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1. introduction cm 2014

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1. introduction cm 2014

  1. 1. COTM 5104: CONSTRUCTION MANAGEMENT Chapter 1 Introduction GETANEH GEZAHEGNE March 2014 School of Civil and Environmental Engineering
  2. 2. ContentsContents Introduction 1. Construction Industry 2. Domestic Construction Industry 3. Fundamentals of Management AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 2
  3. 3. 1. Construction Industry1. Construction Industry 1.1. General  Construction: is a process of constructing something by man for one purpose or another. It may be a road, bridge, dam, dwelling place, an airport, commercial building, etc.  Construction types:  Residential buildings;  Institutional and commercial buildings;  Specialized industrial construction; and  Infrastructure and heavy construction.  Construction Industry (CI)) is an industry which is involved in the planning, execution and evaluation of all types of civil works. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 3
  4. 4. 1. Construction Industry1. Construction Industry 1.1. General  Project: is some form of human activity that has a beginning, a productive phase and an end, creating something that did not exist before.  Construction Project: is an investment of scarce resources with a definite objective, time horizon and geographical boundary.  Construction projects are mostly constructed on the ground and exposed fully to the local environment.  A construction project has different scale and complexities. It ranges from improvements to large investments. But, every project is:  An investment of resources, and  A cause of irreversible change. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 4
  5. 5. 1. Construction Industry1. Construction Industry 1.1. General  Common characteristics of construction projects:  It has a specific starting and finishing time.  It has usually geographical and sometimes organizational boundary.  It has clearly defined set of objectives.  It entails the investment of scarce resources in the expectation of future benefits.  It may be planned, financed and implemented as a unit. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 5
  6. 6. 1. Construction Industry1. Construction Industry 1.2. Study of Construction  Study of Construction mainly covers two themes: 1. Construction Technology: Relates to methods and techniques used to place the physical materials and elements of construction at the Job site. 2. Construction Management: Addresses how available resources will be applied. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 6 Money Manpower Materials Machines
  7. 7. 1. Construction Industry1. Construction Industry 1.2. Study of Construction  Many great construction projects mark significant milestones in human history: 1. Great Pyramids; 2. Brooklyn Bridge; 3. Panama Canal; and 4. Euro/channel tunnel. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 7
  8. 8. 1. Construction Industry1. Construction Industry 1.3. Construction Industry Category  Construction Industry can be categorized into three major sectors: i.i. Transport and Communication SectorTransport and Communication Sector - Road, Railway, Airway, and Telecommunication related physical works; ii.ii. Water and Energy WorksWater and Energy Works – Hydropower development, transmission lines, wind power, irrigation projects; and iii.iii. Buildings and Other Physical InfrastructuresBuildings and Other Physical Infrastructures.  CI is among the leading industry in producing employment and contribute to the over all national development. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 8
  9. 9. 1. Construction Industry1. Construction Industry 1.3. Construction Industry Category AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 9 Transportation Infrastructure Urban development Energy supply Water supply The ConstructionThe Construction IndustryIndustry
  10. 10. 1. Construction Industry1. Construction Industry 1.4. Construction Industry Attributes 1.4.1 Nature of Construction Industry:1.4.1 Nature of Construction Industry:  Requires big capital investment thus is highly affected by the economy of the nation.  Consumes much of the national budget in developing countries like Ethiopia. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 10 World Total 3.41 Trillion $ Asia 1,113 Billion $ Europe 1,017 Billion $ North America 885 Billion $ Latin America 241 Billion $ Middle East 101 Billion $ Africa 56 Billion $ 1. US $819 B (8.2%) 2. Japan $618 B (13.9%) 3. Germany $253 B (11.4%) 4. China $181 B (17.0%) 5. UK $109 B (7.7%) Ethiopia $ 402 M(59.8%)
  11. 11. 1. Construction Industry1. Construction Industry 1.4. Construction Industry Attributes 1.4.1 Nature of Construction Industry:1.4.1 Nature of Construction Industry: A. Nature of production:A. Nature of production: mainly on site.  Changing supply-chain relationship and production site.  Exposed to inclement weather condition.  Seasonal disruption.  Health and safety concerns. B. Nature of productB. Nature of product  Large, heavy, durable, expensive, heterogeneous, and immobile. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 11
  12. 12. 1. Construction Industry1. Construction Industry 1.4. Construction Industry Attributes 1.4.1 Nature of Construction Industry:1.4.1 Nature of Construction Industry: C. Demand for the productC. Demand for the product  Demand is usually driven by ‘other’ goods and services; not controlled by industry,  In the majority of cases, clients define requirements before the industry provides it,  Time lags between demand and supply is long. D. The WorkforceD. The Workforce  The industry is, by its very nature, an overwhelmingly domestic and labor-intensive industry despite the advancement in modern technologies.  Construction is a team output and requires motivated and skilled workers. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 12
  13. 13. 1. Construction Industry1. Construction Industry 1.4. Construction Industry Attributes 1.4.2 Uniqueness of Construction Industry:1.4.2 Uniqueness of Construction Industry:  Fragmented industry; AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 13 Need Design Bid Build Client ClientA/E Contractor Fragmented project participants Sequential process
  14. 14. 1. Construction Industry1. Construction Industry 1.4. Construction Industry Attributes 1.4.2 Uniqueness of Construction Industry:1.4.2 Uniqueness of Construction Industry:  Long production cycle; AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 14
  15. 15. 1. Construction Industry1. Construction Industry 1.4. Construction Industry Attributes 1.4.2 Uniqueness of Construction Industry:1.4.2 Uniqueness of Construction Industry:  Large uncertainty;  Transient organization nature;  Unpredictable work load; and  Subject to environmental impact. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 15
  16. 16. 1. Construction Industry1. Construction Industry 1.5. Roles of Construction Industry  Construction Industry is the most important enabler for social, economic and political development of countries.  It provides the basis upon which other sectors can grow by constructing the physical facilities required for the production and distribution of goods and services.  Specifically this fact is true for least developing countries like Ethiopia because projects are:  Inter-sectoral;  Source of employment; and  Demands huge capital budget. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 16
  17. 17. 1.6. Construction Project Lifecycle  The project life cycle of a construction project may be viewed as a process through which a project is implemented from cradle to grave. 1. Construction Industry1. Construction Industry 17 Definition of project objectives and scope Conceptual plan or preliminary design Plans and specifications Completion of construction Acceptance of facility Fulfillment of useful life AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G.
  18. 18. 1. Construction Industry1. Construction Industry 1.7. Stakeholders of Construction sector  Stakeholders of Construction sector:  Construction Industry involves many people, organization, agencies, ministries, designers, contractors, project managers, equipment suppliers, material suppliers, testing Laboratories, etc. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 18 ContractorContractor ArchitectArchitect EngineerEngineer SuppliersSuppliers SubsSubs VendorsVendors PublicPublic OwnerOwner
  19. 19. 1. Construction Industry1. Construction Industry 1.7. Stakeholders of Construction sector  Contractual stakeholders:  Employer/Client,  Consultant/Engineer, and  Contractor.  Non-contractual stakeholders:  Public agencies: Statutory Agencies (EEPCo, AAWSA, Fire Authority), Public authorities and Municipalities (land and building permit),  Suppliers, and  End users etc. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 19
  20. 20. 1. Construction Industry1. Construction Industry 1.7. Stakeholders of Construction Sector 1.7.1 Employer/client  Employer/Client is the initiator and owner of the project (it can be public or private client).  The client is the most important party who is active from inception to completion and event to post-occupancy maintenance.  Duties of the client encompass the following:  Availability and cost of land,  Location & accessibility  Required Infrastructure  Legal constraints  Current & future development  Soil characteristics of land  Site preparation (right of way)  Permits AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 20
  21. 21. 1. Construction Industry1. Construction Industry 1.7. Stakeholders of Construction Sector 1.7.2 Consultant  The main role of the consultant is to interpret the client’s project requirement into a specific design and possibly the supervision.  The consultants’ team shall:  Ascertain, interpret and formulate the client’s requirement into an understandable project.  Design the project to much requirements and constraints (imposed by statutory obligations, technical feasibility, environmental factors, site conditions, cost, etc)  Assess client’s cost limit to decide on materials & the like.  Prepare contract documents.  Supervise the project and constantly inform the client on the progress  Approve payments  Resolve contractual disputes  Issue provisional and final acceptance certification AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 21
  22. 22. 1. Construction Industry1. Construction Industry 1.7. Stakeholders of Construction Sector 1.7.3 Contractor  These are groups established mainly as commercial companies, that contract to construct development projects.  Responsibility of contractors:  Carry out a full site investigation prior to submission of tender,  Submit tender,  Plan, Program, Control the construction process.  Notify the consultant about delays, discrepancies,  Effect all payments to his employees, suppliers, subcontractors,  Rectify all defects on completion of works, etc  Provide post occupancy repair and maintenance if required. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 22
  23. 23. 1. Construction Industry1. Construction Industry 1.8. Resources for Construction Industry  The following resources are vital that make up an integral components for construction industry:  Human Resources (Labor or Workmen);  Financial Resources ( Fund);  Information Resources;  Physical Resources ( Materials, Equipment and Other Assets); and  Services and Management. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 23
  24. 24. 2. Domestic Construction Industry2. Domestic Construction Industry 2.1. Domestic Construction Industry: Historical Aspect  Previous monarchies had contributed to the development of construction in Ethiopia.  Historic chronicles of the 17th and 18th centuries showed that there were a number of small roads, palaces and river improvement works.  Among the Emperors Atse Fasil, Atse Tewodros and Atse Menilik were noted for their major contributions. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 24
  25. 25. 2. Domestic Construction Industry2. Domestic Construction Industry 2.1. Domestic Construction Industry: Historical Aspect  Modern construction however had started during the reign of Emperor Menilik II (The road from Addis Ababa toAddis Ababa to AsmaraAsmara).  Italy during its invasion (1936-19411936-1941) had also contributed to the development of the construction industry. It had constructed about 6000km6000km of roads.  After Italian invasion, the first Ministry called “MinistryMinistry of Communication and Public Worksof Communication and Public Works’’ was established during the Imperial regime. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 25
  26. 26. 2. Domestic Construction Industry2. Domestic Construction Industry 2.1. Domestic Construction Industry: Historical Aspect  The construction development can be reviewed into six distinct periods based on the historical paradigm shifts in the construction industry in Ethiopia: i. Pre 1968: Foreign Companies dominated construction Industry. ii. 1968-1982: Emergence of Small scale Domestic construction companies, iii. 1982-1987: Parastatal companies dominated Construction Industry, iv. 1987-1991: Fragmentation between Design services & Construction works, v. 1991-2001: Parastatal Domination legally abolished, and re- emergence of private construction companies, vi. 2001- to date: Integration and Capacity Building. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 26
  27. 27. 2. Domestic Construction Industry2. Domestic Construction Industry 2.2. Current Status of Local Construction Industry  Current status of the construction industry is distinguished by:  Lack of clear developmental objectives for the industry;  Inadequate co-ordination of planning between the industry and infrastructure programs in the various sectors of the economy;  Heavy dependence on foreign resources such as materials, equipment and expertise, which continue to be supplied to a major extent by foreign consultants and contractors;  Transport bottlenecks to the distribution of construction materials and equipment;  Inadequate relevant local construction regulations and standards; AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 27
  28. 28. 2. Domestic Construction Industry2. Domestic Construction Industry 2.2. Current Status of Local Construction Industry  Current status of the construction industry is distinguished by:  Control of the construction sector by small-to-medium sized firms and parastatal construction enterprises operating at low levels of capacity and with inadequate working capital;  Inadequate and ineffective organizations representing the interests of contractors, consultants and engineers;  Inadequate numbers of suitably qualified and experienced personnel, at all levels: engineers, technicians, mechanics, operators and foremen etc.;  Inadequate consideration given to the use of local resources (including community participation in labor-based works);  Little consideration given to the concept or cost of maintenance as a component of investment costs. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 28
  29. 29. 2. Domestic Construction Industry2. Domestic Construction Industry 2.2. Current Status of Local Construction Industry  The general state of the domestic construction industry in Ethiopia is characterized by the following five major deficiencies:  An inadequate capital base;  Old and limited numbers of equipment;  Low levels of equipment availability and utilization;  Deficiencies in technical, managerial, financial and entrepreneurial skills; and  Insufficient and ineffective use of labor-based construction and maintenance technology. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 29
  30. 30. 2. Domestic Construction Industry2. Domestic Construction Industry 2.3. Challenges of Domestic Construction Industry  Some of the major challenges faced in the Ethiopian construction industry are:  Lack of equipment and material;  Obstacles posed by government regulations;  Scarcity of finance;  Big projects off-limits to domestic firms;  Inefficient custom and clearance;  Lack of skilled labor; and  Construction project delays:- Delays are endemic to construction projects in Ethiopia. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 30
  31. 31. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.1 Road Construction  The Road Sector Development Plan (RSDP) has been implemented over a period of thirteen years and in three separate phases, as follows:  RSDP I – Period from July 1997 to June 2002 (5 year plan);  RSDP II – Period July 2002 to June 2007 (5 year plan); and  RSDP III – Period July 2007 to June 2010 (3 year plan). AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 31 Phases of the Program Financial (in Million ETB) % Physical ( in km) % Budget Disb. Plan Acco. RSDP I (Five Years ) 9812.9 7284.57284.5 74 8908 87098709 98 RSDP II (Five Years) 15985.8 18112.818112.8 113 8486 1200612006 142 RSDP III (Three Years) 34643.9 34957.834957.8 101 20686 1925019250 93 Total RSDP (Thirteen Years ) 60442.6 60355.160355.1 100 38080 3996539965 105
  32. 32. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.1 Road Construction  RSDP IV is prepared as part of Governments’ overall Growth and Transformation Plan.  Implementation of RSDP IV is major strategic pillar of the Growth and Transformation Plan.  RSDP IV consists of:  Rehabilitation of 728Km of trunk roads;  Upgrading of 5,023Km of trunk and link roads;  Construction of 4,331Km of new link roads;  Heavy maintenance of 4,700Km of paved and gravel roads; and  Routine maintenance of 84,649Km of road network. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 32
  33. 33. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.1 Road Construction  The program also consists of the following regional and Wereda road components through Universal Road Access Program, URAP.  Construction of 11,212Km of new rural roads through the RRAs; and  Construction of 71,523Km of Wereda roads through the Wereda road offices.  Cost Estimate:  The total cost of implementing RSDP IV is estimated to be ETB 125,276.7 million. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 33
  34. 34. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.2 Railway Construction  Ethiopian Railway Corporation, ERC is presently managing a 5,000Km proposed National Railway Network study and the Addis Ababa Light Rail Transit (AALRT) Project. A. Addis Ababa Light Rail transit Project (AA LRT):  The 1st Phase of the LRT project comprises an East-West line from Ayat to Torhailoch (17.35Km) and a North- South line from Menelik II Sq. to Kality (16.90 Km).  The Total Length of Phase I will be 34.25Km.  Cost: USD 3 milion per Kilometre. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 34
  35. 35. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.2 Railway Construction A. Addis Ababa Light Rail transit Project (AA LRT): AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 35
  36. 36. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.2 Railway Construction B. Federal Railway Projects  Ethiopia has launched the construction of a 5,000Km railway complex which aims to link the capital, Addis Ababa, to various regions of the country.  According to the GTP 2,000Km of the total will be constructed in the next five years.  The first phase of construction will be the construction of five railway tracks, which will create job opportunities for over 300,000 citizens nationwide, and will cost the nation an estimated 6 billion Birr (US$336 million) annually. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 36
  37. 37. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.2 Railway Construction B. Federal Railway Projects AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 37 Project Phase Route Via Distance (Km) Phase I Route 1 Addis Ababa (Sebeta)_Mojo_Awash_Dire Dewa_ Djibouti 656 Part of Route 3 Addis Ababa(Sebeta)_Ejaji_Seka_Bedele 366 Part of Route 6 Weldia_Mile_Djibouti_Railway 256 Part of Route 5 Awash_Kombolcha_Mekele 556.2 Phase II Route 4 Ejaji_Nekemt_Asossa_Kurmuk 460 Route 2 Mojo_Shashemene_Konso_Woyito_ Konso_ Moyale 905 Route 7 Wereta_Azezo_Metema 244 Part of Route 5 Mekele_Shire 201.2 Part of Route 6 Fnoteselam_Bahirdar_Wereta_Weldia 461 Route 8 Adama_Indeto_Gasera 248 Extension Extension to Sudan Via Boma (not part of the project) 115
  38. 38. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.2 Railway Construction B. Federal Railway Projects AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 38
  39. 39. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.3 Hydropower Development  Ethiopia has a vast hydropower potential, which is estimated to be about 45,000 MW.  Even though Ethiopia considers itself the Powerhouse of Africa, so far very little percentage (less than 5%) of the vast potential has been harnessed.  In 2009 less than 10% of Ethiopians had access to electricity and the country was plagued by power outages. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 39
  40. 40. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.3 Hydropower Development AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 40 Name Installed Capacity Commissi oning Basin Contractor Financing Cost Fincha 134 MW 1973 Fincha (Blue Nile) Gilgel Gibe I 180 MW 2004 Omo river Salini (bid) World Bank $331m Tekeze 300 MW 2009 Tekeze (Atbara) Sinohydro Corporation (bid) Chinese $365m Beles 460 MW 2010 Lake Tana (Blue Nile) Salini (no bid) Ethiopian government Gilgel Gibe II 420 MW 2010 Omo River (no dam, fed by GG I) Salini (no bid) Italy and EIB Euro 370m Gilgel Gibe III 1870 MW 2012-13 Omo river Salini (no bid) Italy Euro 1.55bn Fincha Amerti Nesse (FAN) 100 MW 2013 Fincha (Blue nile) China (CGGC) Exim Bank of China $276m Halele Worabese 440 MW 2014 Omo river Sinohydro Corporation FairFund? Euro 470m Gilgel Gibe IV 2000 MW 2014 Tributary of the Omo River Sinohydro Corporation Chinese $1.9bn Chemoga Yeda 278 MW 2013 tributary of the Blue Nile, near Debre Markos Sinohydro Corporation Chinese $555m Genale Dawa III 256 MW Awarded in 2009 between Oromo and Somali state Chineese (CGGC) Chinese $408m
  41. 41. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.3 Hydropower Development Possible interconnection with neighboring countries AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 41
  42. 42. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.4 Wind Power Development  EEPCo has decided to use wind power for the several advantages that it posses:  Being renewable;  Being reliable and affordable;  Being complementary to hydropower plants: rainy season – low wind; dry season – high wind potential; and  combining wind and hydro adds value to the hydro plant, i.e. longer operation time, also at the end of dry season (water saving through wind). AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 42
  43. 43. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.4 Wind Power Development AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 43 S. No. Name of the project Electric power generation capacity in MW Year of completion 11 Ashengoda Wind Power ProjectAshengoda Wind Power Project 120120 ((€210 million )€210 million ) 20122012 22 Adama Wind Power ProjectAdama Wind Power Project 51 (51 ($117 million)$117 million) 20112011 3 Adama II Wind Power Project 51 2013 4 Assela Wind Power Project 100 2013 5 Ayisha Wind Power Project 300 2012 66 Debre Birhan Wind Power ProjectDebre Birhan Wind Power Project 400400 20132013 7 Messobo Wind Power Project 42 2012
  44. 44. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.4 Wind Power Development Four major search areas for wind power AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 44
  45. 45. 2. Domestic Construction Industry2. Domestic Construction Industry 2.4. Recent Trends and Future Prospects 2.4.5 Irrigation Projects 2.4.6 Housing development projects 2.4.7 University Capacity Building Projects, UCBP 2.4.8 Sugar Factory Projects 2.4.9 Fertilizer Factory Projects AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 45
  46. 46. 3. Fundamentals of Management3. Fundamentals of Management 3.1. Management: Definition  A means of achieving political, economic, and social objectives.  A means of integrating resources (materials, finance, human resources, information, etc.,) in order to achieve organizational objectives efficiently and effectively.  A means of getting things done through people in order to achieve objectives.  A process of establishing vision, mission, values, objectives, goals, and strategies and communicating these, and guiding and empowering others to accomplish them.  A process of planning, organizing, directing and controlling of organizational activities in order to achieve objectives.AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 46
  47. 47. 3. Fundamentals of Management3. Fundamentals of Management 3.2. Management Functions  Management is a set of goal-directed, interrelated and interdependent activities, aimed at accomplishing organizational goals in an efficient and effective manner.  Generally, management functions encompass: planning, organizing, leading and controlling. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 47
  48. 48. 3. Fundamentals of Management3. Fundamentals of Management Management Function inputs and outputs AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 48 Management sets direction ResourcResourc eses•HumanHuman •FinancialFinancial •Raw MaterialsRaw Materials •TechnologicalTechnological •InformationInformation Inputs PerformancePerformance •Attain goalsAttain goals •ProductsProducts •ServicesServices •EfficiencyEfficiency •EffectivenessEffectiveness Outputs Planning Controlling Organizing Leading
  49. 49. 3. Fundamentals of Management3. Fundamentals of Management 3.2. Management Functions  Planning: devising a systematic approach for attaining the goals of the organization.  Organizing: determining how activities and resources are grouped and the composition of work groups and the way in which work and activities are to be coordinated.  Leading: guiding, leading and overseeing of employees to achieve organizational goals.  Controlling: establishing performance standards and comparing results and expectations to make appropriate changes. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 49
  50. 50. 3. Fundamentals of Management3. Fundamentals of Management 3.2. Management Functions AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 50 PlanningPlanningPlanningPlanning OrganizingOrganizingOrganizingOrganizing LeadingLeadingLeadingLeadingControllingControllingControllingControlling ManagementManagement FunctionsFunctions ManagementManagement FunctionsFunctions
  51. 51. 3. Fundamentals of Management3. Fundamentals of Management 3.2. Management Functions 3.2.1 Planning  Management starts with planning. Without a plan organizations will never succeed. If they do, it will have been by luck or chance and is not repeatable. Plan, will help us in:  What to accomplish (goals);  When to accomplish the goals;  What resources to use;  Who should accomplish what;  Where to accomplish; and  What methods to use.  Assess all possible scenarios including the best and worst and what actions to take. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 51
  52. 52. 3. Fundamentals of Management3. Fundamentals of Management 3.2. Management Functions 3.2.2 Organizing  Organizing refers to the process of designing jobs and departments and determining authority relationships in organizations.  Organizing:  Permits people to work together in order to achieve goals;  Helps to achieve synergy;  Avoid duplication of resources;  Establish authority ; and  And facilitate communication. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 52
  53. 53. 3. Fundamentals of Management3. Fundamentals of Management 3.2. Management Functions 3.2.2 Organizing  Some issues in organizing include:  Specialization (division of labor);  Grouping jobs into departments and structuring (functional, product, customer, geographic, matrix);  Determining authority relationships (span of control, chain of command);  Delegation of authority; and  Centralization and decentralization. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 53
  54. 54. 3. Fundamentals of Management3. Fundamentals of Management 3.2. Management Functions 3.2.3 Leading  Influencing, inspiring and empowering employees to work towards the leaders vision.  Leading involves:  Building successful groups and teams in organizations;  Motivating people;  Communication; and  Developing organizational change. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 54
  55. 55. 3. Fundamentals of Management3. Fundamentals of Management 3.2. Management Functions 3.2.4 Controlling  The process of measuring performance, comparing it with the objectives, and making any necessary adjustments.  The purpose of control include:  Adapting to changes;  Minimizing consequences of errors;  Helping the organization cope with complexities; and  Improving efficiency. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 55
  56. 56. 3. Fundamentals of Management3. Fundamentals of Management 3.2. Management Functions 3.2.4 Controlling A. Control Purpose  The control function, in turn, has four basic purposes. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 56
  57. 57. 3. Fundamentals of Management3. Fundamentals of Management 3.2. Management Functions 3.2.4 Controlling B. Control Process AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 57
  58. 58. 3. Fundamentals of Management3. Fundamentals of Management 3.3. Levels of Management Manager: Definition AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 58  The people looking beyond themselves and exercising formal authority over the activities and performance of other people in pursuit of organizational goals.  Someone whose primary responsibility is to carry out the management process.  Someone who plans and makes decisions, organizes, leads, and controls human, financial, physical, and information resources.
  59. 59. 3. Fundamentals of Management3. Fundamentals of Management 3.3. Levels of Management A. Top Managers  The relatively small group of executives who manage the organization’s overall goals, strategy, and operating policies. B. Middle Managers  Largest group of managers in organizations who are primarily responsible for implementing the policies and plans of top managers. They supervise and coordinate the activities of lower-level managers. C. First-Line Managers  Managers who supervise and coordinate the activities of operating employees. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 59
  60. 60. 3. Fundamentals of Management3. Fundamentals of Management 3.3. Levels of Management AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 60 M arketing A dm inistration O ther H um an resources O perations Finance Middle managers Areas of Management Levels of Management First-line managers Top managers
  61. 61. 3. Fundamentals of Management3. Fundamentals of Management 3.3. Levels of Management AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 61 Lower Level Middle Level Top Level Make decision about the overall direction and performance of the organization Translate the over all direction and performance into specific objectives and plans Implement directions and plans through production and delivery of services
  62. 62. 3. Fundamentals of Management3. Fundamentals of Management 3.4. Managerial skills  Conceptual skills: the capacity to think in the abstract and to see the organization as a complete unit and to integrate and give direction to its diverse activities so that objectives are achieved.  Interpersonal skills: the ability to communicate with, understand and motivate both individuals and groups.  Technical skills: skills necessary to accomplish or understand the specific kind of work being done in an organization. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 62
  63. 63. 3. Fundamentals of Management3. Fundamentals of Management 3.4. Managerial skills AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 63 Management Skills Interpersonal Skills Communication , conflict resolution, leading Conceptual Skills Intellectual ability to process information and make accurate decision about the work, group, and the job Technical Skills Knowledge and ability to accomplish the specialized activities of the work group Top Level Middle Level Lower Level
  64. 64. 3. Fundamentals of Management3. Fundamentals of Management 3.5. Construction Management  The management of construction is an enterprise that involves many people with diverse interests, talents and backgrounds. The owner, design professional and contractor comprise the primary triad of parties,  However, others such as subcontractors, material suppliers, bankers, insurance and bonding companies, attorneys and public agency officials, are vital elements of the project team whose interrelated roles must be coordinated to assure a successful project. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 64
  65. 65. 3. Fundamentals of Management3. Fundamentals of Management 3.5. Construction Management  The function of project management for construction include:  Specification of project objectives and plans including delineation of scope, budgeting, scheduling, setting performance requirements, and selecting project participants.  Maximization of efficient resource utilization through procurement of labor, materials and equipment according to the prescribed schedule and plan.  Implementation of various operations through proper coordination and control of planning, design, estimating, contracting and construction in the entire process.  Development of effective communications and mechanisms for resolving conflicts among the various participants. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 65
  66. 66. 3. Fundamentals of Management3. Fundamentals of Management 3.6. Organization Management A. Organization  A consciously coordinated social unit, composed of two or more people influencing each other that functions on a relatively continuous basis to achieve a common goal or set of goals.  It is a structured process in which people interact and influence each other in order to achieve objectives. B. Components of Origination  People,  Influence ,  Goals or Purpose,  Structure, and  Technology.AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 66
  67. 67. 3. Fundamentals of Management3. Fundamentals of Management 3.6. Organization Management C. Organization Environment AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 67 ORGANIZATION Near or Operating Environment Customers Clients Competitors Suppliers Partners Macro or Far Environment Technological Factors Social Factors Political Factors Economic Factors
  68. 68. 3. Fundamentals of Management3. Fundamentals of Management 3.7. Organizational Structure  Organizational structures can fall into either mechanistic or organic forms.  Mechanistic organizations are rather rigid in that they comprise distinctly delineated jobs, clearly defined hierarchical structure and are driven primarily by top- down command and control. Mechanistic organizations are tall structures, consisting of hierarchies with several layers of management levels.  Organic structures are is relatively flexible. They are structurally decentralized, empowering employees at all levels of the organization to take personal responsibility for the processes and activities in which they are engaged. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 68
  69. 69. 3. Fundamentals of Management3. Fundamentals of Management 3.7. Organizational Structure  Organizational design is creating an appropriate organizational structure that will enable the organization to accomplish its goals.  The organization can choose from among functional, divisional or matrix designs, whichever is appropriate.  It is the process of arranging, allocating work authority and resources to achieve organization goals.  It involves:  Identifying tasks to be performed;  Allocating the tasks among members; and  Integrating efforts to achieve its objectives. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 69
  70. 70. 3. Fundamentals of Management3. Fundamentals of Management 3.7. Organizational Structure Key Concepts  Span of Management Control: The number of subordinates reporting directly to a given manger;  Chain of Command: The plan that specifies who reports to whom in an organization, such reporting lines are prominent features of organization chart;  Coordination: The integration of the activities of the separates parts of an organization to accomplish organizational goals; and  Downsizing: A version of organizational restructuring which results in decreasing the size of the organization and often results in a flatter organizational structure. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 70
  71. 71. 3. Fundamentals of Management3. Fundamentals of Management 3.7. Organization Structure 3.7.1. Functional Organization  In a functional organization, tasks or jobs of similar nature are grouped together and structured as a unit. Each unit is staffed by functional specialists.  Structuring the organization along the functional lines facilitates good coordination and makes supervision of the unit easy for managers as they only need to be familiar with a narrow set of skills. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 71 General ManagerGeneral Manager Marketing MgrMarketing Mgr.. Production Mgr.Production Mgr. Finance Mgr. HRM Mgr.HRM Mgr.
  72. 72. 3. Fundamentals of Management3. Fundamentals of Management 3.7. Organization Structure 3.7.2. Divisional Organization  Divisional structures are grouped according to workflow and structures are made up of independent strategic organizational units.  The workflow can be broken into product lines, geographic regions, etc. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 72 GM (Head Quarter)GM (Head Quarter) (A.A)(A.A) DGM (Awasa)DGM (Awasa) DGM (Mekelle)DGM (Mekelle) DGM (Bahir DarDGM (Bahir Dar)DGM (Jimma)DGM (Jimma)
  73. 73. 3. Fundamentals of Management3. Fundamentals of Management 3.7. Organization Structure 3.7.3. Matrix Organization  In matrix organization, individuals are made responsible both to their line manager and the project manager involved.  The matrix concept facilitates working on concurrent projects by creating a dual chain of command, the project (program, systems, or product) manager and the functional manager.  Matrix structures utilize functional and divisional chains of command simultaneously in the same part of the organization, commonly for one-of-a-kind projects. AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 73
  74. 74. 3. Fundamentals of Management3. Fundamentals of Management 3.7. Organization Structure 3.7.3. Matrix Organization AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 74 FinanceFinance GrpGrp MarketingMarketing GrpGrp MaterialsMaterials GrpGrp HRHR GrpGrp HRHR GrpGrp ProductionProduction GrpGrp FinanceFinance GrpGrp MaterialsMaterials GrpGrp ProductionProduction GrpGrp MarketingMarketing GrpGrpProject AProject A ManagerManager Project BProject B ManagerManager ProductionProduction FinanceFinance MarketingMarketing MaterialMaterial && ProcurementProcurement HumanHuman ResourceResource Head QuarterHead Quarter
  75. 75. THANK YOU! AAU, AAiT, Construction Management, Lecture Notes, March 2014, Getaneh G. 75

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