Chapter 6:

Construction Process

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 6.1 Site surveying and preparation
❖ It is the inspection of an area where work is proposed, to
gather information for a design or an estimate to
complete the initial tasks required for an outdoor activity.
❖ It can determine a precise location, access, best orientation
for the site and the location of obstacles.
❖ The aim concept of survey is to take all information from
existing site or new site to provide solution and helpful
network customer more better.
❖ Tools: camera, GPS, compass safety tools and more.
❖ Flow and procedure: pre survey – preparation - survey
activity - survey analysis - design and solution -
implementation. 2
 6.1 Site surveying and preparation
Site survey
❖A good site survey will help in determining the
feasibility of the desired coverage
❖The process of performing a site survey
includes the following steps:
• Gather tools and configuration
• Research and investigate industry specific
concern
• Gather the recommended equipment list, or site
survey kit
• Implement the site survey
• Document the site survey.
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6.1 Site surveying and preparation
❖In the design and plan phase, all necessary
surveying are conducted and from the data
obtained, design, drawing and plans are prepared,
but they are done on papers in the office.
❖In execution, engineer has to lay out those design
and drawing on the ground and start physically
building up the proposed designed plan.
❖For the actual implementation, once again the
previous survey, design and plan have to be laid
on the ground is require, this is called site
surveying and preparation.
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6.1 Site surveying and preparation
❖Site engineer has to mobilize a large number of
people, heavy equipments, stack materials and
set up an office to execute all of them.
❖While site surveying, the engineer has to allocate
spaces, services and amenities (facilities) to the
people involved in the construction.
❖In construction work, safety has to be paid
attentions.
❖Temporary services are necessary to execute the
construction work.
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6.1 Site surveying and preparation
❖Temporary services includes offices, electricity,
telecommunication, access road, drinking water,
sanitation facilities, information board, etc.
❖Heavy and costlier equipment and construction
materials should also be allocated spaces in and the
site office so that no part of the equipment,
materials or any other be stolen or broken by
outsiders.
❖Site engineer also need to think about the disposal
of the debris generated from the work. In
construction of road, excavated earth has to be
disposed properly without disturbing environment.
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 6.1 Site surveying and preparation
❖While setting temporary office, the engineer
should consider function ability within and
around the site office so that there occurs no delay
in any work being carried out.

❖Summary, thus every project needs site surveying

including technical survey that includes lay outs
of the structures on the ground as per design
and drawings and assess the possibility of
provisions for labor accommodation, site
offices, temporary access roads, indoor and
outdoor spaces for storage for materials and
equipment, temporary services like telephone,
electricity, water supply, sanitation etc.. 8
 Factors affecting Construction
Site Preparation
❖ Nature, scope and type of the work
❖ Site Condition / topography
❖ Methods of execution
❖ Labour intensive or
❖ Capital intensive.
❖ Access to the site.
❖ Easy and efficient entry and exit.
❖ Storage of materials
❖ Cement bags should be stack about 12 bags and 30 cm apart from wall.
❖ Bricks and tiles stack height should be 1-1.5m
❖ Materials such as lime, cements should be kept constantly moving so that the first
come shall be consumed earlier.
❖ Temporary buildings.
❖ Miscellaneous
❖ Temporary services includes offices, electricity, telecommunication, access road,
drinking water, sanitation facilities, information board, etc.
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6.2.ARRANGEMENT OF FACILITIES
AND JOB LAYOUT
❖It refers to the arrangement of machines,
departments, workstations, storage areas and
common areas within an existing facility.

❖Facility layout is simply the way a facility is

arranged in order to maximize process that are
not only efficient but effective towards the overall
organization goal.

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6.2.ARRANGEMENT OF FACILITIES
AND JOB LAYOUT
❖Objective of effective layout:
➢ Minimize the material handling cost
➢ utilize labor and space efficiently.
➢ Facilitate communication between workers,
supervisors.
➢ eliminate unnecessary movement
➢ incorporate safety and security measures
➢ promote product and security measures.
➢ encourage proper maintenance activities.
➢ provide flexibility to adapt to changing conditions.

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Fig: Typical Job-Layout of a multi-story building project 13
6.2.ARRANGEMENT OF FACILITIES
AND JOB LAYOUT
❖Factors affecting job layout plan:
Primary Factors:
➢ Nature and type of work:
➢ Access to site:
➢ Nature of Ground
➢ Temporary roads
➢ Construction methods
➢ Construction materials

Secondary factors:
➢Accommodation for administration
➢Medical facilities
➢Communication facilities
➢Availability of services
➢Opportunity of expansion
➢others: political/ cultural/ socioeconomic situations 14
6.2.ARRANGEMENT OF FACILITIES
AND JOB LAYOUT
The following are the advantages of a good job
layout:
❖Smooth and economical working of the project
❖Reduces the completion time of the project
❖Provides more safety in the working of the project
❖Material wastage and deterioration are reduced
❖Material transactions become easy, speedy and
economical
❖Increases the output from labor and machinery

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 6.3. Material handling system
❖ Material handling is the movement, protection, storage and
control of materials and products throughout manufacturing,
warehousing, distribution, consumption and disposal.
❖ It establishes a plan which includes basic requirements,
desirable alternates and planning for contingency.
❖ It integrates handling and storage activities, which is cost
effective into integrated system design.

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 6.3. Material handling system
❖ Moving the materials and products in the construction site,
distribution unit, and manufacturing and in office environment
includes material handling..

❖ Materials Handling Involves:

➢ Materials itself.
➢ People.
➢ Department or room or place in which handling takes place.

❖Cost of material handling increases as the

transportation distance increases.
❖Material handling does not add value to a product, it
usually adds a significant element of cost usually
varying 20-35% of cost of the product. 17
 Materials handling system
considers:
1. Obtaining the least cost of material handing.
2. Resolves the problem rather than creating.
3. Production effectiveness can be increased by
having the right quantity at the right place, at the
right time.
4. Reduces the damage due to materials handling.
5. Maximize the space utilization
6. Reduce the accident rate and severity of injury.

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 Material handling system
includes:
❖Store account
❖Protection during storage
❖Issue procedures
❖Physical inspection and verification
❖Watch guard
❖Fire protection
❖Insurance

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 Advantages of effective Material
handling
❖ Improve customer service
❖ Reduce inventory excesses
❖ Shorten delivery times
❖ Lower overall handling costs in manufacturing, distribution and
transportation
❖ Enhance handling through streamlining and better timing
❖ Facilitate product control through better monitoring and
management
❖ Improve inventory management and the accuracy of information
through real time monitoring
❖ Least handling is the best handling
❖ Research has shown that best handling of construction materials can
reduce cost by 4 to 5% of total cost

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 Cash flow and Financial
Management
❖Cash is the lifeblood of any business
operation.
❖Timing of the flow of cash is a most important
consideration.
❖Unpredicted or unpredictable changes to the
cash flow can lead a company to business
failure.
❖Flow of money in terms of time is cash flow

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 Project Cash Flow
Money
+ Appraisal
(valuation
Implementation

&
Time
Break even
evaluation) points
-
Investment

Return

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 Cost component for determining
cash flow
❖Time based cost
❖Purchase
Proportional to the quantity and
number of items
❖Overhead and tax
Related to time and volume of works

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 Contractor's Construction Budget Breakdown

Contractor's
Constuction
Budget Breakdown

Sales budget Production budget

Manpower Materials Equipment Overheads

budget budget budget budget

Inventory
budget

Purchase
budget

P and L Cash flow Blance sheet

forecast forecast forecast
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Example of Cash flow at different
situation

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Cash Flow for Contractors and
Employer

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 Financial management
❖ A construction financial manager’s background often indicates
the areas in which the manager will concentrate.
❖ For example: a construction financial manager whose
background is in construction operation initially will concentrate
on the proper recording of job cost.
❖ Up to submission of tender; contractors have to spend in buying
tender documents ( 1000 -10000) , field visit, preparing
bid/tender (1%) and bid security (2.5%)
❖ After selection, certain amount is required for signing contract
and performance.
❖ Contractor may get certain amount ( about 20% of contract
amount) as mobilization fund.
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 Financial management
Financial issues:
❖ Lack of financial facilities restrict growth of construction industry.
❖ Lengthy and cumbersome disbursement and payment procedures
lead to project delay
Management deficiencies
❖ Some contractors and consultants lack professional management
❖ Inadequate research and development
❖ Lack of capacity in project managers
❖ A cash flow forecast helps identify whether a firm needs to
borrow, how much, when and how it will repay the loan
❖ Building a cash flow forecast allows an evaluation of cash
resources that are required and when they are required.
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 Financial management
Project cash flow
❖ Is the net cash flow associated with the project for that year
❖ Source of cash – uses of cash
❖ Project financial planning provides a way to indicate the cash
flow incidence for the account or project.
❖ Project cash flow diagrams are used as a tool to visualize the
costs of an investment
❖ X axis time; y axis money; made or lost during a time period
❖ Typically money that is being invested or paid out are drawn
pointing down form the time axis and money that is being
returned is drawn pointing up.
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 Financial management
Tips form managing cash flow on construction projects
❖ Know your client
❖ Start with a realistic and profitable estimate
❖ Perform a cash flow forecast or projection
❖ Negotiate favorable contract terms
❖ Be aggressive in collecting payments
❖ Stay on top of charge orders
❖ Close out the project

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 Terminologies
❖Investment: Efficient allocation of collected fund
❖Liabilities
• Sources of fund of organization.
• Loan/Debt
• Obligation (an act or course of action to which a person is morally
or legally bound)
• They are of two types:
• Short term/current liabilities: Ps jif{ leq ltg{'kg]{ bfloTj
• Long term/non-current liabilities: Ps jif{ eGbf l9nf] ltg'{kg]{
• Equity(Equity is measured for accounting purposes by subtracting
liabilities from the value of an asset.)
• Ownership capital (shareholders' capital)

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 Terminologies
❖ Cost of capital: C0f lnbf ltg'{kg]{ Aofh (Interest), z]o/wgLx?nfO
afFl8g] nfef+z (Dividend), OTofbL
❖ Inventory: Stock of goods
❖ Assets
– Usage of funds
These are of two types
– Current assets: Cash, Accounts Receivable (A/R),
Inventory, Notes Receivable (N/R) (note receivable is a
written promise to receive money at a future date) etc.
-Ps jif{d} gubdf kl/0ft x'g ;Sg]_
➢ Non profitable funds
– Fixed assets: Land, building, plants, machinery,
furniture fixtures etc. -Ps jif{eGbf a9L ;dodf dfq gubdf kl/0ft
x'g ;Sg]_
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 Financial Statements
❖It contains basic financial information about
revenues, expenses, assets, liabilities and cash
flows during a specified period.
❖Basic financial statements of a firm are the income
statement, the balance sheet and the cash flow
statement
❖The income statement keeps the record of revenues
and expenditures of a firm during an accounting
year.
❖The balance sheet shows clear picture of a firm's
assets, liabilities and owners' claim at a specified
point in time.
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 Role of Financial Statements
❖For the rational and informed decision
making financial statement is required.

❖Assets, liabilities and funds are presented

in balance sheet; it shows the condition of
firm at particular time.

❖Income statement shows the profit and loss

of a firm during a period
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Balance sheet/statement of financial
position
❖ The balance sheet is a snapshot of the company's
financial position at an instant in time.
❖ It shows what the company owns (assets) and what it
owes (liabilities and net worth).
❖ The "bottom line" of a balance sheet must always
balance (assets = liabilities + equity).
❖ The individual elements of a balance sheet change
from day to day and reflect the activities of the
company.
❖ Analyzing how the balance sheet changes over time
will reveal important information about the company's
business trends.
❖ You can monitor your ability to collect revenues, how
well you manage your inventory, and even assess your
ability to satisfy creditors and stockholders. 35