WHAT IS CONSTRUCTION MANAGEMENT (CM)?
ULTIMATE GOAL OF CONSTRUCTION MANAGEMENT
• Construction management is a professional service for project
owners. It provides them with the management of the
construction project’s schedule, cost, quality, safety, scope and
function. Construction management is led by a construction
manager, who reports to the owner and is tasked with
delivering a successful project.
• “Construction Management is a professional management
practice consisting of an array of services applied to
construction projects and programs through the planning,
design, construction and post construction phases for the
PURPOSE of achieving project objectives including the
management of quality, cost, time, and scope.”
• Construction management is the process of planning,
coordinating, controlling, Organizing, scheduling, mobilizing,
directing equipment, material, and personnel, and overseeing
construction projects.
PURPOSE OF CONSTRUCTION MANAGEMENT
• TO CONTROL the quality of a project’s primary constraints:
SCOPE, TIME, and COST.
TRIPLE CONSTRAINTS
With any project, there are LIMITATIONS and RISKS that need to be
addressed to ensure success. The three primary constraints that
construction managers should be familiar with are TIME, SCOPE, and
COST.
• COST:
The financial constraints of a project, also known as the project
budget which comprises all of the financial resources needed to
complete the project on time.
• SCOPE:
The tasks required to fulfill the project’s goals.
• TIME:
The schedule for the project to reach completion.
INTRODUCTION TO CONSTRUCTION MANAGEMENT
• Full satisfaction of the client’s demands for a viable project both
in terms of functionality and budget.
WHY CONSTRUCTION MANAGEMENT IS NEEDED?
• Buildings and their construction have become increasingly
COMPLEX. New INNOVATIONS in methods, designs and
materials mean that the management of construction projects
REQUIRES PROFESSIONALS with the KNOWLEDGE AND
SKILLS TO DELIVER ON TIME AND ON BUDGET in a
demanding and rapidly changing industry.
ROLE OF CONSTRUCTION MANAGER
• Responsible for PLANNING, COORDINATING, BUDGETING,
and SUPERVISING projects from the beginning to the end.
• In charge of the OVERALL PLANNING and CONTROL of a
project. CM is a central role in any construction project.
• Responsible for DEVELOPING A PROGRAMME OF WORK for
the project.
• CM may work with procurement specialists or be directly
responsible for facilitating the PROCUREMENT of materials
and subcontractors, working with construction contract delivery
methods.
• On a day-to-day basis they will SUPERVISE THE BUILDING
WORK, managing the hiring and firing of employees or
managing subcontractors and partners.
• TRACK PROGRESS OF THE CONSTRUCTION for example
the delivery materials and equipment and ensure adherence to
health and safety practices.
• Responsible for or delegate the task of OBTAINING LICENSES
AND PERMITS.
• IDENTIFY RISKS AND ISSUES and resolve problems.
• Accountable for MONITORING COSTS AND DELIVERING
THE PROJECT ON BUDGET.
CORE RESPONSIBILITIES OF CONSTRUCTION MANAGER
• COST MANAGEMENT: Maintain awareness of all costs
associated with a project; budget management; anticipate any
changes to project scope that could impact cost.
• CONTRACT ADMINISTRATION: Create contracts for
subcontractors and suppliers; manage payments to contractors;
source materials and suppliers.
• HEALTH AND SAFETY MANAGEMENT: Ensure everyone on-site
follows health and safety regulations; prepare health and safety
documentation; implement suitable protocols for ongoing practices
and regular monitoring.
• QUALITY MANAGEMENT: Deliver projects that meet clients'
specifications; ensure all work complies with quality standards;
facilitate regular checks throughout the project lifecycle; use a total
quality management approach (TQM) to help reduce costs in
remedial work; minimize delays; maintain relationships with clients,
contractors, and staff.
• TIME MANAGEMENT
KEY SKILLS OF CONSTRUCTION MANAGER
Carrying out a construction project involves a lot of planning,
organization, and problem-solving. It requires a strong set of both
workplace and technical skills.
• ANALYTICAL AND CRITICAL THINKING SKILLS : Construction
managers must interpret designs, plans, and technical drawings.
They must also understand complex contracts and interpret
building codes and regulations. They'll need to translate all this
information into easy-to-follow instructions for on-site workers.
• MOTIVATIONAL SKILLS : Construction managers must ensure
their teams meet deadlines, stay within budget, and produce
quality work. To do so, they must motivate team members with
guidance, feedback, and recognition, as well as resolve conflicts
and keep the team focused on its goals.
• ATTENTION TO DETAIL : The construction manager is
responsible for ensuring the quality of work on site is up to
standard with local building codes and regulations and meets
client expectations. This requires attention to detail throughout the
entire process, including managing mistakes and minimizing their
impacts
• COMMUNICATION SKILLS: Communication is critical as
construction managers interact with a range of people, including
the public, clients, and tradespeople, so they must have good
interpersonal skills.
• CONTRACT MANAGEMENT SKILLS: A construction manager
may need to NEGOTIATE contracts, manage budgets, and
ENSURE ALL PARTIES INVOLVED IN A BUILDING PROJECT
ARE SATISFIED. This requires persuading, COMPROMISING,
and making mutually beneficial, binding agreements.
• HEALTH AND SAFETY KNOWLEDGE: Construction managers
must be aware of worksite health and safety issues and
understand relevant legislation and regulations. This is vital
because of the risks associated with construction work.
Construction managers need to know best practices to minimize
risks to all project stakeholders.
• PROJECT MANAGEMENT SKILLS: Managing building projects
requires coordinating a range of activities involving different people
and completing milestones on time and within budget. An
understanding and experience with construction management
methodologies can be important in complex projects
THREE (3) MAIN PARTIES INVOLVED IN CONSTRUCTION
MANAGEMENT
• OWNER, who is the one commissioning the work and funds
or finances it;
• the ARCHITECT or ENGINEER, who is responsible for the
design of the project; and
• the GENERAL CONTRACTOR, who is the person
overseeing the day-to-day operations of the project as well
as managing the subcontractors.
Construction management is overseeing these parties and the overall 3. PROJECT EXECUTION: The execution phase of the project
project through the lens of the owner’s interests. Therefore, lifecycle is when the work gets done.
construction management interfaces with all three parties in order to
 PROJECT CLOSURE: The purpose of the closing phase is to
make sure the project is delivered on time and within its budget, if not
confirm completion of project deliverables to the satisfaction of
ideally under budget. The project must also meet the quality, scope
the project owner and to communicate the final project
and function expectations of the owner.
disposition and status to all participants and stakeholders.
KEY ELEMENTS OF CONSTRUCTION MANAGEMENT
PHASES OF THE CONSTRUCTION MANAGEMENT PROCESS
• CONSTRUCTION DELIVERY METHODS: A project delivery
INITIATION PHASE
method is a system used by an agency or owner for organizing
and financing design, construction, operations, and • Define project goals
maintenance services for a structure or facility by entering into
• Create a business case: A business case provides justification for
legal agreements with one or more entities or parties.
undertaking a project. It evaluates the benefits, costs, and risks of
• CONSTRUCTION CONTRACTS: Construction contracts are alternative options and provides a rationale for the preferred
legally binding documents that are signed by the winning solution.
bidder and the owner and outline the scope of work, risks,
• A feasibility study is done to ensure that the construction is viable.
duties, and legal rights for both parties. Construction contract is
the basis for payment for each of the contract types. • Complete the project charter: A project charter is a formal
document delineating the project's purpose, scope, stakeholders,
• CONSTRUCTION BIDDING PROCESS: Construction bidding
objectives, and comprehensive plan. This document should guide
is the process of submitting a tender by the contractor to the
all subsequent decisions and actions.
client as a proposal to conduct or manage a particular
construction project. It allows the construction manager to • Draw up the list of stakeholders
review the safety, financial, and insurance resources of
contractors to hire for the project to ensure that they are best PLANNING PHASE
suited for the job. • Planning is the most crucial phase of construction management in
which every minor detail of the project process is planned.
PROJECT LIFE CYCLE
• Define scope
The Project Lifecycle is the sequence of phases through which a
project progresses. The lifecycle provides the basic foundation of the • Create a project plan
actions that have to be performed in the project, irrespective of the
• Set a budget baseline
specific work involved.
• Define roles and responsibilities
 PROJECT INITIATION: Project initiation is the first step in
starting a new project. During the project initiation phase, the • A project team is formed.
reason of doing the project is established and what business
• A work breakdown structure (WBS) is often used to divide the
value it will deliver.
larger job into small, more manageable deliverables and tasks.
 PROJECT PLANNING: In this step, the team identifies all of
• A work schedule is designed
the work to be done. The project's tasks and resource
requirements are identified, along with the strategy for
producing them.
EXECUTION PHASE
• With all the planning done, materials acquired, machinery set up,
blueprints made and work team selected comes the real job of
executing the plans made on paper.
• A lot of effort is required to keep up the execution on the ground
parallel with the planning.
• Risk assessment before executing a plan is necessary as it
diminishes the chances of mistakes and unforeseen problems.
Even if some issues do occur, the risk assessment team comes up
with an instant solution.
MONITORING AND CONTROL PHASE
• Monitoring the project gives a clear view of the project's progress
and assists in sticking to the proposed schedule and restricts extra
costs.
• Construction Project execution requires close monitoring control to
execute it effectively. Therefore, ensure that the execution stage
and monitoring stage run parallel to each other.
• The importance of monitoring and control is evident from the fact
that even a slight mistake or error at a construction site can be
expensive.
COMPLETION/CLOSEOUT PHASE
• The final phase involves a punch list, where the contractor and
owner look over the job and catch errors or items that still need to
be completed.
• Resources are demobilized, rentals are returned, the worksite is
cleaned and subcontractors’ contracts are closed so they can
move on to other projects.
• At the very beginning of the project life cycle the owner is
challenged by determination of the interrelationship among the
project stakeholders. (Organizational Relationship)
• The other prime challenge is the method of payment for the main
contractor. (Basis for payment and the process of paying the
contractor).
PROJECT DELIVERY SYSTEMS (Organizational Relationships)
A system used by an agency or owner for organizing and financing
design, construction, operations, and maintenance services for a
structure or facility by entering into legal agreements with one or
more entities or parties.
COMMON DELIVERY METHODS IN CONSTRUCTION PROJECTS
DESIGN-BID-BUILD (DESIGN-TENDER-BUILD)
• Also known as traditional building, is probably the most used
method. 'Traditional’ because it has been the approach of choice
for owners of most construction projects.
• There are three phases: design, bid, and build.
• The owner contracts with a design organization to perform
preliminary planning, carry out design work, and prepare contract
documents.
• Following the completion of this phase, a construction organization
is selected, based upon the owner’s criteria, and the owner enters
into a contract with the successful contractor for the assembly of
the project elements in the field.
• The contract for the design
work is separate from that
for the construction work.
Thus, the term design–
tender–build implies a strict,
and sometimes time‐
consuming, project schedule
sequence – designing,
followed by tendering,
followed by constructing.
PROJECT DELIVERY SYSTEMS CONTRACT TYPES
DESIGN-BUILD
• The owner executes a single contract with an organization that
becomes responsible for both the design and the construction of
the project.
• Reduces the timeline that’s associated with design-bid-build by
having a single party replace the designer and the contractor.
• This design-builder is usually an architect, engineer or contrac-
tor and works with the owner.
• This fosters better communication but puts many responsibilities
on the shoulders of the design-builder.
BENEFITS FROM THE DESIGN-BUILD METHOD
• SINGULAR RESPONSIBILITY. There is a single point of responsi-
bility, avoiding ‘buck passing’ and ‘finger pointing’.
• QUALITY. The greater responsibility implicit in this method pro-
vides motivation for high-quality and proper performance.
• COST SAVINGS. The single entity can work together as a team to
evaluate alternative methods and materials efficiently and accu-
rately.
• TIME SAVINGS. Design and construction can be overlapped, and
bidding time after design is eliminated.
• Potential for REDUCED ADMINISTRATIVE BURDEN. After the
contract is agreed upon, the owner will have relatively little invest-
ment in coordinating and arbitrating between the designer and
contractor, since they are a single entity.
• EARLY KNOWLEDGE OF FIRM COSTS. The single design–
construction entity is responsible for both design and cost esti-
mates.
• RISK MANAGEMENT. Cost, schedule, and quality can be clearly
defined and appropriately balanced.
CONSTRUCTION MANAGER
• The owner may engage a construction manager to provide
professional construction management services. The construction
manager ACTS AS AN ADVISOR TO THE OWNER for a fee and
the owner engages separate contractor and designer
organizations.
• The construction manager organization PROVIDES ADVICE TO
THE OWNER regarding construction matters, including cost,
schedule, safety, the construction process, and other
considerations; such advice may be offered throughout the project
life cycle or at selected portions thereof.
• The construction manager acts as an extension of the owner’s
staff and assumes little risk except for that involved in fulfilling its
advisory responsibilities.
CONSTRUCTION MANAGER AT RISK
• The ‘at-risk’ construction manager OCCUPIES A CONTRACTUAL
POSITION between the owner and the execution contractors.
• The construction manager replaces the general contractor in
holding the various trade contracts. In addition to the GENERAL
CONTRACTOR ROLES on the traditional design–tender–build
approach, the at‐risk construction manager PROVIDES EXPERT
ADVICE TO THE OWNER on all matters related to the
construction, usually beginning well before the field work begins.
• It’s similar to the design-bid-build method, but the construction
manager (CM) is hired by the owner to oversee the project.
• This is great for owners who need expert help managing the
project and often allows the owner to remove themselves from the
process.
SEPARATE PRIME CONTRACTS
• It is an arrangement in which THE OWNER CONTRACTS DI-
RECTLY WITH INDIVIDUAL SPECIALTY CONTRACTORS, each
of whom can be considered as a ‘prime’ contractor because
THERE IS NO SINGLE GENERAL CONTRACTOR to coordinate
their work.
• Construction manager, will assist the owner in the coordination,
but the construction manager is NOT RELATED CONTRACTUAL-
LY to the several prime contractors.
TURNKEY
• A turnkey contract is one in which the owner and contractor agree
on a fixed contract sum for a contract under which the contractor
will take responsibility for the entire project.
• In this type of project, it is a construction organization that usually
enters into a contract with the owner
• At first glance, this form looks much like the design–build form,
however, the scope of the contractor’s responsibility is typically
broader than basic design, procurement, and construction, as it
includes such services as project financing and land procurement
and other tasks not generally within the design–build scope.
• The owner provides a brief describing the desired outcome,
performance criteria, and standards, the parties agree on a fixed
price, and the contractor proceeds, with no participation by the
owner in the performance of the work.
BUILD–OWN–OPERATE–TRANSFER
• Has evolved as a means of involving the private sector in the
development of the public infrastructure.
• Requires the private sector to finance, design, build, operate and
manage the facility and then transfer the asset to the government
free of charge after a specified CONCESSION period.
• The terms BOOT and BOT are used synonymously, while terms
like DBO (design–build– operate) and BOO (build–own–operate)
imply construction and operation but no transfer.
• Typical ‘concession periods’ range from about 10 years, not
including project development time, to as long as 55 years,
including approximately 7 years for construction.
JOINT VENTURE
• A voluntary association of two or more parties formed to conduct a
single project with a limited duration.
• Joint venture agreements are formed between construction firms
or between design firms and construction firms; THEY DO NOT
INCLUDE OWNERS.
• In a sense, they are special-purpose partnerships, because of their
separate, temporary nature.
• The usual PURPOSE of such an arrangement is to spread the
risks inherent in large projects and to pool resources in a way that
permits the joint venture to execute a project that would be beyond
the capabilities of one of the parties individually.
FORCE ACCOUNT
• The project owner acts as the prime contractor and carries out the
work with its own forces by providing field supervision, materials,
equipment and labor.
• This method is usually confined to relatively small, uncomplicated
projects that are built for the owner’s use.
• Often, such small-scale projects are also designed in house by the
owner’s staff.
JOB ORDER CONTRACTING
• Works at completing a number of predefined construction tasks.
• It tends to be used in small-to-medium construction projects, such
as repairs, renovations and maintenance.
• It’s ideal for short timelines and fixed budgets, but not new
construction.
PHASED CONSTRUCTION
• Some portions of the DESIGN WORK OCCUR CONCURRENTLY
WITH FIELD CONSTRUCTION, thus achieving an overall savings
in total project duration.
• Recall the traditional design–tender–build approach in which the
entire project is fully designed prior to the calling for tenders for the
construction phase.
• Under this method, construction does not begin until the end of the
tendering and contractor selection efforts, which necessarily must
follow completion of design.
• Contrast this approach with a scheme under which enough design
work is completed to begin field work.
• An example might be a building project that is designed and built
in several parts.
• After the foundations are designed, foundation construction
begins.
• Design for the balance of the structure proceeds concurrently with
that first construction effort.
• The structural frame design is completed while foundation
installation work is underway, after which the structural frame is
erected. The process continues, with DESIGN AND
CONSTRUCTION OCCURRING IN OVERLAPPED PHASES.
MULTIPLE AWARD TASK ORDER CONTRACT
• Often found in military or government construction work.
• It involves long-standing contracts for multiple projects, all of which
are under a single master contract.
• There could be multiple contractors at work, there could also only
be one.
TYPES OF CONTRACTS (Payment Methods)
CONSTRUCTION CONTRACT
Construction contracts are legally binding documents that are signed
by the winning bidder and the owner and outline the scope of work,
risks, duties, and legal rights for both of both parties.
TYPES OF CONTRACTS
LUMP SUM /FIXED PRICE CONTRACT
• The construction manager/contractor and the owner agree on the
overall cost of the construction project and the owner is responsi-
ble for paying that amount whether the construction project ex-
ceeds or falls below the agreed price of payment.
• The price of the lump sum contract must include all DIRECT
COSTS of labor, materials, equipment and subcontractors, as well
as such INDIRECT COSTS as field supervision, field office, equip-
ment maintenance and the like, plus general company OVER-
HEAD, plus PROFIT.
ADVANTAGES & DISADVANTAGES (Lump Sum/Fixed Price
Contract)
ADVANTAGES:
• Total cost of the project is known before construction begins.
• Lack of a need to monitor and approve the contractor’s costs
DISADVANTAGES:
• The owner bears the RISK of poor quality from a contractor trying
to maximize profit within the fixed sum.
• The high cost and long time required for contractors to prepare
tenders; although such costs are borne by the contractor,
ultimately they are built into the successful contractor’s total price.
• Flexibility of this contract form is limited; any variation from the
original plans and specifications require a change order, a process
that can be time consuming and expensive and may even lead to
contract disputes.
COST PLUS
• This contract provides payment for the contractor including the
total cost of the project as well as a fixed fee or percentage of the
total cost.
• The owner pays the contractor’s costs related to the project plus a
fee that covers profit and non‐reimbursable overhead costs.
• The owner pays the contractor’s costs related to the project plus a
fee that covers profit and non‐reimbursable overhead costs.
TWO TYPES OF COST‐PLUS CONTRACTS ARE USED:
(1) COST PLUS A PERCENTAGE OF COSTS, under which the fee is
an agreed‐upon percentage of the ‘costs’ and
(2) COST PLUS FIXED FEE, wherein the fee does not depend on the
contractor’s costs.
GUARANTEED MAXIMUM PRICE
• This contract is the same as the cost-plus-fee contract although
there is a set price that the overall cost and fee do not go above.
• Sets a maximum price for a construction project, beyond which the
contractor absorbs additional costs.
• Sometimes called a construction manager at risk contract, this
type of construction agreement minimizes financial risk for the
owner because it sets a project cost limit.
TIME AND MATERIALS
• Often used on small projects
• MATERIALS are paid at their actual cost, while LABOR AND
EQUIPMENT inputs are reimbursed at pre‐agreed rates. LABOR
AND EQUIPMENT rates must include all indirect and overhead
expenses, profit and contingency, in lieu of the payment of any
extra ‘fee’.
• As the basis for a payment request for a given period, the contrac-
tor presents material invoices, payroll records with hours by cate-
gory and similar records for equipment. Subcontract payments
would normally be reimbursed at actual cost.
MEASURE AND VALUE
• This contract is used when the cost cannot be determined ahead
of time.
• The owner provides materials with a specific unit price to limit
spending.
• The owner pays the contractor for the measured quality as
determined by the engineer of each item carried out at the rate set
out in the schedule of prices.
• This method determines the amount the contractor will be paid as
the project proceeds by requiring that the actual quantities of
finished product be measured and then multiplied by pre-agreed
per unit prices.
• Contractors provide tenders based on estimated quantities
provided by the owner, so that each tenderer’s price is based on a
common set of quantities. Thus, prior to the work, the tender
prices are based on estimated quantities, whereas during and
after the work, the payment is based on actual quantities.
• From the contractor’s viewpoint, some of the risk in the bidding
process is removed, because payment is based on actual
quantities rather than on a lump sum.