BUSINESS ECONOMICS AND ENTREPRENEURSHIP

Aleš Tomek

Hal Johnston

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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2

List of Lessons

1. Emerging Trends AT & HJ2. Business Strategies AT & HJ3. Financial Management AT & HJ4. Risk Management AT & HJ5. Project Management AT & HJ

6. Advanced Systems AT & HJ 7. Standard Contracts AT & HJ 8. Cash Flow Planning AT & HJ9. Sustainability Concepts AT & HJ

10. Summary AT & HJ

Topic for TodayProject Management

Hal Johnston

Faculty of Civil Engineering

Department of Economics and Management

Czech Technical University in Prague

Project Management for Superior PerformancePart 1 - Introduction

Czech Technical University in Prague

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Objectives

• Today we will present the following:

– Reasons for a different type of management for project-based firms

– Attributes of construction projects requiring special management techniques

– Goals and objectives of construction projects

– Management techniques that can be used to successfully meet the goals and objectives of construction projects

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Introduction to Project Management

• Management is a discipline

– Large, broad-based field

• Project management

– Management of several projects

• Separate entities

– Finite time frame

• Associated with completion date

– Primary purpose: to achieve project goals

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Attributes of Construction Projects

• Include:

– Specific parameters (e.g., budget)

– Finite durations

– Located away from company

– Each project requires separate management

– Single source of responsibility

– Separate cost accounting element

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Attributes of Construction Projects (cont’d.)

– Single project can have thousands of parts, systems, and equipment

– Substantial purchases may be required

– Substantial subcontracting is used

– Construction companies have numerous projects at the same time

– Single owner or customer

– Each site is controlled by the contractor

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Goals and Objectives of Construction Projects

• Project goals

– Example: successful and profitable

• Objectives

– Definable tasks that support goals

• Time frame and level of quality

• Cost control and safety program effectiveness

• Customer satisfaction

• Effective management of subcontractors

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Management Techniques to Achieve Project Goals and Objectives

• Management techniques

– Necessary to control project building

• In order to achieve objectives

– Wide variety

– Takes a team to design and build facilities

• Managers control all variables

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Organization of the Project Delivery System

• Needs to be cost-effective

– Personnel varies according to project

• Project duration, size, and contract type

• Amount of self-performed work

• Personnel available and crew size

• Multiple areas of work and contracts

• Reporting requirements to the customer

• Extent of cost control and reporting required

• Public versus private work and market

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Leadership

• Attributes:

– Vision of entire project

– Plans for achieving completed project

– Insistence of meeting financial goals

– Understand crews and provide motivation

– Communication– Maintain relationships

with upper management

– Critical decision timing– Company loyalty

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

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Problem Solving

• Considerations:

– Full impact on subcontractors, suppliers, and contractor

– Cost impact

– Time impact

– Best solution for project conditions

– Best method of resolving conflicts

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

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Reporting and Record Keeping

• Provides:

– Communication between field and home office

– Communication with client and consultants

– Systematic and regular analysis of current conditions by field personnel

– Historical record for project documentation

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Planning and Scheduling

• Enables completion on a finite date

– Plan: organizes the project

– Schedule: tool for communicating the plan

• Flexible

– Can be modified to changing conditions

• Initial planning: project management basis

• Continual planning and scheduling: addresses conditions that arise

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Cost Control

• Containing construction costs

– Within budget established by cost estimate

• Involves use of comparison

– May indicate a need to change methods, techniques, or crew composition

• Can help achieve additional profits

• Ensures accurate cost database

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Flow of Cost InformationDelmar/Cengage Learning

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Quality Management

• Has become an important part of project management’s tasks

– Quality has several meanings

• Meeting expected level of material

• Maintaining the level of workmanship

• Earning general customer satisfaction

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Safety Management

• Proactive safety management program

– Economic benefits

• Workers’ compensation premiums

• Insurance premiums

– Tied to company-wide performance record

– Goal: prevent all jobsite accidents

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Contract Compliance

• Submittals include:

– Material and permanent equipment submittals

– Shop drawings

– Project meetings

– Change control, documentation, and compensation

– Progress payments and project closeout

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Computerized Record Keeping

• Helps compile, organize, and analyze project progress information

– Time, cost, and project data recorded on the jobsite

• Timely production of quality, usable information

• Facilitates problem solving and communication during the project

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Summary

• Construction organizations:

– Rely on project management to manage profit centers

• Goals of a construction project:

– To be successful and profitable

• Variety of techniques used

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

Properties

Thermal

Mechanical

Transfer of heat

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Elemental analyses

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23

End of Part 1 of topicsQuestions?

Project Management for Superior Performance

Part 2 - The Project Team

Czech Technical University in Prague

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Objectives

• Part 2 will introduce the following:

– Traditional delivery system and the relative roles within that system

– Roles and responsibilities of the participants in the traditional system for the owner, architect, and contractor

– Construction management form of the construction delivery system and the relationships of the roles within that system

– Design-build delivery system with examples of the roles and responsibilities within that system

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Roles, Responsibilities, and Authority of Project Participants

• Delivery systems

– Provide a matrix of organization

• Formal and informal contractual relationships between participants

• Standard contractual forms are available for each delivery system

– Professional and trade associations

• Produce and endorse contractual agreements

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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The Traditional Contract Project Delivery System

• Referred to as “design-bid-build”

– Primary contractual parties:

• Owner, architect, and contractor

– Neither the architect nor the contractor does 100% of the work assigned

• Each makes an agreement with others involved to accomplish specific areas of work

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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The Traditional Construction Delivery SystemDelmar/Cengage Learning

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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The Traditional Contract Project Delivery System (cont’d.)

• Methods of compensation:

– Lump-sum contract

– Cost, plus a fee

– Cost plus, with guaranteed maximum price

– Unit price contract

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Responsibilities of the Contractual Parties

• Owner:

– Paying for the work and project coordination

– Site, scope, and documents

• Architect:

– Project design and construction documents

• Contractor:

– Labor, material, equipment, expertise, and means to complete the project

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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The Owner’s Roles During the Construction Phase

The Owner’s Organization for the Construction ProjectDelmar/Cengage Learning

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

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The Architect’s Roles During the Construction Phase

Architect’s OrganizationDelmar/Cengage Learning

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

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The Contractor’s Roles During the Construction Phase

Contractor’s Project OrganizationDelmar/Cengage Learning

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

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Contractor’s Project Organization, Project Manager,and Superintendent ParallelDelmar/Cengage Learning

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

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Other Roles in the Construction Process

• Significant roles played by other entities

– Majority are regulatory agencies

List of Typical InspectionsDelmar/Cengage Learning

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

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Communications in the Traditional System

Communication Matrix, Traditional SystemDelmar/Cengage Learning

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

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The Construction ManagementDelivery System

• Contractor-based management systems

– Applied early in the project

• Provides more tools and controls

• Forms of CM:

– Agency CM

– CM-at-Risk, CM/GC, Multiple Prime, or Guaranteed Maximum Price (GMP)-CM

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

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Notes Organization of the CM Delivery System (Agency CM)Delmar/Cengage Learning

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

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Roles of the CM Project Team

Construction Management RolesDelmar/Cengage Learning

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

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Communications in the CM Delivery System

Communications in the Construction Management SystemDelmar/Cengage Learning

European Erasmus Mundus Master Course

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The Design-Build Delivery System

• Single-source procurement

– Design and construction provided for GMP

• “Cost not to exceed” price

• Often includes a cost-savings split clause

– Design-build firm

• Facilitator for designers and constructors

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

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NotesDesign-Build Organization IDelmar/Cengage Learning

Design-BuildOrganization IIDelmar/Cengage Learning

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

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NotesDesign-BuildOrganization IIIDelmar/Cengage Learning

Design-Build Organization IVDelmar/Cengage Learning

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

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Communications in the Design-Build Delivery System

Design-Build CommunicationsDelmar/Cengage Learning

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

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Engineering-Procurement-Construction

• Referred to as E-P-C

– Common for heavy construction facilities

• Industrial plants, power plants, refineries, etc.

• E-P-C firm provides:

– Engineering

– All materials and equipment

– Construction

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

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Summary

• Primary construction delivery systems:

– Traditional system (i.e., design-bid-build)

– CM system

– Design-build system

• Each system is effective in certain situations

– Project communications vary

European Erasmus Mundus Master Course

Sustainable Constructions under Natural Hazards

and Catastrophic Events

Introduction

Properties

Thermal

Mechanical

Transfer of heat

Unprotected Protected

Elemental analyses

Classification Beams

Columns

Critical temp.

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47

End of part 2 - topicQuestions?