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Introduction
This book has been a basic text worldwide over the past 35 years. It provides an introduction to
the construction industry for students planning to work as construction managers. It is estimated
that more than 400,000 students and practitioners have used it to gain a broad understanding of
what one might encounter as an engineer and/or manager in the complex world of construction.
The first edition of this text was published by John Wiley and Sons, Inc., in 1980. Quoting
from the Preface of that edition, we noted that:
The construction industry . . . is a fragmented and diffuse industry encompassing both very small and
very large contracting groups as well as the in-house forces of government and semi-government
agencies. It also includes many professional groups such as architects, engineers, construction man-
agers, and management consultants. In addition, materials suppliers and vendors as well as other
support groups are part of this massive industry. It is not surprising then that it speaks with many
voices, and that at times highly quantitative methods are appropriate while at other times the intuitive
or empirical approach is all that is available. The management of construction is at one and the same
time an art and a science.
Therefore, construction managers must be masters of a wide range of qualitative and quan-
titative subjects and deal with a wide spectrum of topics involving technical, management, legal,
financial and leadership issues. Using an analogy, a construction manager is like a decathlon
athlete who must be outstanding in a wide range of technical and people-oriented areas—a jack
of all trades, master of all.
Organization
Early chapters of this text address the history of construction and the process by which owners
procure and contractors execute construction projects. Subsequent chapters deal with company
organization as well as planning and scheduling. Chapters addressing the four Ms of
construction—money, machines, manpower, and materials—are then presented. Along the way,
monetary concepts such as calculating the cost of money (i.e., issues regarding interest and invest-
ment), the impact of taxes, funding of projects from the owner’s perspective and how contractors
manage “cash flow” during the construction process are discussed. The final chapter discusses
one of the most important issues confronting modern day construction managers—safety.
Material new to this edition includes chapters on planning and scheduling that have been
streamlined to provide a smoother presentation. In addition, a new chapter addressing linear
scheduling methods in detail as well as the scheduling impact of resource allocation and resource
planning has been added.
Material regarding the historical background of construction as a profession and a disci-
pline has been included to help the student become excited about the multifaceted nature of
realizing great construction projects. Hopefully, students will gain a better understanding of the
role played by construction over the centuries in shaping the society in which we live.
vii
viii Preface
Acknowledgments
The authors would like to recognize the late Professor Ronald Woodhead of the University of
New South Wales for the major role he played in the realization of the first two editions of this
book. His experience and insights were critical to the success of these earlier editions.
We would also like to thank the many colleagues and numerous students who have pro-
vided very useful feedback regarding various aspects of this book over the past 35 years.
In particular, the following academics and industry colleagues provided important insights
and relevant material for this book:
Dulcy Abraham and Joe Sinfield, Purdue University
Bob Bowen, Bowen Engineering, Indianapolis, IN
Peter Dozzi, University of Alberta, Edmonton, Canada
Jimmy Hinze, University of Florida, Gainesville, FL
E. Paul Hitter Jr., Messer Construction, Cincinnati, OH
Mike Kenig, Holder Construction, Atlanta, GA
Jerry Kerr, Construction Consultant, Indianapolis, IN
Kelly Wallace, Bozzuto Construction, Greenbelt, MD
Finally, we would like to recognize the continuing support and understanding of our families
through the process of writing, updating, and preparing the text for publication.
Contents
ix
x Contents
4 Contracts 59
4.1. Contract Environment 59
4.2. Process of Purchasing Construction 60
4.3. Major Construction Contract Types 61
4.4. Competitively Bid Contracts 61
4.5. Stipulated-Sum Contracts 62
4.6. Unit-Price Contracts 63
4.7. Negotiated Contracts 66
4.8. Project Delivery Methods 68
4.9. Design-Build Contracts 69
4.10. Design-Build in a Consortium Format 70
4.11. Construction Management Contracts 71
4.12. Construction Management At-Risk 72
4.13. Comparing Project Delivery Methods 72
Review Questions and Exercises 73
5 Legal Structure 75
5.1. Types of Organization 75
5.2. Legal Business Forms 75
5.3. Proprietorship 76
5.4. Partnership 77
Contents xi
5.5. Corporation 78
5.6. Comparison of Legal Structures 82
5.7. Joint Venturing 84
Review Questions and Exercises 85
6 Impact of Taxes 86
6.1. Society and Taxation 86
6.2. Business Impact of Taxation 87
6.3. Why Taxes? 88
6.4. Types of Taxes 88
6.5. Income Tax Systems 88
6.6. Taxation of Businesses 89
6.7. Business Deductions in General 91
6.8. Taxable Income: Individuals 91
6.9. Itemized Deductions, Standard Deductions,
and Personal Exemptions 92
6.10. The Tax Significance of Depreciation 93
6.11. Marginal Tax Rates 93
6.12. Tax Credits 95
6.13. Tax Payroll Withholding 96
6.14. Tax Payment Schedules 96
6.15. Marginal, Average, and Effective Tax Rates 97
6.16. Summary 97
Review Questions and Exercises 98
7 Project Planning 99
7.1. Introduction 99
7.2. Work Breakdown Structure 100
7.3. Developing the Work Breakdown Structure 102
7.4. A Work Breakdown Example 102
7.5. Work Packages for the Gas Station Project 103
7.6. Determining Sequence of Work Packages 104
7.7. Estimate Development and Cost Control Related
to the Work Breakdown Structure 106
7.8. Role of Code of Accounts 108
7.9. Summary 109
Review Questions and Exercises 109
20 Safety 327
20.1. Need for Safe Practice 327
20.2. Humanitarian Concerns 328
20.3. Economic Costs and Benefits 328
20.4. Uninsured Accident Costs 331
20.5. Federal Legislation and Regulation 332
20.6. Occupational Safety and Health Administration Requirements 334
20.7. How the Law Is Applied 334
20.8. Safety Record Keeping 337
20.9. Safety Program 338
Review Questions and Exercises 345
Appendices 347
Appendix A Typical Considerations Affecting the Decision to Bid 348
Appendix B Performance and Payment Bonds 351
Appendix C Arrow Notation Scheduling Calculations 356
Appendix D Generalized Network Relationships 362
Appendix E Productivity Scheduling Method Using Singularity Functions 368
Appendix F Plans for Small Gas Station 371
Appendix G Compound Interest Table 374
Appendix H Site Reconnaissance Checklist 375
Appendix I The Cumulative Normal Distribution Function 377
Bibliography 381
Index 385
chapter
History and Basic Concepts
1
2 History and Basic Concepts
The bridge was upgraded to its present configuration in 1894 (Figure 1.1). A second set of
10.5-inch cables was added to carry heavier decks. The reconstruction increased the carrying capac-
ity of the bridge to a 30-ton limit. As a native of Covington, one of the authors rode both trolley
(street) cars and electrically powered buses hundreds of times to the transit terminal in Cincinnati
located at the north end of the bridge. In 1984, the bridge was named the John A. Roebling Bridge.
World famous bridges have become a symbol of civil engineering. The Golden Gate Bridge
in San Francisco has not only been hailed as a tremendous engineering achievement but also a
beautifully balanced aesthetic achievement. Plans are now underway to bridge the famous Straits
of Messina between the toe of Italy and the island of Sicily. This bridge will have a clear span of
almost 2 miles, approximately 10 times the span of the Roebling Bridge in Cincinnati. It will also
be designed to resist hurricane-force winds. Construction of this bridge will rival the construction
of the Channel Tunnel connecting England and France.
world for nine centuries. It is an impressive example of the ingenuity of the builders of that time
and their mastery of how forces can be carried to the ground using arches in one dimension and
in three dimensions as domes.
In modern times, the Brooklyn Bridge and the Panama Canal stand as legendary feats of
engineering achievement. They are also testimonies to the fact that realizing a construction pro-
ject involves solving a multitude of problems, many of which are not technical. In both the
Brooklyn Bridge and Panama Canal projects, people-centered problems requiring great innova-
tion and leadership were just as formidable as the technical problems encountered. To solve
them, the engineers involved accomplished “heroic” feats. The stories of these two construction
projects are told in the following sections.
FIGURE 1.4
Washington A. Roebling, chief
engineer of the Brooklyn Bridge
require anyone to work under unsafe conditions, he entered the caissons and supervised the work
personally. He ultimately suffered from a mysterious illness related to the fact that the work was
carried out under elevated air pressure in the caissons. We now know that this illness, called “the
bends,” was caused by the absorption and rapid exit of nitrogen from the bloodstream when
workers entered and exited the pressurized caissons.
1.4 Panama Canal 5
Special Collections and University Archives, Rutgers University Libraries
FIGURE 1.5
Emily Warren Roebling, wife of
Washington Roebling
part of the project as the construction of a gigantic railroad system that would operate continu-
ously (24 hours a day) moving earth from the area of the cut to the Chagres dam construction site.
The material removed from the cut would provide the fill for the dam. It was an ingenious idea.
To realize this system, Stevens built one of the great rail systems of the world at that time.
Steam-driven excavators (shovel fronts) worked continuously loading railcars. The excavators
worked on flexible rail spurs that could be repositioned by labor crews to maintain contact with
the work face. In effect, the shovels worked on sidings that could be moved many times each day
to facilitate access to the work face. The railcars passed continuously under these shovels on
parallel rail lines.
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3.
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4.
Hymni ja salaisuus