UNIT – 1

CONSTRUCTION SECTOR-
OVERVIW
INTRODUCTION:

Today, India is the second fastest growing

economy in the world. Construction has become
the second largest economic activity after
agriculture.
Construction accounts for nearly 65% of the total
investment in the infrastructure & is expected to
be the biggest beneficiary of the surge in
infrastructure investment over next 5 yrs.
Sector of Infrastructural Development

1. Power

2. Roads

3. Railways

4. Ports

5. Airports
1.Power:
Power generation capacity of 122 GW; 590 bn
units produced- India is the 5th largest electricity
generation capacity in the world

2. Roads:
An extensive road network of 3.3 m km-
the second largest in the world.

3. Railways:
7566 locomotives, 37,840 coaching vehicles,
222,147 freight wagons,
 6853 stations, 300 yards ,2300 Goodsheds, 700 Repair
shops make the rail network largest in Asia and second
largest in world.

4.Ports:
12 major ports and 185 minor ports along 7517km long
Indian coastline.
100% FDI under the automatic route is permitted for port
development projects.

5. Airports:
India has 125 airport out of which 11 are designated
international airports. New international airports are
being built at Bengaluru and Hyderabad by private
consortia.
Role of Construction Industry
Construction is an important part of the industrial
sector and one of the core sectors of India’s
economy. It also acts as the second largest
employer in the country after agriculture,
employing 18 million people directly and 14
million indirectly.
Construction creates large scale employment,
which itself is a significant contribution to Indian
economy.
Employment generated in construction also
significantly helps the rural population. According
to 1971 census, about 51% of the construction
workforce comes from rural area and 49% from
urban and semi urban areas.

The construction sector has increased its share of

India’s total employment from 2.8% in 1983 to
5.4% in 2003-04. The sector accounts for about
38% of gross investment and about 45% of
India’s total infrastructure costs.
Features of Construction Economy
Construction industry is generally much
fragmented. A number of features of the
industry generally create favourable
conditions for the establishment of new
firms. The features are presented here:-

1.Construction firms have relatively low

levels of fixed costs. As the products are
assembled at the site, no large premises are
required.
2. Construction firms have relative low
requirement of working capital. The construction
is started only after specific order and
traditionally monthly payments are made.
3. Construction trade normally uses labour
contractors. Permanent workforce is not
maintained and fixed cost is lowered.
4. In the Indian context, very few machines are
essential and therefore, requirement of initial
investment are low. Even in developed countries,
smaller firms have easy access to leasing
companies to obtain machinery and plants as
required.
Nature of Construction Industry
The construction industry is divided into
three major segments
1.Building contractors, or general
contractors, build residential, industrial,
commercial and other buildings.
2. Heavy and civil engineering construction
build sewers, road, highways etc.
3. Speciality trade contractors are engaged
in specialized activities such as carpentry,
painting ,plumbing and electrical work.
Classification
and Types of Civil
Engineering Works:-

1.Minor works,

Major works

and
Project
2. a) Permanent works
b) Semi permanent works
c) Temporary works
d) Original works
e) Repair works

3. a) Light construction
b) Heavy construction
Role of Construction Management
In the construction industry there was a time
when all the projects were labour intensive and
management in those days meant proper
utilization of labour to make optimum progress in
construction in most economical manner.
Nowadays technological advancement and new
scientific inventions have added new dimensions
to the construction industry. A project is now
considered as a group of activities having
interrelations, which may include the role of
specialist and specialized work using the latest
knowledge and skill available.
 CPM & PERT are some of the modern systematic
techniques used to control the activities within
the period at a certain cost.
New techniques and methods are now adopted in
construction with the aid of these plants and
machinery to make construction easier, well
within time schedule of high quality.
The application of these construction management
techniques which are used in plants and
machinery for finding alternative solutions and
selecting the best possible solutions.
Importance of Management
1.Management guides and controls the activities of
manpower for the optimum utilization of
company resource such as 5 Ms
2. It creates a vital, dynamic and life giving force
to the enterprise
3. It also provides new ideas and vision to the
organization to do better.
4. Management only can meet the challenge of the
change.
5. Management co- ordinates activities of the
different departments in a enterprise and
establish team spirit among the persons.
Characteristics of management
1.Management is goal oriented. It achieves the
organizational goal through co-ordination of the
effort of the personnel.
2. Management works as catalyst to produce goods
using labour , material and capital.
3. Management is a distinct process comprising of
functions such as planning, organizing, staffing,
directing and controlling.
4. It is a multi disciplinary subject
5. Management is a unifying force. It integrates
human and other resources to achieve the
desired objective.
Functions of Management
1. Forecasting
2. Planning
3. Staffing
4. Organizing
5. Directing
6. Co- ordinating
7. Controlling
8. Decision making
Managerial Objective

It is ” intended goals , which prescribe scope and

suggest direction to the efforts of a manager.”

Management objectives are as follows:

a) Clearly defined & communicated,

b) Reasonably attainable,
c) Based upon the overall organizational goals,
d) Containment of expenditure within budget & time.

Managerial objective may be classified as :

A. General objectives
B. Specific objectives
Both Objectives containing some terms which are as
follows:

General objective :
Nature of project
Continuous supply of capital
Growth of company
Increase in work
Environmental objective
Social objective
Human objective
Time scale.

Specific objective :
 Nature of work to be done
 Type of project to be selected
 Market standing (local , national , international)
 Product & service diversification if any
What Dose Construction Project
Management Imply ?
It implies the application of knowledge , skills , tools &
techniques to project activities in order to meet or exceed
stakeholder needs & expectations from a project with given
scope , time , cost & quality contains. It aims achieving the
specified objectives efficiently & effectively by managing
human energies & optimizing the non human resources .
The project manager aims to achieve his mission , efficiently &
effectively, to the client satisfaction by :
a. Managing time and progress , cost and cash flow , quality
and performance & organization behavior.
b. With : assigned organization resources.
c. By: planning, scheduling ,directing , monitoring
&controlling resources.
d. Within: quality, time cost , & environmental constraints.
Why do construction projects usually fail
to achieve their mission?
causes of project failure due to improper management:
a) Planning failure
b) Organizational failure
c) Resource failure
d) Directional failure
e) Controlling failure
f) Co-ordination failure
g) Other failures( bad workmanship , poor performance of
sub-contractors , accidents, etc.)
Construction manager:
a) Role of construction manager: The project manager is kingpin around whom
the whole organization revolves.
10 behavior related roles of the project manager are outlined below:
1) Accountability role.
2) Leadership role.
3) Liaison role.
4) Monitor’s role.
5) Disseminator’s role.
6) Spokesperson’s role.
7) Entrepreneur’s role.
8) Disturbance handling role.
9) Resource allocation role.
10) Negotiator’s role.

b)Responsibilities of construction manager:

project manager‘s responsibilities include:
 Team building.
 Planning management.
 Financial and cost control.
 Technical management.
 Resource management
 Contract management
 Quality management
 Information management.
c)Qualities of successful construction manager:
a) Successful mangers are one who possesses technical
competence not only in his specialized field , but to certain
extent competence in other related fields.
b) A manager should be able to think rationally &reasonably.
c) He should have good leadership qualities.
d) He must try to keep his organization ahead of others .
e) He must be able to influence of his employees.
f) A manager must be emotionally stable.
g) He must be able to express his thoughts &feeling very clearly.

d)Construction project management professional

skills:
A. Managerial skills
B. Leadership skills
C. Technical skills
D. Conceptual skills
e)Personal attributes:
 Attitude
 Common sense
 Open mindedness
 Adaptability
 Inventiveness- an ability to discover innovative strategies &
solutions.
 Prudent risk taker: a willingness &ability to identify &
understand risks but to take a risk approach in an unwise or
reckless fashion.
 Fairness
 commitment
f)Duties & responsibilities of construction manager:
g)Ethics :It represents the external & prevalent moral standards,
personal values, corporate code of conduct & are generally a part
of the cultural tradition of country.
Importance of ethics:
 Ethics corresponds to basic human needs.
 Ethics creates credibility with the public
 Ethics gives management credibility with employees
 Ethics helps better decision making
 Ethics &profit
 Ethics can protect society
Introduction to project management
consultancy
 Scope
 Need for consultancy in projects:
a)client driven- 1)to solve technical problems.
2)to induct expertise &fill gaps.
b)funding agency driven.- various studies of projects to
enable investment.

 Consultancy in projects:
-Project formulation , appraisal & investment decision.
-Implementation of planning.
-Implementation
 Role
of consultancy in project formulation and
appraisal:
- Survey &field investigation.
- Technology selection.
- Environment impact assessment studies & report.
- Techno-economic analysis.
- Preparation of feasibility reports.
- Linkage with other projects.

 Roleof consultancy in implementation of

planning:
-Work-Activity -Time plan.
-I/P resources plan (manpower , materials , equipments).
-utilities plan.
-generation & transportation of project o/p.
 Role of consultancy in project implementation:

-Design and engineering.

-Procurement.
-Supervision of construction.
-Monitoring and control works.
-Turnkey consultancy contracts.
Conventional approach
 Role of consultant to client:

1) Market survey.
2) Technology evaluation.
3) Preparation of feasibility report/project report.
4) Basic and detailed engineering.
5) Formulation of specifications & vender bid evolution.
6) Inspection of plants and machinery.
7) Supervision of construction , erection , testing
&commissioning.
8) Project management.
Role of management consultants in
infrastructure sector

The specific services that management consultants can offer

infra structure sectors can be broadly categorized as follows:

-Policy & institutional framework , including

 Thrust area for investment,
 Norms for setting up of projects and financing them ,
 Organizations involved &
 The regulatory framework , including centre state matters.

-Advisory services, such as

 Project formulation ,covering scouting, feasibility and modalities
 Liaison & documentation ,
 Environmental and sociological issues ,&
 Sectoral expertise.
.
-Financing mechanisms , for
 Stake holders , including government ,
 Debt & or equity participation , &
 Alliances' , both domestic and foreign.

-Techno-sociological-management synergy , to
bring about collaborative effort of specialists,
community , government & other stakeholder
Introduction to Real Estate
 The term ‘real estate’ is defined as land , including
the air above it & the ground below it & any buildings or
structure on it . It is also referred to as realty.
 it covers residential housing , commercial offices , trading
spaces such as theatres , hotels & restaurants , retail
outlets , industrial buildings such as factories & govt.
buildings .
 Real estates involves the purchaes , sales & development of
lands , residential and non residential buildings .
 The main players in the real estate market are the
landlords, developers , builders , real estate agents ,
tenants, buyers etc.
 The real estate can be divided in to three categories:
 Commercial
 Residential
 Agriculture
 The following factors influence the price & cost of the real
estates :
a. The physical characteristics of the property.
b. The property rights.
c. The time horizon of the holding the property.
d. Geographical area.
e. The development rate.

Features of real estate markets:

 Durability
 Heterogeneous
 High transaction costs
 Long time delays
 Both an investments good & consumption good
 Immobility
 Fundamental factors determining the value of
real estate:
 Demand
 Supply analysis
 The property
Need of project management consultancy
in Real Estate
project management in real estate will include :

 Analysis & design of project & events

 Planning the work according to objectives.
 Assessing and controlling the risk.
 Estimating resources.
 Allocation of resources.
 Organizing the work.
 Assigning task.
 Directing activities.
 Safety management
 Defect prevention
 Issue management
 Quality management
 Project closure
The listed project management activities are handled
effectively and efficiently by the project management
consultancy by:
 Undertaking project briefing.
 Design and specification studies.
 Site investigation & feasibility studies.
 Project strategy preparation.
 Phasing strategy preparation.
 Vendor management
 Client reporting
 Finance management
 Staff mobilization
 Drawing and data finalization.
 Warranty compliance of services.
 Commissioning , testing & handling over formalities.
 document cotrolling system
Execution of projects through PMC’s
- At the first stage of executing the project, looking from the PMC’s
view it review & define the type and form of all construction
documents to the agencies responsible for preparing these
documents . It offers comprehensive documents &guidelines for
drawing up construction documents to these agencies. It then
shortlist quality-conscious construction agencies and finalise a
procedure for choosing the appropriate construction agencies &
implement the selection procedure .
- Next , it finalise construction contracts between selected
construction agencies &client. Additionally , it recommends
sources & suppliers to met the require quality specifications of
material . Believing in delivering top notch quality to clients , the
team inolves itself selecting and inspecting materials to be
purchased from the chose contractor/vendor . Moreover , where
required , it also researches the market to source &/or selec
alternative materials & organize materials testing.