Characteristics of CI

1. CHAPTER-TWO
THE CONSTRUCTION
INDUSTRY
Compiled by: Instructor Tariku Dessu(M.Sc.)
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2. Definition
 Construction Industry is an industry which is involved in
the planning, execution and evaluation of all types of civil
works
 Construction Industry Categories:
I) Transport and Communication (Road, Railway, Airway, and
Telecommunication
II) Water and Energy Works; and
III) Buildings and Other Physical Infrastructures
 Construction Industry is among the leading industry in
producing employment and contribute to the overall national
development.
Compiled by: Instructor Tariku Dessu(M.Sc.)
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3. Characteristics of Construction
Projects
 A construction project is made up of a group of interrelated work
activities constrained by a specific scope, budget, and schedule to
deliver assets needed to achieve the strategic goals of an
Organization.
 Thus, projects are defined by their scope, budget, and schedule.
 Scope: Each project is unique and must have a written requirements
document that takes into consideration operational needs, level of
service, regulatory requirements etc.
 Schedule: All projects must have a definite beginning and end.
Once there is a well-defined scope, the Organization needs to
determine the time it will take to complete the project by developing
Compiled by: Instructor Tariku Dessu(M.Sc.)
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4. Developing the schedule involves breaking down the work into
manageable activities needed to accomplish the scope of each
deliverable, estimating the duration of each activity, and placing
them in a logical sequence.
The result is a project schedule that tells you the expected
duration of the project and the logical relationships between the
activities, including activities on the “critical path,” that controls the
end date.
Budget: All projects are constrained by limited monetary funding
resources. Consequently, every project needs a budget to initially
define its funding requirement.
Cont.…
Compiled by: Instructor Tariku Dessu(M.Sc.)
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5. Examples of project include:
Construction a building or facility
Developing a new product or service
Effecting a change in structure, staffing, or style of an
organization
Designing a new transportation vehicle/aircraft
Developing or acquiring a new or modified
information system
Running a campaign for political office
Implementing a new business procedure process etc.
Cont.…
Compiled by: Instructor Tariku Dessu(M.Sc.)
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6. So, a construction project is an investment of
scarcer sources with a definite objective, time horizon
and geographical boundary.
What makes construction projects UNIQUE?
They deal with geographical differences and natural
events in every case and may have a significant effect
on the environment
Often require large amounts of materials and physical
tools
Involves many stakeholders etc.
Cont.…
Compiled by: Instructor Tariku Dessu(M.Sc.)
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7. A construction project is a unique product, it has:-
Compiled by: Instructor Tariku Dessu(M.Sc.)
A). Internal
Characteristics
• Many stakeholders
• Involves major
capital investment
• Great diversity of
end uses
• Many work sites and
use of large, mobile
equipment
• Works not removable
• Often high-value and
long lasting
• B). External
Environment
• Natural hazards
(flood, lighting,
earthquake, storm)
• Site conditions
• Surrounding
property/structure
• Theft, war,
unproductive labor
and strikes
C). Management Aspects
• Contractual obligations
• cost control
• Time control
• Quality control
• Contract mgmt.& Adm.
• Environmental
protection
• Health and safety
management
• Political risk
management etc.
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8. Hence, Construction Industry is Unique because:
 It is Fragmented Industry;
 It has Long production cycle;
 It has Transient organization nature;
 It involves Unpredictable work load;
 It is Subject to Environmental Impact etc.
Compiled by: Instructor Tariku Dessu(M.Sc.)
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9. Major works in construction
Construction
Buildings and
related
works
Infrastructure
works
Transportation Energy & Mining
Water Resource
Development
works
Civil work in
Communication
Compiled by: Instructor Tariku Dessu(M.Sc.)

10. Characteristics of construction project
I) High risk and uncertainty.
 Anticipated & Emergent risks.
 Political aspect
 a non conducive politic climate for investment
 Lack of law enforcement
 Regulation & policy aspect
 Regulation in export – import limitation
 Influences of increasing in tax policy
 Complicated & difficult bureaucracy in giving
construction permission
 Financial aspect etc.
 Payback period longer than expected
 Fluctuations in foreign currency
 High overhead cost
Compiled by: Instructor Tariku Dessu(M.Sc.)

11. Characteristics of construction project
Contd..
II) Varity of technology.
III) Highly flexible organization.
 The plan needs to be flexible enough to be
integrated into virtually any project with minor
changes in details.
IV) Highly customized product.
 Can be modify or build according to individual
or public specifications or preference.
V) Vulnerable to market forces.
 influenced by market forces
Compiled by: Instructor Tariku Dessu(M.Sc.)

12. Compiled by: Instructor Tariku Dessu(M.Sc.)
Roles of Construction Industry
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13.  The main players in the construction industry are:
 The Client:
 The Consultant:
 The Contractor:
 Insurance Companies:
 Banks:
 Suppliers:
 Permitting Agencies:
 Public
 Etc.
Compiled by: Instructor Tariku Dessu(M.Sc.)
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14. Compiled by: Instructor Tariku Dessu(M.Sc.)
Stakeholders of Construction Industry
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15. Cont.…
Compiled by: Instructor Tariku Dessu(M.Sc.)
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16. Cont.…
Compiled by: Instructor Tariku Dessu(M.Sc.)
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17. Cont.…
Compiled by: Instructor Tariku Dessu(M.Sc.)
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18. Compiled by: Instructor Tariku Dessu(M.Sc.)
Current Status of Local Construction Industry
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19. Compiled by: Instructor Tariku Dessu(M.Sc.)
Challenges of Domestic Construction Industry
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20. 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.
 Every Construction project is: an investment of resources
and a cause of irreversible change.
Compiled by: Instructor Tariku Dessu(M.Sc.)
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21. Compiled by: Instructor Tariku Dessu(M.Sc.)
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22. Resources for the Construction Industry
 Human Resources / Labor or Workmen
 Financial Resources / Fund
 Information Resources
 Physical Resources such as Materials, Equipment and
 Other Assets
 Services and Management
Compiled by: Instructor Tariku Dessu(M.Sc.)
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23. Stages in Construction
I. Inception and feasibility
II. Planning and Design
III. Tendering Stages
IV. Bid Evaluation
V. Award of Contract
VI. Construction Stage
VII.Commissioning and Acceptance
VIII.Provisional Acceptance
IX. Final Acceptance
Compiled by: Instructor Tariku Dessu(M.Sc.)
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24. Compiled by: Instructor Tariku Dessu(M.Sc.) 24
I) What is a Project Stakeholder?
II) Each of the stakeholders has their own role in construction projects, then
state their roles in brief to accomplish the project successfully.
Stakeholders Roles
Beneficiaries / Users
Client / Employer
Consultants
Constructors/Contractor
Suppliers / Sub contractors
Financiers / Sponsors
Public works bodies
Legislative Bodies
General Audit
Individual Assignment-2

25. END…
THANK
YOU!
FOR YOUR
ATTENTION
Compiled by: Instructor Tariku Dessu(M.Sc.)
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