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Construction Management

School of Construction
Management

Global Construction Industry
2nd largest industry after Agriculture

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Source: “World Construction Report 2012” by Davis Langdon, an AECOM company

Construction Output as % of
GDP

Source: US Census Bureau, www.census.gov, CSO India, http://mospi.nic.in, http://www.stats.gov.cn
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Construction Industry in India $110 Billion 35 Million people 8% of India’s 16% of working GDP population in India 75 large 40% of all companies development 28000 organized investments of last companies 50 years >5000 years of construction history 5 .

986 41.713 8.14 860. % 4.94 873.949 60.080 86.5 34.7 7.355 53.76 818.0 7.2 34.1 33.6 34.80 886.9 7.85 847. Overview of Indian Construction Industry Table: India Construction and Infrastructure Industry.830 10.1 6.951 68.5 49.8 50.2 49.682 7.4 33.0 8.0 8. INRbn Construction Industry Real Growth.272 12.3 7.0 7.5 31.7 6.194 Investment.6 Investment.4 34.22 898.3 of Total Construction Residential and Non Residential Building 52.8 51.5 5.27 832. ‘000 9 3 1 1 8 3 9 9 2 6 Infrastructure Industry Value As % 47. % of GDP 803.8 % of GDP Total Capital 26.376 47.1 51.8 49.111 15.2 8.6 6.493 Value.0 8.9 51 50.2 48.4 48. INRbn Total Capital 31. 2011 .2020 2011/1 2012/ 2013/1 2014/ 2015/1 2016/ 2017/1 2018/1 2019/ 2020/2 2 13 4 15 6 17 8 9 20 1 Constuction Industry 6.7 34.9 7.9 8.7 50.763 17.002 11.639 14.55 922.607 77.9 7.0 8.2 50.9 48.5 50.7 32.84 Total Workforce.7 Industry Value As % of Total Construction 6 .3 49.784 30.1 49 49.6 51.572 19.9 Change y-o-y Construction Industry 7.2 8.864 35.38 910.

Overview of Indian Construction Industry Share of construction spending by sector 2012 (%) Market size and growth prospects by major construction sector 12 .

Y (Rank as International contractor. 28 ENR – X. Top Indian Contractors Larsen&Toubro ENR – 47. Rank as Global Contractor) 13 .

SWOT Analysis On Indian Construction Industry STRENGTH WEAKNESS Cheap labor Small companies High cost of finance Large number of engineers Complicated tax str Low efficiency PPP enabling environment Low ratio 14 .

real LOW INVESTMENT estate investment Little regard for construction systems trusts. SWOT Analysis On Indian Construction Industry OPPORTUNITIES THREATS Massive scope of Sustainability Land acquisition construction Foreign direct Large number of investments. infrastructure companies investment trusts 15 .

Performance of Construction Projects in India 16 .

Performance of Construction Projects in India Around 56% projects have cost overrun (totaling 20% cost) 49% have time overrun 17 .

Performance of Construction Projects in India Major reasons of the Project Failure are  Delays in preconstruction activities. Regularity hurdles & land acquisition  Inadequate project formulation & poor planning  Improper contract administration and poor performance of contractors  Lack of project management during execution 18 .

Communication & Documentation 19 . Objectives & Functions of Construction Project • Management • Contract Management & Maintaining profitability • In time project delivery Compliances • Customer Satisfaction • Human Resource Management • Accident Prevention • Project Planning. • Sustainable Construction Monitoring and Control • Financial Management • Resource Management & Site Execution • Equipment Management • Material Management • Labor productivity • Coordination.

Monitoring. Allocation statutory and tort and Management of liabilities Resources 20 . Financial & Administrative) • Delivery of contractual liabilities • Co-ordination and liaison with agencies • Compliance of • Mobilization. quality. build and retain management for team. and Control cost. safety. • Decision-making sustainability) (Technical. parameters (time. Project Manager – Responsibilities & Functions • Responsible to upper • Select. Lead team to profitability achieve goal • Achieve project • Planning.

Project Contracting • All major construction projects are one off jobs done through work contracts • The contractor goes to another person’s land and does something which becomes permanently attached to the other person’s land & hence becomes the other person’s property • The contractor becomes unsecured creditor (nothing is hypothecated/mortgaged) • Hence the contract becomes a critical instrument for project implementation 21 .

Project Contracting • Agreement between competent parties enforceable at law • Formation of Contract: – Object – Proposal / Offer – Acceptance – Consideration – Reciprocal promise 22 .

Typical Parties for Works Contract • Owners – Public Owner (Government bodies) – Private Owner (also include quasi-public bodies) • Architect/Engineers (A/E) • Prime/General Contractor • Project Management Consultants / Construction Managers • Sub-contractors • Suppliers • Banks & Financial Institutions • Specialized Service Agencies • Labor • Regulatory agencies • General Public 23 .

Project Delivery Models • Design Bid Build (Traditional) • Design Build (EPC / Turnkey) • Design Build Operate (Concession) • Construction Management (Design- Manage / CM @ risk) 24 .

.. BOOT. BOLT. Types of Contract • Measurement Contract – Item Rate – Percentage Rate • Fixed Price – Lump Sum – Guaranteed Maximum Price • Cost Reimbursable – CPPF – CPFF – CPIF • Concession – BOT. 25 ......

Typical Documents Comprising the Contract • Bidding documents consisting of the Invitation to Bid. the Instruction to Bidders. and the Bid Form • General Conditions of Contract • Special Conditions of Contract • Specifications • Drawings • Reports of investigations of physical conditions 26 .

Critical Areas of Contract Administration & Management • Scope of Work • Measurement & Payment Terms • Quality Control & Handing Over • Guarantees and Warranties • Time Provisions • Delays & Extension of Time • Incentives & Liquidated Damages • Change Orders • Differing Site Conditions • Escalation Payments • Suspensions & Termination • Dispute Resolution 27 .

AAI etc. Project Organization •  Major Clients – Residential Sector : Real Estate Developers (Ranging from Godrej to neighborhood promoter) – Infrastructure Sector : Government Agencies like CPWD. etc.000 Class ‘A’ registered contractors – Numerous small contractors 28 . &Major Industrial Houses like Tata • Construction Contractors – 200 corporations – 120. IOCL. NHAI. PWD. Rail. – Non Residential Sector : PSU’s like ONGC.

Construction Business Organization • Firms – Sole Proprietorship – Partnership • Limited Liability Company (LLC) – Private Limited Company – Public Limited Company • Government Enterprises • Joint Ventures 29 .

Planning and Control Purchasing/procurement Accounting & Finance Managing Field Construction maintaining project parameters 30 . Functions of Construction Organization General administration Estimating Managing contracts and personnel Design Engineering.

Structure of Construction Organization • Basic Structure – Line & Staff • Frequently used forms – Functional – Feudal – Matrix 31 .

features and requirements – Organizational Experience – Resource Availability – Technological and Financial Complexities – Risk. etc. Factors For Organizational Forms • Structure keeps on evolving. 32 . depending on – Project / Contract size. Competition.

Owner’s Project Organization (Sample) 33 .

Architect’s Project Organization (Sample) 34 .

Contractor’s Project Organization (Sample) 35 .

Contractor’s Project Organization (Sample) 36 .