An Najah National University
Faculty of Engineering
CONSTRUCTION ECONOMICS &
MANAGEMENT
Dr. Mohammed ABUNEMEH
Course Outline
Introduction
Life cycle of construction project
Foundation of engineering economy
How time and interest affect money
Examples on combined factors
Present worth analysis
Construction scheduling technique and usage of bar chart.
Critical Path Method (CPM); precedence diagramming method
Resource planning and cash flow analysis
Type of construction contracts
Course Outline
Quantity surveying & Estimating construction cost
Bid documents
Grading System
Grading policy for this course will be based on the following:
First Exam 25%
Second Exam 25%
Final Exam 50%
Text Book & References
Text Book:
Estimating Construction Cost, Robert R. Peurifoy
Edward Fisk and Wayne Reynolds, "Construction Project
Administration", 9th edition
Hinze, Jimmie, “Construction Planning and Scheduling”, 3rd Ed.,
2008
Blank, L. & Tarquin, A., (2012), Engineering Economy 7th
Edition, New York: McGraw-Hill.
Introduction
Definition of Terms:
Construction Management
Construction Contracting
One-to-One Concept (in organization)
Construction Management
Construction:
The process by which material, equipment,
machineries are assembled into a permanent facility.
Management
The planning, directing, and controlling of resources
(Material, Manpower, Machines, Money) to achieve
the desired goal (Time, Cost, Quality)
Construction Management
Covers the following area:
Planning and Scheduling
Business and communication system
Material control
Payment procedure
Changes to the work
Inspection and acceptance
Construction Contracting
Contracting:
The legal and business activities needed for initiating,
executing, and terminating a construction contract.
One-to-One Concept
Previous Administration functions involve different
parties (Owner, contractors, Engineers)
To minimize confusion, conflicts, claims, use:
One to One concept
Each party has a single representative who
communicates important project information and
orders.
Classification of Construction Projects:
By Size: Small, Medium, Large, Mega.
By Ownership: Private, Public, Military.
By Usage: Residential, Commercial, Industrial,
Utility. (Usage can be expanded to subcategories).
By Scope (preferred):
Building (Residential, non residential), emphasis
on aesthetics.
Engineering (Highway, Heavy, Utility) emphasis
on function
Industrial: emphasis on production
The Construction Participants
Three key players in the game:
The client (or Owner or stakeholder)
The A/E or consultant
The contractor (or Constructor or Builder)
Relationship Among Parties
contract General
Owner
build
Contractor
own
contract Project
contract
build
Design
A/E Subs
The Owner
The owner is responsible for:
Funding and paying bills for the construction of project.
Determining what the project will include (also called the
scope of the project), when the project can begin and must
end (the schedule),
Receive the ultimate benefits of the finished project.
The Owner
Owner organizations can be broken into two major categories,
public and private.
A public agency exists for the ultimate benefit of the
citizens, the general public. Examples of public projects:,
an highway, or an Universities, schools.
A private organization can be described as any individual,
partnership, corporation, or institution that builds a project
for its own use or for resale.
The owner enters into separate contract with Architect and
contractor.
The Design Professional
The consultant is a party of the contractual relationship has
professional skills in engineering whether civil, structure,
architectural, mechanical. Etc.
Who acts in behalf of the client.
The Design Professional
The major role of the design professional:
Is to interpret or assist the owner in developing the project's scope,
budget, and schedule and to prepare construction documents that
will be used by the construction contractor to build the project.
The architect typically sub-contracts portions of work to other
design professionals such as structural engineers, landscape
architects, electrical & mechanical engineers
In almost all cases the design professional is a licensed, registered
professional who is responsible for the physical integrity of the
project.
The Contractor
A contractor is an individual or an entity that enters into a
contract with the owner to carry out the construction work.
If only one contractor is appointed he may be known as the
main/prime contractor.
The Contractor is responsible for the interpretation of the
contract documents into physical facility. Transform idea to
reality
The Contractor
In most cases the prime contractor divides the work among
many specialty contractors called subcontractors. On a large
project these subcontractors may also divide up the work into
even smaller work packages
The Subcontractors
A contractor assigned and work under the supervision of the
main contractor and who has special skills, experiences and
equipment to deal with specialized aspects of the work.
Nominated subcontractor
Non-nominated subcontractors
Project Life Cycle
The major phases in the project cycle that are common to
most design and construction projects are:
Project Planning
Design
Schematic Design
Design Development
Contract Documents
Construction Procurement (Bidding Phase)
Construction
Occupancy
Project Planning Phase
During this phase of the project the owner makes decision that
set the tone for the project. All projects begin with an idea or a
need
The most critical decision that is made during this project
phase is to make a decision as to whether or not to proceed
with the project (called a go/no go decision).
Project Planning Phase
Phase activities:
Feasibility studies
Budgeting & Financing
Scheduling
Site selection/acquisition
Site investigation
Design Phase
Design process involves:
Schematic Design
Talk to owner, rough sketches
Design Development
Major Systems & component selected
Contract Documents
Preliminary Cost estimate
Develop Preliminary working drawings
Develop working drawings with Specifications
Schematic Design
The A/E reviews and evaluates the owner’s program and budget
requirements and discusses with the owner alternative approaches to
the design and construction
During schematic design, the A/E prepares conceptual design
documents. These may include: preliminary sketches ,small scale
schematic plans, elevations, sections, diagrams, and other graphic
and written documents, General written description of project.
The completion of the schematic design phase represents
approximately 30 percent design completion for the project
Design Development
The design development phase takes the project from about 30
percent to approximately 60 percent design.
It is the time when the design team will be evaluating and selecting
all the major systems and components of the project.
During this phase of the project the design team is involved in the
evaluation and finalization of all the architectural components and
project systems.
Contract Documents
Construction Procurement:
Solicitation
Proposal preparation
Bid/proposal opening
Bid/proposal evaluation
Award of contract
Final negotiation
Construction
Mobilization
Subcontracting
Purchasing
Permits
Site preparation
Foundations
Interior finishes and equipment
Occupancy/ Post Construction:
Start-up and testing
Leasing
Operation
Correction
Repairs/maintenance
Building evaluation
Level of Influence on cost
Project Cost
Influence
Time
