construction management

1. LECTURE 1
CONSTRUCTION INDUSTRY
All civil works such as buildings, roads,
water works, hydro- power works, etc., can
be grouped under the industry termed as
construction industry.
Principle of Construction Management

2. Construction Industry
Transportation
Infrastructure
Energy
supply
Urban
development
Water
supply
The Construction
Industry

3.  Construction is an enormously important industry
by which societies create most new values;
 Creates, defines and maintains the built environment
within which most other social and economic
activities take place;
 Most of mankind’s day-to-day activities are
dependent on the infrastructure delivered by the CI
Why Construction ?

4. The History of Construction
 Since ancient times, mankind has erected some huge
structures
The 6, 550, 000 t and137
m Pyramids of Khufu at
Giza (Circa 2500BC)
The 6,400Km long China
Wall (Around 668 BC)
The 24m and 180t Axum
Obelisk (Before the 4th
century)

5. The Development of Construction in Ethiopia
 Though some spectacular structures have been
erected, Ethiopia’s construction as industry is very
infant
 Ethiopian modernization started under Menelik II
 The Ethio-Djibouti rail ways is best example
 The Construction industry is set up in modern form
During the Majesty’s era
 Established Ministry of works, BaTCoDA, IHA, etc

6. The Current setup in Construction
 Under the current format major players of the
construction sector are
 Ministry of Infrastructure
 Ministry of Works and Urban Development
 ERA, IUHDPO, etc
 Ministry of Water Resources
 Ministry of Mining and Energy
 EEPCo

7. Status of the Global CI
 Compared to other industries, CI is labeled as
‘conservative’
 Different arguments about the advantages and disadvantages of its
conservatism.
 Some serious critics about ‘inefficiencies’ in the
industry
 Fragmented industry
 Sequential project delivery system and adversarial supply-chain
relationship
 Known for late delivery, over budget, low
profitability, poor returns and slow up take of new
technology and management philosophies

8. Characteristics of CI
 Nature of production: [usually] on site
 Changing supply-chain relationship and production site
 Exposed to inclement weather condition
 Seasonal disruption
 Health and safety concerns

9. Characteristics of CI
 Nature of product: large, heavy, durable, expensive,
heterogeneous, and immobile
 Demand is localized
 Demand doesn’t vary extensively
 Costly to abandon and rebuild

10. Characteristics of CI
 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 b/n demand and supply is long.

11. Characteristics of CI
 Structure of industry:
 Fragmented industry
 Large uncertainty
Need
ID
Desig
n
Bid Build
Client Clien
t
A/E Contrac
tor
Fragmented project
participants
Sequential process

12. Stakeholders
 Definition
 Are individuals or groups who has a vested interest in the
project or its product.
 Are parties who could have a telling effect on the
success or failure of the project

13. Stakeholders
 Classification
Positive Vs Negative
Direct Vs Indirect
Internal Vs External

14. Major stakeholders of a construction project
 The general public
 W o r k e r s
 Indirect stakeholders’
boundary
 Direct stakeholders’ boundary


 Client
 Suppliers
 Users
(Beneficiarie
s)
 Regulatory/Statutory
bodies
 Consultants
 Contractors
 Financers/
Financing
institution
s
 Trade
Unions

15. Major stakeholders of a construction project
 Client: is the party (public or private) under whose
tutelage the project is executed
 Comes up with the investment needs
Land
Pr. Idea
Capital

16. Major stakeholders of a construction project
 Client:
 [Usually] provides the infrastructure needed
 Takes care of some of the legal constraints & permits
 Pays for the project’s execution
 Major public clients in Ethiopia;
 Roads (ERA & its regional counterparts)
 Housing (IUHDPO, MoE, MoH, etc)
 Energy (EEPCo)
 Water sector (MoWR)

17. Major stakeholders of a construction project
 Consultants: are professional bodies who design the
project
 Change the clients project idea into economic and constructable
artifact
 Make sure that design satisfies requirements
 [Usually] prepare BoQ and contract documents
 If assigned to supervise:
 Look after proper execution of project
 Certify payment certificates
 Issue provisional and final acceptance certificate

18. Major stakeholders of a construction project
 Contactors: is the party that changes the drawings
and specification made by the A/E into a physical
structure
 Provides the resources needed to execute the project
 Executes the project according to plan
 Monitors project execution
 Rectifies defects

19. Major stakeholders of a construction project
 Statutory bodies: are government bodies that looks
after the project’s compliance with the general
public’s interest
 Prepare a general development scheme and make sure that the
project satisfies that
 Look after the safety, legal, commercial etc issues associated with
the project
 Look into the environmental, cultural, social etc effect that the
project induces
 The major regulatory bodies in the sector are
 MoWUD, Municipalities, The ERA, The MoWR

20. Major stakeholders of a construction project
 Suppliers: are parties that supply the varies materials,
equipments and services needed for the project
 Financers/Financial institutions: are institutions like
banks, insurances, pension agencies etc who could
provide loan services for the project
 Works in the industry: are professionals, occupationals
or unskilled laborers who earn their living from
working in the industry or its supply chain.
 Trade (labor) unions: are unions of the working class
that look after unfair treatment of workers (like
payment issues, firing issues) as well as issues related
to occupational health and safety

21. Major stakeholders of a construction project
 Project product users: are parties who may be
using the end product of the project
 The general public: are communities of the
locality, the general society of a country or even
the globe who may have a vested interest in the
project
 Other sectors: are sectors which could have
interest in the process or product on the
construction project

22. Importance of construction
 Construction constitutes about 10% GDP of many
economics; about 30% of developing countries
 111 million employment worldwide
 Defines, develops and maintains that built
environment where other activities take place
 Provides the second largest work opportunity (next
to Agriculture)

23. Major works in construction

24. Major works in construction: Ethiopia
Sector Major outputs
Road sector (RSDPI &II) 1995-2005 Upgrading, maintaining (of existing)
and construction of new roads.
Power sector
(Power SDP)
The electrification program based
on generation and transmission of
power, Built huge hydropower
projects to move the nation from
rationed power supply to the verge
of power exporter
Water works sector Many irrigation, sanitation &water
supply projects across the country
Housing/building sector (IUHDP) Huge number of housing units and
institutional (such as UCBP)
buildings being build
Private sector Vibrant private involvement with
many real estates and buildings

25. Major works in construction: Ethiopia
Sector Forecasts
Road sector
(RSDP III) 2005/6-
2009/10
106106Km road upgrading,
maintenance, construction at estimated
cost of Birr 43.16 Billn
Power sector
(Power SDP)
Huge hydropower projects still under
construction. To name a few Tekeze
(2.132 Billion), Gojeb (1.524Billion)
Water works
sector
The still running irrigation schemes
would cost the nation more than 21
billion when complete in 2010
Housing/building
sector
(IUHDP)
To build about 400,000 housing units in
the coming five years
Private sector Can only be forecasted to grow even

26. Major challenges of the industry: Ethiopia
 Considerable components of the industry’s
activities are being are implemented by
international companies (contractors, suppliers,
consultants etc)
 Reason
 Local firms lack capital (equipment and machineries), financial,
institutional (managerial, experience reputation, etc), human
(competency and capability), etc resources to satisfy financers’
requirements
 Effect on the industry
 Lost opportunity to build capacity of local firms
 Lose in business and job opportunities for citizens
 Siphoning of in hard currency

27. Major challenges of the industry: Ethiopia
 Most of the projects delivered have failed under the
conventional project success criteria of being
delivered on time, on budget and to the standard
and quality required
 Reasons:
 Incapable industry (capacity and competency) as seen from quite
various aspects
 Various unprofessional (particularly in terms of systems and
managerial) and non ethical practices
 Effect on the industry
 Lost opportunity to improve and grow
 Huge impact on the country’s already constrained resource
 Necessity to maintain infrastructure before their due period etc

28. Why Construction Management?
 Management is defined as the art of arranging
and/or organizing various activities, operating
equipment and group of people in a suitable manner
to create systematic operation with continuity to
achieve a common goal.
 As construction is also one of the industries which
need the proper systematic coordination of activities,
materials, labor and operating equipment, therefore
managing such industry is necessary.

29. Why Construction Management?
Construction management is necessary to insure:
 Proper planning and organization of the works,
 The effective use of resources,
 The completion of works within estimated budget and specified
time,
 In time delivery and utilization of materials,
 The necessary quality of the work,
 Proper usage of equipment and latest methods of construction
and technology,
 Evolving a reputation for high quality of workmanship,
 Controlling over the contract agreed upon and specification

30. Why Construction Management?
 Motivating people to work to their best and creating an
organization that works as a team,
 In taking sound decisions at the lowest practical
management level through delegation of authorities,
 Proper communication and reporting of the works
executed,
 The provisions of safe and satisfactory working conditions
for all workers,
 Monitoring of the works to be executed against planning,

31. Why Construction Management?
 Proper sequence of flow of construction, and
 Proper coordination of the resources to create an
organization that works as wholesome to fulfill the
objectives.