Construction Management

School of Construction Management

Global Construction Industry
2nd largest industry after Agriculture

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Source: World Construction Report 2012 by Davis Langdon, an AECOM company
Construction Output as % of GDP

Source: US Census Bureau, www.census.gov, CSO India, http://mospi.nic.in, http://www.stats.gov.cn

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4
 Construction Industry in India
$110 Billion 35 Million people
8% of Indias 16% of working
GDP population in
India

75 large
40% of all
companies
development
28000 organized
investments of last
companies
50 years
>5000 years of
construction history 5
 Overview of Indian Construction Industry
Table: India Construction and Infrastructure Industry, 2011 - 2020

2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Constuction Industry
6,682 7,713 8,830 10,002 11,272 12,639 14,111 15,763 17,572 19,493
Value, INRbn

Construction Industry Real

4.0 7.2 8.2 8.3 7.7 7.1 6.6 6.7 6.5 5.9
Growth, % Change y-o-y

Construction Industry % of
7.9 7.9 8.0 8.0 8.0 8.0 8.0 7.9 7.9 7.8
GDP

Total Capital Investment,

26,784 30,864 35,986 41,376 47,355 53,949 60,951 68,607 77,080 86,194
INRbn

Total Capital Investment, %

31.5 31.7 32.4 33.1 33.7 34.2 34.4 34.5 34.6 34.6
of GDP

Total Workforce, 000 803,769 818,273 832,851 847,141 860,948 873,803 886,229 898,389 910,552 922,846

Infrastructure Industry
Value As % of Total 47.4 48.1 49 49.3 49.8 50.2 50.5 50.8 51.1 51.3
Construction
Residential and Non
Residential Building
52.6 51.9 51 50.7 50.2 49.8 49.5 49.2 48.9 48.7
Industry Value As % of
Total Construction
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 Overview of Indian Construction Industry

Share of construction spending by

sector 2012 (%)

Market size and growth prospects by

major construction sector
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 Top Indian Contractors

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Larsen&Toubro
ENR 47, 28
12

10

8
Total Revenue (bn $)

4 Shapoorji Pallonji
ENR 123, 111

2
IRCON Punj Lloyd
0 ENR 173, NA ENR 92, 159
International Revenue (bn $)
-0.5 0 0.5 1 1.5 2 2.5 3 3.5
-2

ENR X,Y (Rank as International contractor, Rank as Global Contractor)

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SWOT Analysis On Indian Construction Industry

STRENGTH WEAKNESS

Cheap labor Small companies High cost of finance

Large number of engineers

Complicated tax str Low efficiency

PPP enabling environment Low ratio 14

 SWOT Analysis On Indian Construction Industry

OPPORTUNITIES THREATS

Massive scope of Sustainability Land acquisition

construction
Foreign direct
Large number of investments, real LOW INVESTMENT
estate investment Little regard for
construction systems
trusts, infrastructure
companies investment trusts 15
Performance of Construction
Projects in India

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 Performance of Construction
Projects in India

Around 56% projects have cost overrun (totaling 20% cost) 49% have time
overrun
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 Performance of Construction
Projects in India
Major reasons of the Project Failure are
Delays in preconstruction activities, Regularity
hurdles & land acquisition
Inadequate project formulation & poor planning
Improper contract administration and poor
performance of contractors
Lack of project management during execution

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Objectives & Functions of Construction
Project Management
Maintaining profitability Contract Management &
In time project delivery Compliances
Customer Satisfaction Human Resource
Accident Prevention Management
Sustainable Construction Project Planning, Monitoring
and Control
Financial Management
Resource Management & Site
Execution
Equipment Management
Material Management
Labor productivity
Coordination, Communication
& Documentation

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 Project Manager Responsibilities &
Functions
Responsible to upper
management for
profitability
Achieve project parameters
(time, cost, quality, safety,
sustainability)
Delivery of contractual
liabilities
Compliance of statutory and
tort liabilities
Select, build and retain
team. Lead team to achieve
goal
Planning, Monitoring, and
Control
Decision-making (Technical,
Financial & Administrative)
Co-ordination and liaison
with agencies
Mobilization, Allocation and
Management of Resources
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 Project Contracting
All major construction projects are one off jobs
done through work contracts
The contractor goes to another persons land and
does something which becomes permanently
attached to the other persons land & hence
becomes the other persons property
The contractor becomes unsecured creditor
(nothing is hypothecated/mortgaged)
Hence the contract becomes a critical instrument
for project implementation
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 Project Contracting
Agreement between competent parties
enforceable at law

Formation of Contract:
Object
Proposal / Offer
Acceptance
Consideration
Reciprocal promise

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 Typical Parties for Works Contract
Owners
Public Owner (Government bodies)
Private Owner (also include quasi-public bodies)
Architect/Engineers (A/E)
Prime/General Contractor
Project Management Consultants / Construction Managers
Sub-contractors
Suppliers
Banks & Financial Institutions
Specialized Service Agencies
Labor
Regulatory agencies
General Public
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 Project Delivery Models
Design Bid Build (Traditional)
Design Build (EPC / Turnkey)
Design Build Operate (Concession)
Construction Management (Design-Manage /
CM @ risk)

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 Types of Contract
Measurement Contract
Item Rate
Percentage Rate
Fixed Price
Lump Sum
Guaranteed Maximum Price
Cost Reimbursable
CPPF
CPFF
CPIF
Concession
BOT, BOOT, BOLT........

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 Typical Documents Comprising the Contract

Bidding documents consisting of the Invitation to Bid, the

Instruction to Bidders, and the Bid Form

General Conditions of Contract

Special Conditions of Contract

Specifications

Drawings

Reports of investigations of physical conditions

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 Critical Areas of Contract
Administration & Management
Scope of Work
Measurement & Payment Terms
Quality Control & Handing Over
Guarantees and Warranties
Time Provisions
Delays & Extension of Time
Incentives & Liquidated Damages
Change Orders
Differing Site Conditions
Escalation Payments
Suspensions & Termination
Dispute Resolution

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 Project Organization
Major Clients
Residential Sector : Real Estate Developers (Ranging
from Godrej to neighborhood promoter)
Infrastructure Sector : Government Agencies like
CPWD, PWD, NHAI, Rail, AAI etc.
Non Residential Sector : PSUs like ONGC, IOCL, etc.
&Major Industrial Houses like Tata
Construction Contractors
200 corporations
120,000 Class A registered contractors
Numerous small contractors

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 Construction Business Organization
Firms
Sole Proprietorship
Partnership
Limited Liability Company (LLC)
Private Limited Company
Public Limited Company
Government Enterprises
Joint Ventures

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 Functions of Construction Organization
General administration
Estimating
Managing contracts and personnel
Design
Engineering, Planning and Control
Purchasing/procurement
Accounting & Finance
Managing Field Construction maintaining
project parameters
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Structure of Construction Organization
Basic Structure Line & Staff
Frequently used forms
Functional
Feudal
Matrix

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 Factors For Organizational Forms
Structure keeps on evolving, depending on
Project / Contract size, features and requirements
Organizational Experience
Resource Availability
Technological and Financial Complexities
Risk, Competition, etc.

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Owners Project Organization (Sample)

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Architects Project Organization (Sample)

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Contractors Project Organization (Sample)

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Contractors Project Organization (Sample)

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