers
 Permitting Agencies and Building Authorities
 Public
Organization of Construction industry
• Types of Players in the Construction Industry
• Owners are the party which take decision to build the facility,
define the need, provide the financing, and manage the
construction process.
• Owners are public (government) or private.
• Most public owners are experienced construction managers.
• Most private owners, such as small manufacturing companies,
have little or no construction management expertise and
depend on consultants to help them through their projects
• Besides providing the project funding, the primary
responsibility of the owner is to define the scope of the work
Organization of Construction industry
• General Contractors
• Most contracts are awarded to a general contractor (GC) who
manages the project, and subcontracts portions of the work,
such as the electrical and mechanical work, to subcontractors
or specialty contractors.
• The primary job of the general contractor is
 to manage the job,
 keep it on schedule,
 control costs,
 ensure the work is well coordinated and performed in a safe manner, and
 to coordinate with the owner on all matters since the GC is the only one of
the contractors holding a contract with the owner.
Organization of Construction industry
• Sub -Contractors or Specialty Contractor
• These contractors make up the largest portion of the
construction industry.
• They do the execution work.
• All subcontractors have a specialty such as electrical or
mechanical, steel erection, acoustical, drywall and painting,
and carpeting.
• The construction of a typical building may require as many as
10 to 15 subcontractors.
Organization of Construction industry
• Designers-Architects and Engineers
• Project owners select an architect or engineer to design their
projects.
• The owner should select based on demonstrated ability to
design the project, in the time frame available, and at a cost
acceptable to the owner.
• Architects are the lead designers for buildings.
• They subcontract some of the work, such as the structural frame
and mechanical systems, to engineers who specialize in such work.

• Engineers are normally the lead designers for heavy civil/ and
infrastructure projects.
• They may subcontract part of the work such as train stations or
office buildings to an architect
Organization of Construction industry
• Construction Managers
• During the 1970s the term construction manager became
popular.
• But today "construction manager" has many different
meanings. Some contractors now call themselves construction
managers.
• Some engineering and architectural firms offer construction
management services, indicating usually that they represent
the owner during construction.
• To make the definition even more difficult, there are some
government agencies that have employees who are
construction managers.
Organization of Construction industry
• Trades, labor unions and labor force
• The trades consist of both union and open shop workers.
• The rules of employment vary by state and locality.
• The unions are organized by craft, with specific unions
representing workers within a certain trade.
• Labor Union’s initial purpose was to improve the lives of their
members.
• The unions are generally formed around crafts and trades, but
today many unions represent several trades, not only the one
trade that carries their name.
Organization of Construction industry
• Insurance Companies
• Contractors are required to provide bid bonds as a condition of
being allowed to bid, and then they must provide insurance,
performance bonds, and payment bonds prior to award of the
contract.
• Insurance companies provide all such bid bonds.
• They also provide insurance to any potential loss to the project.
Organization of Construction industry
• Banks
• Banks provide the working capital contractors need to build
the project.
• In some countries, a payment is made to the contractor at the
time of the contract award to provide working capital.
• Suppliers
• Everything from concrete to paint comes from suppliers.
• Many suppliers assist the contractors in preparing their bids,
preparing shop drawings, and fabricating items specifically for
individual projects.
• The quality of a construction project is very dependent on the
quality of the suppliers used by individual contractors.
Organization of Construction industry
• Permitting Agencies and Building Authorities
• These agencies represent the interests of public safety.
• Agencies in this group include federal agencies such as the National
Highway Authority, Water Supply, WAPDA
• Public
• The public is impacted by every construction contract.
 Impacts are both good and bad.

• Voters approve bond issues for new schools and other public facilities.
• The public is inconvenienced while highways are widened or repaired.
• Individual members of the public wait while their homes are
constructed.
The End