Construction Management

DANIEL W. HALPIN is Professor Emeritus and former head of the Division of Construction Engineering and Management at Purdue University. The author of more than ten books, he is a member of the National Academy of Construction, a recipient of ASCE's Peurifoy Construction Research Award and the Carroll H. Dunn Award of Excellence from the Construction Industry Institute (CII).BOLIVAR A. SENIOR is an Associate Professor in the Department of Construction Management at Colorado State University. He has extensive professional experience in the management of construction projects. Dr. Senior has published many articles relating to construction financing as well as time planning and control. He is a member of the American Society of Civil Engineers and the Dominican College of Professional Engineers, Architects and Surveyors.GUNNAR LUCKO is Assistant Professor of Civil Engineering and Director of the Construction Engineering and Management Program in the Department of Civil Engineering at The Catholic University of America. He holds a German Diploma in Civil and Environmental Engineering from Hamburg University of Technology and an M.S. and Ph.D. from Virginia Polytechnic Institute and State University (Virginia Tech). His research interests include mathematical representation, simulation, and analysis of schedule networks, construction equipment operations and economics, optimization methods, constructability analysis, and engineering education. He has studied statistical equipment valuation models and has participated in research for the Construction Industry Institute, and is currently working on research funded by the National Science Foundation.

• About the Authors vPreface vii1 History and Basic Concepts 11.1. Bridges and History 11.2. The Historical Impact of Construction 21.3. Great Captains of Construction 31.4. Panama Canal 51.5. Other Historic Projects 81.6. Construction versus Manufacturing Processes 91.7. Project Format 101.8. Project Development 111.9. Construction Technology and Construction Management 121.10. Construction Management Is Resource Driven 131.11. Construction Industry 141.12. Structure of the Construction Industry 141.13. Differing Approaches to Industry Breakdown 151.14. Management Levels of Construction 16Review Questions and Exercises 182 Preparing the Bid Package 192.1. Project Concept and Need 192.2. Establishing Need 202.3. Formal Need Evaluation 212.4. Conceptual Drawings and Estimates 222.5. Preliminary and Detail Design 272.6. Notice to Bidders 282.7. Bid Package 282.8. General Conditions 332.9. Supplementary Conditions 342.10. Technical Specifications 342.11. Addenda 382.12. Decision to Bid 382.13. Prequalification 392.14. Subcontractor and Vendor Quotations/Contracts 392.15. Bid Bond 402.16. Performance and Payments Bonds 412.17. Cost and Requirements for Bonds 42Review Questions and Exercises 433 Issues during Construction 453.1. Acceptance Period/Withdrawal 453.2. Award of Contract/Notice to Proceed 463.3. Contract Agreement 473.4. Time Extensions 473.5. Change Orders 483.6. Changed Conditions 493.7. Value Engineering 503.8. Suspension, Delay, or Interruption 513.9. Liquidated Damages 533.10. Progress Payments and Retainage 543.11. Progress Reporting 553.12. Acceptance and Final Payment 553.13. Summary 57Review Questions and Exercises 584 Contracts 594.1. Contract Environment 594.2. Process of Purchasing Construction 604.3. Major Construction Contract Types 614.4. Competitively Bid Contracts 614.5. Stipulated-Sum Contracts 624.6. Unit-Price Contracts 634.7. Negotiated Contracts 664.8. Project Delivery Methods 684.9. Design-Build Contracts 694.10. Design-Build in a Consortium Format 704.11. Construction Management Contracts 714.12. Construction Management At-Risk 724.13. Comparing Project Delivery Methods 72Review Questions and Exercises 735 Legal Structure 755.1. Types of Organization 755.2. Legal Business Forms 755.3. Proprietorship 765.4. Partnership 775.5. Corporation 785.6. Comparison of Legal Structures 825.7. Joint Venturing 84Review Questions and Exercises 856 Impact of Taxes 866.1. Society and Taxation 866.2. Business Impact of Taxation 876.3. Why Taxes? 886.4. Types of Taxes 886.5. Income Tax Systems 886.6. Taxation of Businesses 896.7. Business Deductions in General 916.8. Taxable Income: Individuals 916.9. Itemized Deductions, Standard Deductions, and Personal Exemptions 926.10. The Tax Significance of Depreciation 936.11. Marginal Tax Rates 936.12. Tax Credits 956.13. Tax Payroll Withholding 966.14. Tax Payment Schedules 966.15. Marginal, Average, and Effective Tax Rates 976.16. Summary 97Review Questions and Exercises 987 Project Planning 997.1. Introduction 997.2. Work Breakdown Structure 1007.3. Developing the Work Breakdown Structure 1027.4. A Work Breakdown Example 1027.5. Work Packages for the Gas Station Project 1037.6. Determining Sequence of Work Packages 1047.7. Estimate Development and Cost Control Related to the Work Breakdown Structure 1067.8. Role of Code of Accounts 1087.9. Summary 109Review Questions and Exercises 1098 Project Scheduling 1118.1. Introduction 1118.2. Estimating Activity Durations 1128.3. Using Historic Productivity Data 1138.4. Bar Charts 1138.4.1. Description 1138.5. Scheduling Logic 1168.6. Scheduling Networks 1198.7. The Critical Path Method 1198.8. Forward Pass 1208.9. Backward Pass 1228.10. Activity Floats 1238.11. Working to Calendar Dates 1258.12. Example: Scheduling the Small Gas Station 1278.13. Summary 130Review Questions and Exercises 1309 Scheduling: Program Evaluation and Review Technique Networks and Linear Operations 1349.1. Introduction 1349.2. An Example Program Evaluation and Review Technique Network 1369.3. Program Evaluation and Review Technique Shortcomings 1399.4. Linear Construction Operations 1409.5. Production Curves 1419.6. Line of Balance 1449.7. Line of Balance Applied to Construction 145Review Questions and Exercises 14810 Resource-Related and Advanced Linear Scheduling Techniques 15210.1. Resource Scheduling 15210.2. Resource Allocation 15210.3. Resource Leveling 15310.4. Time–Cost Trade-off 15510.5. Linear and Repetitive Scheduling Techniques 15610.6. Linear Scheduling Method 15810.7. Case Study of a Linear Project 160Review Questions and Exercises 16311 The Mathematics of Money 16411.1. Introduction 16511.2. Time Value of Money 16511.3. Factors Determining the Time Value of Money 16611.4. Simple and Compound Interest 16611.4.1. Simple Interest 16611.4.2. Compound Interest 16711.5. Nominal and Effective Rate 16711.6. Equivalence and Minimum Attractive Rate of Return 16811.7. Discount Rate 16911.8. Sunk Costs 16911.9. Cash Flow Diagrams 16911.10. Annuities 17011.11. Conditions for Annuity Calculations 17011.11.1. Present Value of an Annuity: Finding P Given A 17111.11.2. Instalments Paying for an Item: Finding A Given P 17211.12. Future Value of a Series of Payments: Finding F Given A 17211.13. Annuity Required to Reach a Goal Amount: Finding A Given F 17311.14. Summary of Equivalence Formulas 17311.15. Worth Analysis Techniques: Rationale and Vocabulary 17511.16. Present worth Analysis 17511.16.1. Example: Small Excavator 17511.17. Equivalent Annual Worth 17611.17.1. Example: Best Job Offer 17611.18. Internal Rate of Return 17611.19. Limitations of the Internal Rate of Return Method 17711.20. A Practical Example Using Present worth Analysis 17711.21. Comparison Using Equivalent Annual Worth 17911.22. Summary 181Review Questions and Exercises 18112 Project Cash Flow 18312.1. Cash Flow Projection 18312.2. Cash Flow to the Contractor 18412.3. Overdraft Requirements 18612.4. Comparison of Payment Schemes 188Review Questions and Exercises 19213 Project Funding 19413.1. Money: A Basic Resource 19413.2. Construction Financing Process 19513.3. Long-Term Pro Forma Example 19513.4. Mortgage Loan Commitment 19813.5. Construction Loan 19913.6. Owner Financing Using Bonds 20113.7. Build, Operate, and Transfer 203Review Questions and Exercises 20414 Equipment Ownership 20514.1. General 20514.2. Equipment Ownership and Operating Costs 20614.3. Depreciation of Equipment 20714.4. Straight-Line Method 20914.5. Declining Balance 21114.6. Production Method 21314.7. Depreciation Based on Current Law 21314.8. Depreciation versus Amortization 21514.9. Interest, Insurance, and Tax Costs 21514.10. Operating Costs 21714.11. Overhead and Markup 219Review Questions and Exercises 21915 Equipment Productivity 22115.1. Need for Heavy Equipment 22115.2. Productivity Concepts 22215.3. Cycle Time and Power Requirements 22515.4. Power Available 22715.5. Usable Power 23215.6. Equipment Balance 23515.7. Random Work Task Durations 239Review Questions and Exercises 24116 Construction Labor 24316.1. The Labor Resource 24316.2. Short History of Labor Organizations 24416.3. Early Labor Legislation 24516.4. Norris-LaGuardia Act 24616.5. Davis-Bacon Act 24616.6. National Labor Relations Act 24716.7. Fair Labor Standards Act 24816.8. Union Growth 24816.9. Labor Management Relations Act 24916.10. Other Labor Legislation 25116.11. Vertical versus Horizontal Labor Organization Structure 25216.12. Jurisdictional Disputes 25316.13. Union Structure 25416.14. National Unions 25616.15. State Federations and City Centrals 25616.16. Union Locals 25616.17. Union Hiring Halls 25716.18. Secondary Boycotts 25716.19. Open-Shop and Double-Breasted Operations 25916.20. Labor Agreements 25916.21. Labor Costs 26016.22. Average Hourly Cost Calculation 264Review Questions and Exercises 26617 Estimating Process 26817.1. Estimating Construction Costs 26817.2. Types of Estimates 26817.3. Detailed Estimate Preparation 27117.4. Definition of Cost Centers 27417.5. Quantity Takeoff 27417.6. Methods of Detailed Cost Determination 27817.7. Problems with Unit-Cost Method 28017.8. Resource Enumeration 28217.9. Work Package or Assembly-Based Estimating 28417.10. Summary 286Review Questions and Exercises 28818 Cost Control 28918.1. Cost Control as a Management Tool 28918.2. Project Cost Control Systems 28918.3. Cost Accounts 29018.4. Cost Coding Systems 29218.5. Project Cost Code Structure 29218.6. Cost Accounts for Integrated Project Management 29618.7. Earned Value Method 29918.8. Labor Cost Data Collection 30518.9. Charges for Indirect and Overhead Expense 30718.10. Project Indirect Costs 30918.11. Fixed Overhead 30918.12. Considerations in Establishing Fixed Overhead 310Review Questions and Exercises 31219 Materials Management 31419.1. Material Management Process 31419.2. The Order 31519.3. Approval Process 32019.4. Fabrication and Delivery Process 32219.5. Installation Process 32319.6. Material Types 324Review Questions and Exercises 32620 Safety 32720.1. Need for Safe Practice 32720.2. Humanitarian Concerns 32820.3. Economic Costs and Benefits 32820.4. Uninsured Accident Costs 33120.5. Federal Legislation and Regulation 33220.6. Occupational Safety and Health Administration Requirements 33420.7. How the Law Is Applied 33420.8. Safety Record Keeping 33720.9. Safety Program 338Review Questions and Exercises 345Appendices 347Appendix A Typical Considerations Affecting the Decision to Bid 348Appendix B Performance and Payment Bonds 351Appendix C Arrow Notation Scheduling Calculations 356Appendix D Generalized Network Relationships 362Appendix E Productivity Scheduling Method Using Singularity Functions 368Appendix F Plans for Small Gas Station 371Appendix G Compound Interest Table 374Appendix H Site Reconnaissance Checklist 375Appendix I The Cumulative Normal Distribution Function 377Bibliography 381Index 385