CIVE 312 - Construction Management Fundamentals - 11th Ed - 2019-20 PDF

UNIVERSITY OF BALAMAND
Faculty of Engineering
Civil Engineering Department
CONSTRUCTION
MANAGEMENT
FUNDAMENTALS
CIVE 312 (2cr.) Course Handout
Dr. Nabil Semaan
11th Edition 2020
Dr. Nabil Semaan, PhD

CONSTRUCTION MANAGEMENT FUNDAMENTALS
TABLE OF CONTENT
Chapter 1. Introduction to Construction Management

1. Construction Engineering Discipline
2. What is a Construction Project?
3. Construction Management
4. Construction Project Life Cycle
Chapter 2. Scope Management
1. The Scope of Work
2. Work Breakdown Structure (WBS)
3. The Planning Process
4. Planning Techniques
 Bar (Gantt) Chart
 Activity On Node (AON)
 Activity On Arrow (AOW)
 AON to AOA
 Linear Scheduling Method (LSM)
Chapter 3. Time Management
1. Activities Duration
2. Productivity Concept
3. The Linear Scheduling Method (LSM)
4. The Critical Path Method (CPM)
Chapter 4. Risk Management
1. PERT
Chapter 5. Cost Management
1. Cost Estimation
2. The Detailed Estimate
3. Quantity Take Off (QTO)
4. Cost Control
Chapter 6. Contract Management
1. Procurement/Contract Definition
2. Project Delivery Systems (PDS)
3. Contract Content
Dr. Nabil Semaan, PhD Page 1

CHAPTER 1 – INTRODUCTION TO CONSTRUCTION

MANAGEMENT
1. CONSTRUCTION ENGINEERING DISCIPLINE
Construction
Engineering
I - Construction II -Construction
Technology Management
I - Construction Technology:
It relates to methods or techniques used to perform the construction elements using

physical construction materials.
Examples: Highways, Tunnels, High-rise Buildings, Piles, Residential Buildings, etc.
II - Construction Management:
It addresses how the available Resources can be best allocated/managed
(= management).
What are RESOURCES = 4 M’s:
Manpower (Labor)
Machines (Equipment)
Materials (concrete, steel, tiles, paint, soil, etc…)
Money ($, L.L.)

2. WHAT IS A CONSTRUCTION PROJECT?
Definition: A project is "a temporary endeavor undertaken to accomplish a unique

product or service" [PMBOK® Guide 2000, p. 4]
Characteristics/Attributes of projects:
- Unique purpose.
- Temporary.
- Require resources.
- Owner, sponsor, customer, stakeholders.
- Involve uncertainty.
Project Stakeholders:
Stakeholders are the people involved in or affected by project activities. Construction

stakeholders include:
- The project sponsor and project team

- Support staff
- Customers
- Users
- Suppliers
- Opponents to the project
Project Objectives:
Main Objectives: Time + Cost + Quality (+ Safety + Environment).

Fourth Axis
Safety & Environmental
3. CONSTRUCTION MANAGEMENT:
Construction Management is "the application of knowledge, skills, tools, and

techniques to project activities in order to meet the construction project
requirements" [PMI*, Project Management Body of Knowledge (PMBOK® Guide
2000, p. 6].
Construction Management Advantages:
+ Better control of financial, physical, and human resources.

+ Improved customer relations.
+ Shorter development times.
+ Lower costs.
+ Higher quality and increased reliability.
+ Higher profit margins.
+ Improved productivity.
+ Better internal coordination.
+ Higher worker morale.
Construction Manager Role:
+ Allocate efficiently the 4 Ms.

+ Accomplish project within the assigned time, budget, and quality.
+ How? By:

- Planning: pre-determining a course of action for accomplishing

organizational objectives.
- Organizing: Arranging the relationships among work units and
granting responsibility and authority
- Staffing: Selecting and training people for positions in the
organization.
- Directing: Creating an atmosphere that will assist and motivate
people to achieve desired end results.
- Controlling: Establishing, measuring, and evaluating performance
of activities toward planned objectives.
+ Using his skills in the different construction management functions.
Construction Management Functions (according to PMBOK):
1. Scope Management:
a. Define Scope Of Work (SOW),
b. Develop Work Breakdown Structure (WBS)
c. Develop the Project Plan
2. Time Management:
a. Evaluate Tasks durations
b. Develop Project Schedule
3. Cost Management:
a. Cost Estimation, and develop the Cost Breakdown Structure (CBS)
b. Cost Control
c. Claim Analysis
4. Risk Management:
a. Qualitative and Quantitative Stochastic Schedule and Cost evaluation
5. Procurement Management:
a. Write, monitor and control contracts
6. Quality Management:
a. Set a quality management plan
7. Human Resources Management:
a. Form teams, and organize them
b. Develop the Organization Breakdown Structure (OBS)
8. Communications Management:

a. Set the communication management plan

9. Integration Management:
a. Integrate all of the above in a software tool
b. Develop a Building Information Management (BIM) tool
10. Safety Management (added by Dr. Nabil Semaan)
4. CONSTRUCTION PROJECT LIFE-CYCLE:

CHAPTER 2 – SCOPE MANAGEMENT
1. THE SCOPE OF WORK
Project Charter: The project charter is the written acknowledgment that the project
exists. The project charter names the project manager and gives that person the
authority to assign organizational resources to the project.
Project Statement Of Work (SOW): describes the product, service, or result the
project was undertaken to complete.
According to the PMBOK Guide, the Project Scope Statement is a document that
should include all of the following:
 Project objectives
 Product scope description
 Project deliverables
 Project requirements
 Project boundaries
 Product acceptance criteria
 Project constraints
 Project assumptions
 Initial project organization
 Initial defined risks
 Schedule milestones
 Fund limitations
 Cost estimates
 Project configuration management requirements
 Project specifications
 Approval requirements
Project Deliverables
Deliverables are measurable outcomes, measurable results, or specific items that must
be produced to consider the project or project phase completed. Deliverables, like
objectives, must be specific and verifiable.

Output of Deliverables: Work Breakdown Structure (WBS) + WBS dictionary
2. WORK BREAKDOWN STRUCTURE (WBS):
WBS = Hierarchical list of project's work activities.
A project Work Breakdown Structure (WBS) is:
+ A deliverable-oriented grouping of project elements that organizes and defines

the total scope of the project.
+ Describes the work elements of a project in a logical hierarchy which can be used
for a number of related management control activities.
+ A convenient way to group activities in a rational manner into work packages.
These work packages are then coded so that both costs and the schedule can be
controlled.
+ The work breakdown structure should be organized by work packages. Work
packages might include all of the work performed to complete a particular facility
component.
+ There are many levels of the WBS, for example in an office park:
 The top level of detail would be the entire project.
 The next level of detail might focus on one of the buildings in the project.
 The last level might focus on one of the buildings (e.g. the excavation work;
the foundation work; the columns; the floors; the masonry work, or the
roofing).
+ The work breakdown structure divides and subdivides a project into different
components, whether by area, phase, function, or other descriptive means.
 The highest level in the WBS may consist of a single element, the project.
 At the next level, there may be only five or ten elements or items.
+ Naturally, the further one goes down the WBS, the greater the amount of detail.
+ Regardless of the means used to define the elements, the cost elements are to be
defined for the lowest level in the hierarchy or at the greatest level of detail that is
required to adequately estimate the construction costs.
+ The level of detail will be dictated by the project complexity and the estimating
needs. The level of detail may change with the recipient of the information.

Example: The owner of a house being constructed will be most interested in the
anticipated completion date and total construction costs of the project. However,
a drywall contractor will be primarily interested in information related
specifically to the drywall in the project. Therefore, the needs will vary for
different parties involved in the construction process.
+ The project director is to structure the project work into WBS elements (work
packages) that are:
 Definable: can be described and easily understood by project participants.
 Manageable: can be used to measure progress; has start and completion
dates and measureable interim milestones.
 Adaptable: sufficiently flexible so the addition/ elimination of work scope
can be readily accommodated in the WBS framework.
Example 1:

Example 2: CBS = Cost Breakdown Structure = WBS + Cost
Example 3:

MASTERFORMAT WBS:
Master-format is a master list of Numbers and Subject Titles Classified by work

results or construction practices for organizing information about their: i)
requirements, ii) products, and iii) activities, into a standard sequence.
+ Master list of titles and numbers used to organize information by "work results".
+ Primary Uses:
 Organize bidding and contract requirements.
 Specifications.
 Drawing notes.
 Product info, and
 Cost Data.
Without Master-Format, construction would collapse under information overload.
Master Format Divisions:

3. THE PLANNING PROCESS

What is Planning?
It is the process of breaking down the project into small components (segments)
"ACTIVITIES" and establishing their mutual interdependencies "LOGIC".
Basic Equation: PLAN = WBS + LOGIC
Example:
HOW is the project planning done?
Breackdown the
Determine Project into Build Logic Graphical
Project's Activities: Work between Representation
Approach Breakdown Activities of the PLAN
Structure (WBS)
Job Activities:
+ It is the single work segment that has a recognizable beginning and end and
requires time for its accomplishment.
+ Suggested guidelines for activities selection:

 Area of responsibility: executor or sub

 Category of work: crew, equipment, and materials.
 Structural Elements: footing, walls, etc.
 Location: miles, floors, etc.
Job Logic:
+ It refers to the sequence (order) in which the activities are to be

accomplished in the field.
4. PLANNING TECHNIQUES
BAR CHARTS (GANTT CHARTS)
+ It is the planning technique that represents each activity as a horizontal bar.

+ The bar starts at the beginning of the activity and ends at its finish.
+ The physical length of each bar represents the activity duration.

Advantages Disadvantages
- Easy and simple to draw. - It is very complex for large projects.
- Easy to understand, especially by site - The relations among activities
engineers and foremen. (dependencies) are not clear, therefore
- It is convenient for small projects. control is hard.
- It is an easy way to monitor job - Hard to draw other relations (SS, FF,
progress. SF) and lag constraints.
- It is good to schedule equipment and
crews.

Draw the Bar Chart of the following schedule:
Activity Duration
A 1
B 1
C 2
D 4
E 5
F 5
G 2
H 7
I 6
J 2
K 3
L 7
M 2
N 2

ACTIVITY
A
1
B
1
C
2
D
4
F
5
E
5
G
2
H
7
I
6
J
2
K
3
L
7
M
2
N
2
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
DAYS
NETWORK TECHNIQUES:
There are two main network techniques that are used in planning construction
projects:
1. Activity On Node [AON] (Precedence) Diagrams.

2. Activity On Arrow [AOA] (Arrow) Diagrams.
Activity On Node [AON] Diagrams:
+ Each activity is represented by a node and the relation between activities is

represented by an arrow.
+ Each node can be represented by a block, ride, or square.

- It is convenient for all types of - It is hard to understand from people
projects including large scale ones. who do not know it, such as foremen.
- It is flexible in logic relations - Activity is represented by a block or
representation, Such as FS, SS, FF, circle which is not related to time
SF. moving.
- It can be used as a control tool for - IT is difficult to plan repetitive
construction projects. projects using this technique.
- It can be used as updating tool too.
Activity On Arrow [AOA] Diagrams:
+ Each activity is represented by an arrow and the relation between activities is

represented by a node.
+ Each node can be represented by a circle.

- It is convenient for all types of - It is hard to draw especially for large
projects including scale ones. projects due to the large number of
- It is flexible in logic relations dummies.
representations, such as FS, SS, FF, - It is difficult to plan repetitive projects
SF. using this technique.
- It can be used as a control tool for Complex and large networks for large
construction projects. projects.
- It can be used as updating tool too.
It is easy for computer usage.

AON  AOA:


Example #1
Arrow AON
AOA

Example #2: AOA
Draw the AOA (1 dummy) of the following schedule:
Activity Precedence Duration

A - 1
B A 1
C A 2
D C 4
E B, D, F 5
F C 5
G F 2
H F 7
I F 6
J G 2
K E, J 3
L H 7
M K, L 2
N I, M 2

Exercises on AON and AOA

Exercise 1: Construct a AOA and AON network for the following activities:
Activities Precedence
A -
B -
C -
D A
E A, B
F C, D, E
G F
Exercise 2: Construct a AOA and AON network for the following activities:
Activities Precedence
A -
B A
C A
D A
E A
F A
G C, D, E, F
H B, G
I H
J I
Exercise 3: Draw the AON and the AOA network plans. Hint: for the AOA start and
finish with ONE node [THERE ARE 3 DUMMIES IN THIS PROBLEM].
Activity Precedence
A -
B A
C A
D A
E B
F B, G
G C
H C
I D
J I
K F
L H, I
M H, I
N E, F
O J, M
P K, L, N, O

THE LINEAR SCHEDULING MODELING

LSM is used to plan or record progress on multiple activities that are moving
continuously in sequence along the length of a single project.
The LSM is a graphical technique in which the locations or the length of the linear
project is indicated on the horizontal axis and durations of activities of the project is
represented on the vertical axis. This method of representing linear schedule is also
termed as distance – time scheduling. Each activity is plotted one after the other
based on the order of activities in the section of the project sequentially on this graph.
The starting time and location of the activity is shown as the start point of the activity
on the graph and the ending time and location of the activity is shown as the end point
in The linear schedule graph. In short activities are represented as sloping lines based
on the start coordinate and the end coordinate.
Characteristics of LSM:
 Shows repetitive nature of the construction.
 Progression of work can be seen easily.
 Sequence of different work activities can be easily understood .
 Have fairly high level of detail.
 Can be developed and prepared in a shorter time period than other formats.
Advantages of LSM:
 In certain types of projects: Provides more information than a bar
chart.

 Offers advantages over network diagram.

Implementation of LSM
 Can be applied to continuous activities rather than discrete activities.
 Linear: Transportation projects; highway const., highway resurfacing and
maintenance, airport runway const. and resurfacing, tunnels, mass transit
systems, pipelines, railroads.
 High-rise building construction
 Repetitive building units

CHAPTER 3 – TIME MANAGEMENT
1. ACTIVITIES' DURATION
+ The estimate of any activity duration depends upon:

1. Crew size, or
2. Equipment capacity, and
3. Quantity of work performed.
+ Example
Driving piles activity has productivity of 70 ft/hr. The quantity required to
be driven is 1120 ft. Then, activity duration = 1120(ft)/70(ft/hr) = 16 hrs =
2 working days.
2. PRODUCTIVITY CONCEPT
Productivity Definition:
The Productivity is the rate of work done per a unit of time, e.g. m3 of excavation per
hour or per day, m2 of paint per hour or per day, m2 of tiling per day, lm of trench
excavation per day, etc…

SCHEDULE:
Task
Duration
Equipment COST:
Distribution Unit Cost
Productivity
Rate
Equipment Manpower
Quantity Quantity
Manpower
Distribution
Productivity Main Equation is defined in Equation 1:
𝑸
(1) 𝑷=
𝑻
Where: P = Productivity Rate

Q = Quantity (Volume or area, or linear)
T = time (day, hour, min., sec.)
Since construction perations is CYCLIC in nature, the Productivity can be redefined
in Equation 2:
𝑸
(2) 𝑷=
𝑪𝑻
Where: CT = Cycle Time of an Labor/Equipment

CT = Time required to perform ONE Cycle of Process
Q = Quantity performed in ONE cycle, or Equipment Capacity, (Load per
cycle).

And, the number of cycles is defined in Equation 3:
(3) 1 / CT = No. of Cycles per Time
For Example, if CT is in minutes, thus 60/CT = No. of cycles per hour
If CT is in seconds, thus 3600/CT = No. of cycles per hour
Thus, Productivity is redefined in Equation 4:
(4) P = Volume per cycle * No. of Cycles per time
Or, P = Equipment Capacity * No. of cycles per time
Using the productivity rate (P), the Task Duration (TD) is defined in Equation 5:
(5) TD = Volume / P
And the Unit Cost of Production (UCP) of Equipment is defined in Equation 6:
(6) UCP = Labor or Equipment Unit Cost (per Hour) / P
General Productivity Model (GPM)
Hence, the Ideal General Productivity Model (GPM) for construction processes is
defined in Equations 7 and 8:
𝟔𝟎×𝑸
(7) 𝑷𝒊 =
𝑪𝑻
Where: Pi = Ideal Productivity Rate [m3/hr; m2/hr; m/hr]

Q = Quantity [m3; m2; m]
CT = Cycle Time [min]
𝟑𝟔𝟎𝟎×𝑸
(8) 𝑷𝒊 =
𝑪𝑻
Where: Pi = Ideal Productivity Rate [m3/hr; m2/hr; m/hr]

Q = Quantity [m3; m2; m]
CT = Cycle Time [sec]

However, the ideal productivity rate is affected by many factors:
 Type of material/soil,
 Equipment condition,
 Equipment operation,
 Types of roads, and condition of roads for traveling,
 Operator skills,
 Job conditions,
 Management conditions,
 Space congestion,
 Construction technology,
 Project location,
 Labor unrest,
 Learning curve,
 Weather and external conditions,
 Others…
These factors cause the productivity rates to decrease by delaying the cycle time.
Hence, the Actual Productivity General Model is defined in Equation (9):
(9) 𝑷𝒂 = 𝑷𝒊 × ∏ 𝒇𝒋
Where: Pa = Actual Productivity Rate

Pi = Ideal Productivity Rate
fj = Reduction Factors

Illustrative Example 1: Typical Earth Moving Operation
The process in a chart:
Loader Cycle Time =CTL=0.25+0.25+0.5=1.0min/bucket load
Truck Cycle Time=CTL=4+15+2+12=33 min
For Truck: No. of cycles per hour = 60/CTT
No. of cycles =1.82 cycles per hour
Truck Productivity = No. of cycles x Truck Capacity =

PTRUCK = 1.82 (cycles/hour) x 10 (cy/cycle) = 18.2 cy/hr.
For Loader: No. of bucket loads per hour = 60/CTL
No. of bucket loads = 60 bucket loads/hr.
Loader Productivity = No. of bucket loads x Load Capacity =
PLOADER = 60 (loads /hr) x 2.5 (cy/load) = 150 cy/hr
Thus: Required No. of Trucks = 150 / 18.2 = 8.241 ~ 9 Trucks
Example 2:
Given the following information on the correction factors for a dozer operation:
Operator:
Excellent 1.0
Average 0.75
Poor 0.6
Material:
Loose stockpile 1.2
Hard to cut 0.7
Hard to drift (push) 0.8
Side-by-side dozing: 1.3
Visibility:
Dust 0.8
Rain 0.83
Snow 0.7
Fog 0.6
Fixed cycle time:
Power shift transmission 0.05 min.
Direct drive transmission 0.10 min.
Hard digging 0.15 min.
Calculate your dozer productivity in cum/hr.
The dozer capacity is 5cum, and it travels a leveled distance of 100m, with a velocity
of 10m/min while pushing, and 15m/min returning empty. Efficiency of the job is
50min/hr. The operator skills are poor, the material pushed is wet clay (hard to push).
It is raining on site, that’s why the dozer is using hard digging.
The dozer must move 100 cum. How long will it take to do it.
Q = 5 m3 = 5 cum
Distance d = 100 m, V pushing = 10 m/min, Vreturning = 15m/min
Cycle Time = Fixed Cycle Time (FCT) + Variable Cycle Time (VCT)
FCT = 0.15 min (hard digging)
VCT = 100/10 + 100/15 = 16.667 mim
CT = 16.817 min
Reduction factors:
Poor operator skills: f1 = 0.6
Hard to Drift (push) material (Wet clay): f2 = 0.8
Raining (visibility): f3 = 0.83
Job efficiency: f4 = 50min / 60min = 0.833

Productivity: P = 60.Q.f1.f2.f3.f4/CT = 60 x 5 x 0.6 x 0.8 x 0.83 x 0.833 / 16.817 =

5.92 cum/hr
Time: T = 100 / 5.92 = 16.892 hours or ~ 17 hours.
Exercise 1:
You are comparing four (4) laborers in you construction company: Girgi moved 4 m3
sand in 6 hours. Foufou worked 8 hours and moved 7 m3. Moursi only worked 4 hours
and moved 3 m3. Finally, Loulou worked for 1 hour, because he was sick, and moved
2 m3 .
1. Who was the most productive?
2. If you want to move 20 m3, and asked for Foufou to do it, how long will it
take?
3. LINEAR SCHEDULING METHOD (LSM)
Scheduling using LSM

The basics of LSM can be understood by taking the activities of a typical section of a
road, for example as shown in the figure.
Let us assume that the road section comprises of four activities namely:
 The subgrade represented A1,
 The subbase represented by A2,
 The base course represented by A3 and,
 The surface course represented by A4.
Complying with the rules of networking, the AON would have represented them as
activities following one after the other as shown in the Figure.

The LSM representation following the same relationship between activities shall be as
per the following Figure.
In this figure each successive activity has been considered to begin only after the
completion of the previous activity.
Hence the total project completion time TPD should have been equal to:
TPD = DA1 + DA2 + DA3+ DA4,
Where: DA1 is the duration of activity A1,
DA2 is the duration of activity A2,
DA3 is the duration of the activity A3 and,
DA4 being the duration of activity A4.
But in reality succeeding activities of a linear project do not wait until the completion
of the previous activity but start after a minimum buffer time and distance is allowed
to satisfy the job requirements. This relationship between activities is represented in
the following Figure, which cannot be represented by a network diagram.

Buffers:
 When construction activities progress continuously in a chain, some spacing
between activities is required.
 This spacing serves as a buffer and may be required distance or time interval
between activities.

Example 1:
A pipe construction project consists of five activities:
A. Excavating a trench
B. Laying a sub-base of gravel
C. Laying of the concrete pipe
D. Backfilling
E. Compacting

Assume that the length of the pipe if 1000 m and that the productivity rate for the five
activities are 100, 125, 75, 200 and 150 meters per day, respectively.
Draw the project diagram using Linear Scheduling Method (LSM). Activities should
NOT finish simultaneously. Leave a minimum of 1-day time buffer between
activities.
Solution:
First determine the durations of the activities by dividing the total length (1000 m) by
the production rate for each activity.
The following durations result: 10, 8, 14, 5 and 7 for activities A through E
respectively.
L = 1000m
Productivity :
PA=100m/d; PB=125m/d; PC=75m/d ; PD=200m/d ; PE=150m/d
Activitites durations:
DA=1000/100=10days
DB=1000/125=8days
DC=1000/75=14days
DD=1000/200=5days
DE=1000/150=7days
Activities should NOT finish simultaneously. Leave a minimum of 1-day time buffer
between activities  1 day buffer: must choose if at START or END of activity:
+ An activitty cannot start before the next one
+ An activity cannot finish after the next one
+ No intersections between activities

1000m
Slope = 100m/d
Activity A starts at the start of day 1 (end of day 0)
Activity B lasts for 8 days and we must leave at least 1-day between the finish of
activities A and B.
So to finish at day 11, the activity must start at day 3 (11 - 8): 1 day buffer at finish
Activity C lasts for 14 days, so starting at day 4, it would finish at day 18: 1 day
buffer at start.

Activity D can finish no earlier than day 19 so it will start at day 14: 1 day buffer at
end.
Finally, Activity E can start on day 15 and finish on day 22: 1 day buffer at start.

Example 2:
Draw the LSM of the following project. The project consists of constructing 5
units requiring 7 activities as follows:
Note: Allow a buffer time of 1 day at the start of the activity or at its end in order to
ensure that the schedule precedence logic exist (no simulataneous finish, and no
intersection).
Solution:
Activity Precedence Days/Unit = Durations

1/Productivity (days)
A - 2 5x2=10
B A 1 5
C B 3 15
D C 2 10
E D 1 5
F E 2 10
G F 1 5
Two additional activities were added to this project (activities H and I). Activity I
follows H, and activity H follows G.
The productivity rate for H is 1 day/unit for the first 3 units, and 2 days/unit
for the last 2 units.
The productivity rate for I is 2 days/units. However, after 2 units, the project
stopped for 2 days, then resumed with the same productivity rate.
Draw the LSM (starting activity G).
What is the total project duration?

4. THE CRITICAL PATH METHOD (CPM)
- Uses the AON network Plan

- Adds the duration to each activity (D)
- Adds Early Start (ES), Early Finish (EF), Late Start (LS) and Late Finish (LF).
- Set FS (Finish-Sart), SS (Start-Start), SF (Start-Finish), FF (Finish-Finish)

relationships between activities.
- Set Lags (waiting time) and Leads (overlap) between activites.
- Perform the FORWARD and BACKWARD passes
- Define the Critical Path
- Calculate the Floats: Total Float (TF), Free Float (FF), Interfering Float (Int.
F), and Independent Float (Ind. F).
Forward Pass:

Example 1:
Forward Pass Calculation:
Backward Pass:

Example 2:
Backward Pass Calculation:

Example 3:
AON:


Example 4:
If the schedule starts with more than one activity, and end with more than one
activity, what do we do??
Original schedule:
A C E H
3 5 1 8
F
5
B D G I
2 7 3 10
Forward Pass:
0 3 3 8 8 9 14 22
A C E H
3 5 1 8
9 14
F
5
0 2 2 9 9 12 14 24
B D G I
2 7 3 10

Backward Pass:
0 3 3 8 8 9 14 22
A C E H
3 5 1 8
9 14
F 22 OR 24??
5
0 2 2 9 9 12 14 24
B D G I
2 7 3 10 24
Final Solution: ADD “START” AND “END’ ACTIVITIES [DUMMIES], WITH 0

(ZERO) DURATIONS:
0 3 3 8 8 9 14 22
A C E H
1 3 4 4 59 15 1 16 16 8 24
0 0 9 14 24 24
START F END
0 0 0 9 5 14 24 0 24
0 2 2 9 9 12 14 24
B D G I
0 2 2 2 79 11 3 14 14 1024

Floats:
= Floats = ZERO = 0
Total Float (TF)
+ It is the total amount of time that an activity can be delayed without causing any
delay in the project duration.
TF = LS –ES = LF – EF
Free Float (FF)
+ It is the total amount of time that an activity can be delayed without causing any
delay in the early start of the following activities.
+ FF = ES activity B – EF activity A

Interfering Float (IF)
+ It is the amount of total float (TF) utilized in current activity that interferes with its
following activities.
Independent Float (IndF)
+ It is the total amount of time that left after the late finish of an activity without
causing any delay in the early start of the following activities.
Critical Path (CP)
+ The Critical Path (CP) is the path that includes all the activities that have zero or
the least Total Float (TF).

+ There might be more than one critical path.
Example:

Example:
AON


Floats Calculation:
Lags and Leads:

Lag = waiting time between one activity and the follower activity.
- Lag of 2 days between activities A and B: Activity A finishes, then wait time of
2 days then activity B starts.
- This waiting time (lag) is a time spent on the project but not assigned resources
(cost, labor, equipment and material).
- Lag = +ve number; i.e. L = +2
Lead = Overlap between two activities.
- Lead of 2 days between activities A and B: Before activity A finishes in 2 days,
activity B starts.
- Lag = -ve number = -ve Lag  lead = - Lag; i.e. L=-2
CPM calculation with Lags/Leads:
Forward Pass: ESB = EFA + Lag (lag = +ve)
ESB = EFA + Lead (lead=-ve)
Backward Pass: LFA = LSB – Lag (lag=+ve)
LFA = LSB – Lead (lead=-ve)

Floats Calculation:
Free Float (FF): FFA = Min{ESB,C,D – EFA - Lag}

Independent Float (Ind.F): Ind.FA = Min{ESB,C,D – LFA - Lag},
Lag = +ve, and Lead = -Lag
FS / FF / SS / SF Relationships:
FS: Finish-Start
- Activity A finishes Activity B starts
- Without Lags: EFA = ESB
- With Lags: EFA = ESB + Lag
- General: Regular Forward and Backward passes
- Free Float: FFF-S = Min {ESFOL – Lag - EFACT}
FF: Finish-Finish
- Activity A finishes Activity B finishes at the same time
- Without Lags: EFB = EFA
- With Lags: EFB = EFA + Lag
- General: EFFOL = Max {EFACT + Lag}
ESFOL = EFFOL – Duration
- Free Float: FFF-F = Min { EFFOL – Lag - EFACT}
SS: Start-Start
- Activity A starts Activity B starts at the same time
- Without Lags: ESB = ESA
- With Lags: ESB = ESA + Lag
- General: ESFOL = Max {ESACT + Lag}
EFFOL = ESFOL + Duration
- Free Float: FFS-S = Min { ESFOL – Lag - ESACT}

SF: Start-Finish
- Activity A starts Activity B finishes at the same time
- Without Lags: EFB = ESA
- With Lags: EFB = ESA + Lag
- General: EFFOL = Max {ESACT + Lag}
ESFOL = EFFOL – Duration
- Free Float: FFS-F = Min { EFFOL – Lag - ESACT}
Illustrative Example:
94 102 96 106
FF=4
G L
8 10
64 74 67 70
SS=3
K L
10 3
40 48 36 50
SF=10
G L
8 14

Example 1:
Construct a Precedence Network (AON), and perform the CPM calculations
(Forward, backward passes and Total Float), and indicate clearly the Critical Path.
Activity Duration Precedence Relationship

A 1 --- --
B 5 A FS=2
C 4 A SS=4
D 5 B --
E 9 A FF=10
F 6 C FS=2
G 1 D --
H 6 E FS=2
F SS=4
G FF=4
2 0 2 -2 2 0 2 -2 2 2 0 0
3 8 8 13 13 14
B D G
5 5 10 10 5 15 15 1 16
FF=4
FS=2
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 1 SS=4 4 8 FS=2 10 16 SS=4 14 20
A C F H
0 1 1 4 4 8 10 6 16 14 6 20
FF=10
1 1 0 0
2 11 FS=2
E
3 9 12

Example 2:
2 0 2 -2 2 0 2 -2 2 2 0 0
3 11 FF=2 11 13 13 18
B L Y
5 8 13 13 2 15 15 5 20
FS=2
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 1 FS=-1 0 4 4 8 SS=6 10 20 20 25
A C M F V
0 1 1 0 4 4 4 4 8 10 10 20 20 5 25
3 0 3 -3 3 0 3 -3 8 8 0 0 0 0 0 0
1 8 8 12 10 12 25 26
P O SS=2 J Q
4 7 11 11 4 15 18 2 20 25 1 26
SS=-1
10 0 10-10 10 10 0 0
0 9 SF=15 13 15
N S
10 9 19 23 2 25
Exercises:
Exercise 1: Draw the AON/CPM network, perform the forward, backward and floats
calculations. Indicate the critical path.
Activity Precedence Durations Lags

A - 6
B A 12
C A 8
D A 7
E B 10 -10
F B 9
G C 8 -6
H C, D 12
K E 4
L E, F, G 5
M H 4 3
N K, L, M 3


A - 5
B A 7 -2
C A 8
D A 4
G B 5
F C 3 2
D
E D 6
H G 8
K G, F 6
L F 5 -5
M E 9 -3
N K 6 4
L
M 22
P H, N 8

A - 5
B - 4
C A 7 -1
B 2
D C 3 3
E C 4 -3
F C 2 -1
G D 10 2
E 1
F -2
H G 6 7
I G 5 -3
J G 4 2
K G 7 -2
L H 2 -10
I -2
J 2
K -3

Exercise 4: The following table represents an activity list of a construction operation

schedule:
Activity Precedence Duration Lag

A --- 3
B A 5 1
C A 2 2
B -1
E 2
C -1
F C 6 2
G B 4 -2
H E 3
3
F 4
F 2
K 7
G -1
H 2
L 4
K -1
Exercise 5: Construct a Precedence Network (AON), and perform the CPM

calculations (Forward, Backward passes and Floats), and indicate clearly the Critical
Path.
Perform the CPM calculation.
3
Steel Engr. Fabric. Steel
4 10
4 -5
Constr. Engr. Phase1 const. Phase2 const.
6 18 8
1 10 2 -1
Equip. Engr. Award Contr. Deliver Equip. Phase1 Instal. Phase3 const.
8 4 16 6 3
6 7
Proj. Manag. Procurement
4 28
a) The Total Project Duration is:………………………………….days

b) The Critical Path is: …………………………………………………………

c) ‘Constr. Engr.’ can be delayed by ………………….…days without delaying
the total project.
d) ‘Phase1 Constr.’ Can be delayed as early as by …………………days without
delaying ‘Phase1 Instal.’ early start.
Critical Path: ……………………………………………………………………………

CHAPTER 4 – RISK MANAGEMENT
1. RISK MANAGEMENT DEFINITION
Risk Management comprises:
2. Risk Identification
3. Risk Qualitative Evaluation (risk matrix)
4. Risk Quantitative evaluation (PERT, Monte Carlo Simulation,

Decision Trees)
5. Risk Response and Mitigation
Risk is found in schedules, scope of work, quality, cost, etc…
Risk means uncertainty:
RISK = UNCERTAINTY x OUTCOME
Uncertainty = Probability or chance of occurrence
Outcome = Loss of money or delay in schedule, or change in scope of work,

or bad quality
2. RISK IN SCHEDULE: THE PROGRAM EVALUATION AND

REVIEW TECHNIQUE (PERT)
CPM is a good method for deterministic activity durations, i.e. the durations are
well-known deterministic values.
However, this is never the case, since activity durations may incorporate
UNCERTAINTY. Meaning that the activity durations are never a fixed value but a
range of values. For example, the rebars installation may take a minimum of 2 days
(optimistic), and a maximum of 5 days (pessimistic), and a most likely duration of 3
days. Hence the task with uncertain duration is defined as a probability.
UNCERTAINTY is equivalent to PROBABILITY

The Program Evaluation and Review Technique (PERT) is a stochastic (probabilistic)

version of CPM. It is developed in the 1950s by the US navy to evaluate, monitor and
report the progress of a missile program ‘Polaris’. PERT answers the question: ‘what
is the probability of accomplishing the project in 5 months?’, and/or ‘what is the
project duration that would be attained with a 90% chance of dealy, or 90%
probability?’.
PERT uses exactely the CPM method, but uses probabilistic task durations.
PERT Assumptions:
 The technique considers and focuses on ONE single Critical Path.
 Activity durations follow a continuos BETA distribution, with an expected

mean task duration te, and task variance Ve (Where Ve = se2), and se is the
standard deviation.
 The total project duration, i.e. the duration of the critical path is assumed to
follow a continuos NORMAL probability distribution.
The PERT Three-Estimate Approach
The three estimates to be obtained for each activity are:
Most likely estimate (tm): estimate of the most likely value of the duration,
Optimistic estimate (to): estimate of the duration under the most favorable
conditions,
Pessimistic estimate (tp): estimate of the duration under the most unfavorable
conditions.
The intended location of these three estimates with respect to the probability
distribution is shown in the following Figure:

Thus, the optimistic and pessimistic estimates are meant to lie at the extremes of what
is possible, whereas the most likely estimate provides the highest point of the
probability distribution. PERT also assumes that the form of the probability
distribution is a beta distribution (which has a shape like that in the figure) in order to
calculate the mean (m) and variance (s2) of the probability distribution. For most
probability distributions such as the beta distribution, essentially the entire
distribution lies inside the interval between m-3s and m+3s . For example, for a
normal distribution, 99.73 percent of the distribution lies inside this interval.
The variance Ve is defined as:
2
𝑡𝑝 − 𝑡𝑜 2
𝑉𝑒 = 𝜎 = ( )
6
And the mean te is defined as:
𝑡𝑜 + 4𝑡𝑚 + 𝑡𝑝
𝑡𝑒 = 𝜇 =
6
The looking at the critical path ONLY, and calculating the mean critical path duration
(project duration) and the critical path standard deviation as follows:
𝑇𝐸 = ∑ 𝑡𝑒𝑖
𝑖=1
𝑉𝐸 = ∑ 𝑉𝑒𝑖
𝑖=1

Then:
𝜎𝑇𝐸 = √𝑉𝐸
Where: n =critical path activities
Then, the standardized statistical variable Z for TE :
𝑇𝑆 − 𝑇𝐸
𝑍=
𝜎𝑇𝐸
Where: TS = Desired project duration

Z = Normal Disitrbution Variate, as per Table
Starting from ZERO (Z=0 at Mean Value)

Starting from MEAN towards Zero:

Example 1:
Critical Path: A  B  J  L  N

Optimistic Most Likely Pessimistic Mean Variance

Activity Precedence
to tm tp te Ve
A - 4 10 11 9.167 1.361
B A 9 15 25 15.667 7.11
C A 8
D A 12
E D 2
F D 5
G D 6
H B, C, E 8
I F, G 10
J B 7 14 21 14 5.444
K H, I 4
L H, J 11 15 18 14.833 1.361
M I 12
N K, L, M 5 10 12 9.5 1.361
TOTAL CP TE = 63.167 VE = 16.637
TE = m = 63.167 = Mean Project duration
VE = 16.637 = Project duration variance = s2
s = 4.079 = Project standard deviation
Following a normal distribution:

Confidence levels:
70% confidence level: total project duration between m-s and m+s:
Or between 59 days and 67 days
95% confidence level: total project duration between m-2s and m+2s:
Or between 55 days and 71 days
99% confidence level: total project duration between m-3s and m+3s:
OR:
What is the probability that the total project duration is 68 days?
TS = 68
Z = (68 -63.167) / 4.079 = 1.18

It is equal to 0.881, or 88.1% that the project duration is 68 days.
Example 2:
Perform all the PERT calculations, and find the probability of completing the project
in 36 days or less.
Activity Precedence Optimistic Most Pessimistic Mean Variance

duration likely duration
te Ve
duration
A* - 3 5 8 5.167 0.694
B A 5 6 10 - -
C* A 2 4 5 3.833 0.25
E B, C 2 5 6 - -
F* C 6 10 12 9.667 1.00
G B 4 6 8 - -
H E, F 3 6 10 - -
K* F, G 7 9 11 9.00 0.444
L* H, K 4 5 8 5.333 0.444
Sum = TE=33.0 VE=2.832

TE = m = 33.0 = Mean Project duration
VE = 2.832 = Project duration variance = s2
sE = 1.683 = Project standard deviation

TS=36 days  Z=1.783  96.25% chance that the project ends in 36 days or less.

CHAPTER 5 – COST MANAGEMENT
1. COST ESTIMATION
What is an estimate?
According to the American Association of Cost Estimation (AACE):
"An estimate is an evaluation of all the costs of the elements of a project or effort as
defined by an agreed upon scope"
Cost Estimate Stages
There are three basic stages or phases in project development, and for each of them,
estimates are made
1. The Planning stage includes:

+ Screening
+ Preliminary
+ Quickie
+ Order-of-Magnitude / Guesstimates
+ Rough, scope, etc…
2. Design stages includes:
+ Budget
+ Semi-detailed
3. Detailed construction stage includes:
+ Definitive
+ Detailed
Types and Accuracy of Cost Estimates
AACE International grouped cost estimating into five classes depending on the level
of the project's definition and purposes as follow:
1. Class 5 at the concept screening stage,

2. Class 4 at the study or feasibility stage,
3. Class 3 at the budget or authorization stage,
4. Class 2 at the control or bid/tender stage,
5. Class 1 at the check estimate or bid/tender stage.

Level of Project End Usage - Typical Expected Accuracy

Estimate Class
Definition Purpose of Estimate Range
Class 5 0% to 2% Concept Screening -50% to 100%
Class 4 1% to 5% Study or Feasibility -30% to 50%
Budget, Authorization
Class 3 10% to 40% -20% to 30%
or Control
Class 2 30% to 70% Control or Bid/Tender -15% to 20%
Check Estimate or
Class 1 50% to 100% -10% to 15%
Bid/Tender
2. THE DETAILED ESTIMATE:

The detailed estimate is made up of:
+ Direct costs
+ Indirect costs
+ Overhead costs
+ Taxes + Bonds + Insurrance
+ Contigency + Markup (for risks)
+ Profit
Direct Costs Estimation:

The DIRECT costs are the labor, equipment and material costs directly related to
activities costs, that can be easily measured, as follows:
+ The labor costs
+ The equipment costs
+ The material costs

The preparation of the direct cost estimate requires that the estimator break down –
decomposition - the project into components and sub-components (WBS), the cost
them (CBS), based on resources (4Ms). He must follow these steps:
1. Break down the project into cost centers (CBS)

2. Estimate the quantities required from the Bill Of Quantity (BOQ)
3. Estimate labor and equipment needed for each cost center
4. Price the quantities, labor and equipments (4Ms)
5. Calculate the total direct cost
In order to perform the direct cost estimation, the estimator needs:
1. The complete set of drawings,

2. The contract documents

3. The technical specifications
These three items form the TENDER documents.
The material cost:

Material Cost = Quantity x Unit Price
The labor cost, requires (i) labor production rate, and (ii) crew size:
Labor Cost = (Quantity / Labor Productivity) x Labor Unit Rate
The equipment cost, requires (i) equipment production rate, and (ii) equipment
number:
Equipment Cost = (Quantity / Equipment Productivity) x Equipment Unit Rate
Indirect Costs Estimation:

The INDIRECT costs are the labor, equipment and material costs not directly related
to a specific activity, or impossible to assign directly to a specific process (set of
activities).
Overhead Costs Estimation:

The OVERHEAD costs are all costs of other than direct and indirect costs. Overhead
costs can be: design office overhead, site office overhead, administration, marketing,
travelling, supervision, etc.
Taxes, Bonds and Insurrance Estimation:

Estimators must add the taxes, bonds and insurrance additional costs.
Contigency and Markup Estimation:

The contigency and markup are an addition of a certain percentage in order to
consider unforseen work (uncertain events) in a project. These can be defined as risk
costs.

3. QUANTITY TAKE OFF (QTO)
The estimator prepares a material quantity take-off of all materials from the drawings,
this is done by tabulating the quantity and unit of measure of all work required during
construction, then an addition of prices is performed.
Total
Description Quantity Length Width Depth Thickness Height Units
Quantity
Concrete Quantity Take Off


Formwork Quantity Take off

Hourdi Quantity Take Off

Instead of memorizing the table, use on site equation to calculate unit weight of
rebars:
Unit Weight of Bar (kg/m) = Dia x Dia / 162

Example:





4. COST CONTROL
The Earned Value method has been developed as a tool facilitating project progress
control. It is used for determining a project’s status (is it behind or ahead of schedule?
is it over or under budget?) and the scale of current variances from the plan.
Moreover, it allows a project manager to make inferences on the final effect of the
project in terms of cost and, to some extent, in terms of duration, by extrapolating
current trends.
The method is simple: it assumes a simplified model of a project, and calculations

require nothing more than four basic arithmetic operations. However, the method has
been recognized as a useful tool by many practitioners and government agencies and
has become a standard in project management. It proved to be versatile enough to be
applied to any type of a project, ranging from defence schemes worth millions and
extending on many years to minor IT projects. The analysis can be conducted on any
level of work breakdown structure and used by both clients and contractors.
The method, if to be used efficiently, requires a disciplined approach to collection of

data on project cost and progress (on weekly basis) and the findings are to be
processed immediately. The purpose is to detect any deviation as soon as possible, so
that there is enough time to asses if the deviation is dangerous for the project and, if
necessary, to take corrective actions.
Figure 1 presents the idea of the Earned Value project control. The analysis requires
following inputs:
BCWS: Budgeted Cost of Works Scheduled: the baseline for the analysis, cumulated
planned costs related to time of their incurrence. It is also the Preplanned original
budget;
BCWP: Budgeted Cost of Work Performed: a measure of physical progress of works

expressed by cumulated planned cost of works actually done related to time, it is also
called Earned Value (like the method it is used by). It is also the actual cost/budget
according to schedule done/performed;
ACWP: Actual Cost of Work Performed: cumulated ammount payable for works
done related to time. It is also the actual cost spent till date;

BAC: Budget at Completion: total planned cost of the whole project, it equals BCWS
at the planned finish;
T: Time: planned duration of the project.
Project status indicators
PC Percentage Complete:
PC = BCWP/ BAC (1)
CV Cost Variance: a measure of deviation between planned and actual cost of works
done until the date of recording progress in money units. If negative, it indicates that
the project is over budget:
CV = BCWP - ACWP (2)
If CV < 0 the project is over budget, or cost overrun
SV Schedule Variance: a measure of deviation between the actual progress and the
planned progress. Though it is interpreted as time deviation, it is expressed in money
units. In other words, it is the difference between the planned cost of works that have
been done and planned cost of works that should have been done by the reporting
date. If negative, it indicates a delay:
SV = BCWP - BCWS (3)

If SV < 0 the project is behind schedule
CPI Cost Performance Index: compares the planned and actual value of works done:
CPI = ACWP / BCWP (6)
If CPI > 1 loss of money at the end of the project
If CPI < 1 save money at the end of the project
SPI Schedule Performance Index: compares the planned cost of works done with
planned cost of works planne:
SPI = BCWS / BCWP (7)
If SPI > 1 delay in project schedule
If SPI < 1 save time in project schedule
EAC Estimate at Completion: is calculated at the date of reporting progress to serve

as an estimate of the effect of deviations cumulated from the project’s start on the
total project cost, so it informs how much the project is going to be in the end, if the
cost performance index CPI stays the same:
EAC = (ACWP / BCWP) x BAC = CPI x BAC (8)
It is clear that EAC is a simple linear extrapolation of current tendencies.
TAC Time At Completion: is the forecasted project time at completion:
TAC = (BCWS / BCWP) x T = SPI x T (9)

Example :
Following is a simple project of four (4) activities : A, B, C, and D. The project

schedule is represented as a bar chart.
A (1.5 months) B (2 months) C (2 months)

D (1 month)
3 months
The total project duration is 5.5 months.
The budget for each activity is shown in the following table:
Activity Budget
A 1000$
B 3000$
C 2000$
D 2000$
TOTAL 8000$
After 3 months, the following has been accomplished:
 Activity A: 100% complete, total cost of 900$.
 Activity B: 60% complete, total cost of 1600$.
 Activity C: 50% complete, total cost of 1000$.
 Activity D: not started yet.
Perform the complete EV analysis.
BAC = 8000$
T = 5.5 mo.

1 mo 1.5 mo 2 mo 3 mo 3.5 mo 4.5 mo 5.5 mo

BCWS 667 1000 1750 3250 4000 7000 8000
1000
+0.6x3000
BCWP 1000
+0.5x2000
=3800
900
+1600
ACWP 900
+1000
=3500
At 3 months:
BCWS = 3250$
BCWP = 3800$
ACWP = 3500$
CV = BCWP – ACWP = 3800 – 3500 = 300$ > 0 Cost under budget

SV = BCWP – BCWS = 3800 – 3250 = 550$ > 0 Project on schedule
CPI = ACWP/BCWP = 3500/3800 = 0.921 < 1 Saving money at the end of the project
SPI = BCWS/BCWP=3250/3800 = 0.855 < 1 Saving time in project schedule
EAC = CPI x BAC = 0.921 x 8000 = 7368$
The project is predicted to be completed with 7368$ (instead of 8000$)
TAC = SPI x T = 0.855 x 5.5 = 4.7 months,
The project is predicted to be completed in 4.7 months instead of 5.5 months.

CHAPTER 6 – PROCUREMENT MANAGEMENT
1. PROCUREMENT/CONTRACT DEFITION
Procurement = Contract = Project Delivery System
What Is A Contract?
+ It is a legally enforced promises or set of promises for which law can
recognize duties.
+ It is an agreement between two or more parties to do something according
to several clauses that are established in the contract.
2. PROJECT DELIVERY SYSTEMS (PDS)
Bid Process:
+ It has to be announced in the Notice to Bidders that lowest bid is not the only
criterion to win.
+ The bidder is considered responsible based upon:
i. Technical competence and experience.
ii. Bidder's financial situation.

iii. Bonding capacity.

iv. Current workload.
v. Past history of claims litigation.
vi. Defaults of previous contracts.
The owner has the right to review the bidder qualification + bid price.
COMPETITIVE BID CONTRACTS
LUMP SUM contracts

+ The executor quotes one price that covers all work or services required
by plans and specs.
+ The owner provides the executor with drawings and specifications.
+ The executor will respond with a single quoted price for the entire
project.
+ It is advantageous for the owner:
- Knows exactly the money to spend.
- Has low risk.
+ High risk for the executor because of
- Changes
- Unforeseen difficulties.
+ The executor receives monthly or regular payments according to the
percent of work completed.
+ Advantages
1. Ensure lowest price bid.
2. All bidders are treated equally.
3. Good for well-known projects that are clear.
4. Plans and specs have to be complete prior to bid advertisement.
5.
+ Disadvantages
1. Difficulties of changing in design or modifying the contract
(flexibility is limited).
2. Long time for design and then execution.

Special Lump sum contracts: TURN KEY CONTRACTS:

+ The owner provides: design requirements.
+ The executor designs and executes the facility under a single contract.
+ This single contract eliminates the need for owner coordination and
reduces project duration.
+ Upon completion, the facility key is turned over to the owner and the
contract is closed out.
UNIT PRICE CONTRACTS

+ The executor quotes a price for each executed unit that covers all work or
services required by the contract plans and specs.
+ The, the owner provides the executor with drawings, specs, and Bill of
Quantity (Bid form).
+ Bill of Quantity (BOQ) is the list of work items that the project can be
divided into accompanied with their units and quantities.
Item Number Quantity Unit Description Unit Price Total Amount
1 550 cy Rock Excavation $ ____ $ ____
2 50 lf 8-in. C.I. Force main $ ____ $ ____
3 20 cy Trench Excavation $ ____ $ ____
4 200 yd2 Paving $ ____ $ ____
+ Advantageous for the contractor because no risk of unseen conditions.

+ It is more flexible for changing design.
+ The contractor receives monthly or regular payments according to the
quantities of work performed.
+ Advantages
1. Ensure lowest price bid.
2. All bidders are treated equally.
3. Flexible changes in design.
4. Enable fast track contracts.

5. Plans and specs do not have to be complete prior to bid

advertisement.
6. Shorter time for design and then construction due to fast track.
+ Disadvantages
1. Unbalanced payment to contractors.
+ Unit price contracts are almost used on heavy highway, industrial
rehabilitation work, and big software packages' contracts.
NEGOTIATED CONTRACTS
+ The owner is signing a contract with the executor to reimburse him / her
with the cost incurred plus a fixed fee, a fixed percentage, a percentage
plus profit sharing, or sliding fee.
+ Cost incurred are:
1. Labor
2. Equipment
3. Materials
4. Subcontractors
5. Overhead
Cost + % of Cost
+ Reimbursement = cost incurred + % of cost

+ The executor has:
- Incentive to increase costs.
- No incentive to be economic.
+ The executor has no incentive to decrease time.
Cost + Fixed Fee
+ Reimbursement = cost incurred + fixed fee.

+ The executor has incentive to:
- Decrease time because of fixed money.
+ Still, there is an incentive from the executor to increase cost to expedite
work.

Cost + Fixed Fee + Profit Sharing
+ Reimbursement = Cost incurred + fixed fee + profit sharing.

+ The executor has incentive to decrease time.
+ The executor would like to allocate this amount of profit to a short period
of time.
+ Target cost is estimated and if the executor expenditures are less than the
target, he/she will share this cost under-run.
+ He/She has an incentive to decrease cost to share a profit which is a % of
the reduced cost.
+ If the executor completes the project with cost overrun, there is neither
profit sharing nor penalty.
+ The concept of Guaranteed Maximum Price (GMP) brings a solution for
cost overrun.
+ GMP is a price that the executor guarantees will not be exceeded.
+ Any cost overrun more than GMP is the executor responsibility.
Cost + Sliding Fee
+ Reimbursement = cost incurred + sliding fee.

+ It provides a bonus as profit sharing for the executor for cost under-run,
but he/she has a penalty for cost overrun from the target price.
+ A formula to calculate this fee:
Fee = R (2T – A)
R = base percent value.
T = Target Price.
A = Actual cost of construction.
+ Example:
A project of high rise building is required in down town area. A cost plus
sliding fee contract has been agreed upon. The target price was $10.2
million where the value of bas percent was 1.5%. After construction the
actual cost was $11.1 million. Calculate the sliding fee.
Fee = R (2T – A) = 0.015 (20.4 -11.1) = $ 0.1395 million.

Suppose that this project has been completed with $9.6 million. How much
will be the sliding fee? Compare between these two cases and the normal
case?
Fee = R(2T – A) = 0.015 (20.4 – 9.6) = $0.162 million > $0.1395 million.
Normal Fee = 0.015 * 10.2 = 0.153 million.
DESIGN BUILD SYSTEMS

+ It is advantageous for the client (owner): single source of project delivery
(design and execution) especially for fast projects.
+ The owner does not receive proper checks and balances for the best
contractor.
+ The owner does not receive the cost-savings that often result from the
bidding process.
Advantages
+ It eliminates the disputes between the designer and the executor, so, it is
advantageous to the contractor accordingly.
+ It enhances the communication between the designer and the executor, so,
it is advantageous to the contractor accordingly.
PROJECT MANAGEMENT (PM) CONTRACTS

+ One company (PM) coordinates all project activities starting from concept
design through acceptance of the facility.
+ The PM Company represents the owner in all the project management
activities.
+ The PM establishes the procedures for award of all contracts to engineers,
vendors, prime executors, and sub-executors.

BUILD OPERATE TRANSFER (BOT)

+ A Company or consortium (set of companies) is responsible for building
the project, operating the facility for a consortium period (30 -50 years),
and then, transferring the facility to the owner after this period to operate
it.
+ The owner does not have any risk because he/she gives the consortium the
place to build the project and receives it after the consortium operating
period.
+ The contractor has all the risk even the operating risk.
+ Types of risks that affect the BOT projects:
1. Financial risk.
2. Political Risk.
3. Development risk.
4. Construction Risk.
5. Market Risk.
6. Revenue Risk.
3. CONTRACT CONTENT:
 Agreement:
 Data

 Parties involved
 Scope of contract (work): TENDER DOCUMENTS
1. what are the duties of contractor
2. Drawings
3. Specifications
4. Bill Of Quantities (BOQ)
 Time limit: When the project must be completed
 Consultant documents:
 Reports (geotechnical report, feasibility report, ect.)
 Minutes Of Meetings (MOM) of previous meetings
 Conditions of Contract:
 Price
 Methods of payments
 Receipt and address of notices
 Law of contract
 Language of contract
 Succession documents: List of all documents constituting the contract
 General conditions:
 Insurrance
 Security and safety procedures and law
 Changes of work (how to deal with them)
 Suspension of work by government (how to deal with it)
 Extension of time (how can it be allowed, and how to deal with it)
END

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What are the main components of a construction project?

What are the main components of a construction project?

What are the advantages of construction management?

What are the advantages of construction management?

UNIVERSITY OF BALAMAND

11th Edition 2020

Dr. Nabil Semaan, PhD

Chapter 1. Introduction to Construction Management

Dr. Nabil Semaan, PhD Page 1

CHAPTER 1 – INTRODUCTION TO CONSTRUCTION

1. CONSTRUCTION ENGINEERING DISCIPLINE

It relates to methods or techniques used to perform the construction elements using

Examples: Highways, Tunnels, High-rise Buildings, Piles, Residential Buildings, etc.

It addresses how the available Resources can be best allocated/managed

What are RESOURCES = 4 M’s:

Materials (concrete, steel, tiles, paint, soil, etc…)

Money ($, L.L.)

Dr. Nabil Semaan, PhD Page 2

2. WHAT IS A CONSTRUCTION PROJECT?

Definition: A project is "a temporary endeavor undertaken to accomplish a unique

Stakeholders are the people involved in or affected by project activities. Construction

- The project sponsor and project team

Main Objectives: Time + Cost + Quality (+ Safety + Environment).

Dr. Nabil Semaan, PhD Page 3

Construction Management is "the application of knowledge, skills, tools, and

Construction Management Advantages:

+ Better control of financial, physical, and human resources.

Construction Manager Role:

+ Allocate efficiently the 4 Ms.

Dr. Nabil Semaan, PhD Page 4

- Planning: pre-determining a course of action for accomplishing

Construction Management Functions (according to PMBOK):

Dr. Nabil Semaan, PhD Page 5

a. Set the communication management plan

4. CONSTRUCTION PROJECT LIFE-CYCLE:

Dr. Nabil Semaan, PhD Page 6

CHAPTER 2 – SCOPE MANAGEMENT

1. THE SCOPE OF WORK

Dr. Nabil Semaan, PhD Page 7

Output of Deliverables: Work Breakdown Structure (WBS) + WBS dictionary

2. WORK BREAKDOWN STRUCTURE (WBS):

WBS = Hierarchical list of project's work activities.

A project Work Breakdown Structure (WBS) is:

+ A deliverable-oriented grouping of project elements that organizes and defines

Dr. Nabil Semaan, PhD Page 8

Dr. Nabil Semaan, PhD Page 9

Example 2: CBS = Cost Breakdown Structure = WBS + Cost

Dr. Nabil Semaan, PhD Page 10

Master-format is a master list of Numbers and Subject Titles Classified by work

Without Master-Format, construction would collapse under information overload.

Master Format Divisions:

Dr. Nabil Semaan, PhD Page 11

3. THE PLANNING PROCESS

Basic Equation: PLAN = WBS + LOGIC

HOW is the project planning done?

Dr. Nabil Semaan, PhD Page 12

 Area of responsibility: executor or sub

+ It refers to the sequence (order) in which the activities are to be

BAR CHARTS (GANTT CHARTS)