Construction Management

It’s often said that the construction professional has to be a “jack of all trades, and master of all.” This text covers a wide range of subjects, reflecting the breadth of knowledge needed to understand the dynamics of this large and complex industry. This edition includes updated chapters on planning and scheduling, a new chapter addressing linear scheduling methods, material regarding the historical background of construction as a profession, and includes an Instructor Resource of solutions to the end-of-chapter review exercises. This text has become a standard course text at many universities. The first four editions have enjoyed wide success as an introductory treatment of the subjects which are critical to success in the construction industry. This fifth edition preserves the features that have been most appreciated by its users throughout the years, and adds suggestions provided by instructors and students through formal surveys and informal feedback to the authors.

Table of Contents:
About the Authors v Preface vii 1 History and Basic Concepts 1 1.1. Bridges and History 1 1.2. The Historical Impact of Construction 2 1.3. Great Captains of Construction 3 1.4. Panama Canal 5 1.5. Other Historic Projects 8 1.6. Construction versus Manufacturing Processes 9 1.7. Project Format 10 1.8. Project Development 11 1.9. Construction Technology and Construction Management 12 1.10. Construction Management Is Resource Driven 13 1.11. Construction Industry 14 1.12. Structure of the Construction Industry 14 1.13. Differing Approaches to Industry Breakdown 15 1.14. Management Levels of Construction 16 Review Questions and Exercises 18 2 Preparing the Bid Package 19 2.1. Project Concept and Need 19 2.2. Establishing Need 20 2.3. Formal Need Evaluation 21 2.4. Conceptual Drawings and Estimates 22 2.5. Preliminary and Detail Design 27 2.6. Notice to Bidders 28 2.7. Bid Package 28 2.8. General Conditions 33 2.9. Supplementary Conditions 34 2.10. Technical Specifications 34 2.11. Addenda 38 2.12. Decision to Bid 38 2.13. Prequalification 39 2.14. Subcontractor and Vendor Quotations/Contracts 39 2.15. Bid Bond 40 2.16. Performance and Payments Bonds 41 2.17. Cost and Requirements for Bonds 42 Review Questions and Exercises 3 Issues During Construction 45 3.1. Acceptance Period/Withdrawal 45 3.2. Award of Contract/Notice to Proceed 46 3.3. Contract Agreement 47 3.4. Time Extensions 47 3.5. Change Orders 48 3.6. Changed Conditions 49 3.7. Value Engineering 50 3.8. Suspension, Delay, or Interruption 51 3.9. Liquidated Damages 53 3.10. Progress Payments and Retainage 54 3.11. Progress Reporting 55 3.12. Acceptance and Final Payment 55 3.13. Summary 57 Review Questions and Exercises 4 Contracts 59 4.1. Contract Environment 59 4.2. Process of Purchasing Construction 60 4.3. Major Construction Contract Types 61 4.4. Competitively Bid Contracts 61 4.5. Stipulated-Sum Contracts 62 4.6. Unit-Price Contracts 63 4.7. Negotiated Contracts 66 4.8. Project Delivery Methods 68 4.9. Design-Build Contracts 69 4.10. Design-Build in a Consortium Format 70 4.11. Construction Management Contracts 71 4.12. Construction Management At-Risk 72 4.13. Comparing Project Delivery Methods 72 Review Questions and Exercises 73 5 Legal Structure 75 5.1. Types of Organization 75 5.2. Legal Business Forms 75 5.3. Proprietorship 76 5.4. Partnership 77 5.5. Corporation 78 5.6. Comparison of Legal Structures 82 5.7. Joint Venturing 84 Review Questions and Exercises 85 6 Impact of Taxes 86 6.1. Society and Taxation 86 6.2. Business Impact of Taxation 87 6.3. Why Taxes? 88 6.4. Types of Taxes 88 6.5. Income Tax Systems 88 6.6. Taxation of Businesses 89 6.7. Business Deductions in General 91 6.8. Taxable Income: Individuals 91 6.9. Itemized Deductions, Standard Deductions, and Personal Exemptions 92 6.10. The Tax Significance of Depreciation 93 6.11. Marginal Tax Rates 93 6.12. Tax Credits 95 6.13. Tax Payroll Withholding 96 6.14. Tax Payment Schedules 96 6.15. Marginal, Average, and Effective Tax Rates 97 6.16. Summary 97 Review Questions and Exercises 98 7 Project Planning 99 7.1. Introduction 99 7.2. Work Breakdown Structure 100 7.3. Developing the Work Breakdown Structure 102 7.4. A Work Breakdown Example 102 7.5. Work Packages for the Gas Station Project 103 7.6. Determining Sequence of Work Packages 104 7.7. Estimate Development and Cost Control Related to the Work Breakdown Structure 106 7.8. Role of Code of Accounts 108 7.9. Summary 109 Review Questions and Exercises 109 8 Project Scheduling 111 8.1. Introduction 111 8.2. Estimating Activity Durations 112 8.3. Using Historic Productivity Data 113 8.4. Bar Charts 113 8.4.1. Description 113 8.5. Scheduling Logic 116 8.6. Scheduling Networks 119 8.7. The Critical Path Method 119 8.8. Forward Pass 120 8.9. Backward Pass 122 8.10. Activity Floats 123 8.11. Working to Calendar Dates 125 8.12. Example: Scheduling the Small Gas Station 127 8.13. Summary 130 Review Questions and Exercises 130 9 Scheduling: Program Evaluation and Review Technique Networks and Linear Operations 134 Review Questions and Exercises 148 10 Resource-Related and Advanced Linear Scheduling Techniques 152 10.1. Resource Scheduling 152 10.2. Resource Allocation 152 10.3. Resource Leveling 153 10.4. Time–Cost Trade-off 155 10.5. Linear and Repetitive Scheduling Techniques 156 10.6. Linear Scheduling Method 158 10.7. Case Study of a Linear Project 160 Review Questions and Exercises 163 11 The Mathematics of Money 164 11.1. Introduction 165 11.2. Time Value of Money 165 11.3. Factors Determining the Time Value of Money 166 11.4. Simple and Compound Interest 166 11.4.1. Simple Interest 166 11.4.2. Compound Interest 167 11.5. Nominal and Effective Rate 167 11.6. Equivalence and Minimum Attractive Rate of Return 168 11.7. Discount Rate 169 11.8. Sunk Costs 169 11.9. Cash Flow Diagrams 169 11.10. Annuities 170 11.11. Conditions for Annuity Calculations 170 11.11.1. Present Value of an Annuity: Finding P Given A 171 11.11.2. Installments Paying for an Item: Finding A Given P 172 11.12. Future Value of a Series of Payments: Finding F Given A 172 11.13. Annuity Required to Reach a Goal Amount: Finding A Given F 173 11.14. Summary of Equivalence Formulas 173 11.15. Worth Analysis Techniques: Rationale and Vocabulary 175 11.16. Present Worth Analysis 175 11.16.1. Example: Small Excavator 175 11.17. Equivalent Annual Worth 176 11.17.1. Example: Best Job Offer 176 11.18. Internal Rate of Return 176 11.19. Limitations of the Internal Rate of Return Method 177 11.20. A Practical Example Using Present Worth Analysis 177 11.21. Comparison Using Equivalent Annual Worth 179 11.22. Summary 181 Review Questions and Exercises 181 12 Project Cash Flow 183 12.1. Cash Flow Projection 183 12.2. Cash Flow to the Contractor 184 12.3. Overdraft Requirements 186 12.4. Comparison of Payment Schemes 188 Review Questions and Exercises 192 13 Project Funding 194 13.1. Money: A Basic Resource 194 13.2. Construction Financing Process 195 13.3. Long-Term Pro Forma Example 195 13.4. Mortgage Loan Commitment 198 13.5. Construction Loan 199 13.6. Owner Financing Using Bonds 201 13.7. Build, Operate, and Transfer 203 Review Questions and Exercises 204 14 Equipment Ownership 205 14.1. General 205 14.2. Equipment Ownership and Operating Costs 206 14.3. Depreciation of Equipment 207 14.4. Straight-Line Method 209 14.5. Declining Balance 211 14.6. Production Method 213 14.7. Depreciation Based on Current Law 213 14.8. Depreciation versus Amortization 215 14.9. Interest, Insurance, and Tax Costs 215 14.10. Operating Costs 217 14.11. Overhead and Markup 219 Review Questions and Exercises 219 15 Equipment Productivity 221 15.1. Need for Heavy Equipment 221 15.2. Productivity Concepts 222 15.3. Cycle Time and Power Requirements 225 15.4. Power Available 227 15.5. Usable Power 232 15.6. Equipment Balance 235 15.7. Random Work Task Durations 239 Review Questions and Exercises 241 16 Construction Labor 243 16.1. The Labor Resource 243 16.2. Short History of Labor Organizations 244 16.3. Early Labor Legislation 245 16.4. Norris-LaGuardia Act 246 16.5. Davis-Bacon Act 246 16.6. National Labor Relations Act 247 16.7. Fair Labor Standards Act 248 16.8. Union Growth 248 16.9. Labor Management Relations Act 249 16.10. Other Labor Legislation 251 16.11. Vertical versus Horizontal Labor Organization Structure 252 16.12. Jurisdictional Disputes 253 16.13. Union Structure 254 16.14. National Unions 256 16.15. State Federations and City Centrals 256 16.16. Union Locals 256 16.17. Union Hiring Halls 16.18. Secondary Boycotts 257 16.19. Open-Shop and Double-Breasted Operations 259 16.20. Labor Agreements 259 16.21. Labor Costs 260 16.22. Average Hourly Cost Calculation 264 Review Questions and Exercises 266 17 Estimating Process 268 17.1. Estimating Construction Costs 268 17.2. Types of Estimates 268 17.3. Detailed Estimate Preparation 271 17.4. Definition of Cost Centers 274 17.5. Quantity Takeoff 274 17.6. Methods of Detailed Cost Determination 278 17.7. Problems with Unit-Cost Method 280 17.8. Resource Enumeration 282 17.9. Work Package or Assembly-Based Estimating 284 17.10. Summary 286 Review Questions and Exercises 288 18 Cost Control 289 18.1. Cost Control as a Management Tool 289 18.2. Project Cost Control Systems 289 18.3. Cost Accounts 290 18.4. Cost Coding Systems 292 18.5. Project Cost Code Structure 292 18.6. Cost Accounts for Integrated Project Management 296 18.7. Earned Value Method 299 18.8. Labor Cost Data Collection 305 18.9. Charges for Indirect and Overhead Expense 307 18.10. Project Indirect Costs 309 18.11. Fixed Overhead 309 18.12. Considerations in Establishing Fixed Overhead 310 Review Questions and Exercises 312 19 Materials Management 314 19.1. Material Management Process 314 19.2. The Order 315 19.3. Approval Process 320 19.4. Fabrication and Delivery Process 322 19.5. Installation Process 323 19.6. Material Types 324 Review Questions and Exercises 326 20 Safety 327 20.1. Need for Safe Practice 327 20.2. Humanitarian Concerns 328 20.3. Economic Costs and Benefits 328 20.4. Uninsured Accident Costs 331 20.5. Federal Legislation and Regulation 332 20.6. Occupational Safety and Health Administration Requirements 334 20.7. How the Law Is Applied 334 20.8. Safety Record Keeping 337 20.9. Safety Program 338 Review Questions and Exercises 345 Appendices 347 Appendix A Typical Considerations Affecting the Decision to Bid 348 Appendix B Performance and Payment Bonds 351 Appendix C Arrow Notation Scheduling Calculations 356 Appendix D Generalized Network Relationships 362 Appendix E Productivity Scheduling Method Using Singularity Functions 368 Appendix F Plans for Small Gas Station 371 Appendix G Compound Interest Table 374 Appendix H Site Reconnaissance Checklist 375 Appendix I The Cumulative Normal Distribution Function 377 Bibliography 381 Index 385

About the Author :
Daniel W. Halpin is Professor Emeritus and retired Bowen Head of the Division of Construction Engineering and Management at Purdue University. He is a graduate of the U.S. Military Academy at West Point and received the MSCE and PhD degrees in Civil Engineering from the University of Illinois in 1969 and 1973. Prior to attending Illinois, he served in the U.S. Army Corps of Engineers receiving the Bronze Star Medal for service in the Republic of Vietnam. His awards include the Walter L. Huber Civil Engineering Research Prize (1979) and the Peurifoy Construction Research Award (1992) both given by the American Society of Civil Engineers (ASCE). ASCE recognized his achievements with distinguished membership (Dist.M.ASCE) in 2006. Also in 2006, the Construction Industry Institute (CII) awarded him the prestigious Carroll H. Dunn Award of Excellence, CII’s highest award. He is a member of the National Academy of Construction (NAC) and was named a Distinguished Alumnus of the Department of Civil and Environmental Engineering at the University of Illinois in 2008. Bolivar A. Senior, PhD, is Associate Professor in the Department of Construction Management at Colorado State University, Fort Collins CO. He graduated with a degree in Civil Engineering at the Universidad Nacional Pedro Henríquez Ureña, Dominican Republic, his country of origin. He earned his Master’s degree at the Georgia Institute of Technology, and his doctorate at Purdue University, Indiana. Prior to his academic career, Dr. Senior served in the Dominican Republic as a contractor and consultant for construction project planning, control and financial management. He has served as consultant in productivity improvement and scheduling for projects in Colorado, USA, and coauthored the textbook Financial Management and Accounting Fundamentals for Construction (Wiley). His scholarly work emphasizes the areas of Lean Construction, productivity improvement and teaching methods. Gunnar Lucko, PhD, is Professor of Civil Engineering at Catholic University of America and Director of its Construction Engineering and Management Program. He received his Doctor of Philosophy from the Vecellio Construction Engineering and Management Program at Virginia Tech in 2003 and a Master of Science in 1999. He also holds a Diploma in structural and environmental engineering from Hamburg University of Technology in his native Germany. His scholarship has been recognized by the American Society of Civil Engineers with the 2013 Daniel W. Halpin Award for Scholarship in Construction and the 2011 Thomas Fitch Rowland Prize. His research interests include mathematical modeling, analysis, and optimization of project schedules in conjunction with aspects like cost and resource use, as well as construction equipment operations and economics, and engineering education.