Modern Construction Management

1 Modern Construction ManagementThe book s companion website is at and offers invaluable resources for both students and lecturers: Solutions to the self-learning exercises PowerPoint slides with discussion topics Journal and web referencesModern Construction ManagementSeventh EditionFrank HarrisEmeritus Professor of Construction ScienceUniversity of WolverhamptonandRonald McCafferEmeritus Professor of Construction ManagementLoughborough UniversitywithFrancis Edum-FotweLecturer in Construction ManagementLoughborough UniversityA John Wiley & Sons, Ltd., PublicationThis edition first published 2013 John Wiley & Sons, Ltd 2006, 2013 John Wiley & Sons, Publishing was acquired by John Wiley & Sons in February 2007. Blackwell s publishing program has been merged with Wiley s global Scientific, Technical and Medical business to form office:John Wiley & Sons, Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, UKEditorial offices:9600 Garsington Road, Oxford, OX4 2DQ, UKThe Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, UK2121 State Avenue, Ames, Iowa 50014-8300, USAFor details of our global editorial offices, for customer services and for information about how to apply for permission to reuse the copyright material in this book please see our website at right of the author to be identified as the author of this work has been asserted in accordance with the UK Copyright, Designs and Patents Act rights reserved.

2 No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without the prior permission of the used by companies to distinguish their products are often claimed as trademarks. All brand names and product names used in this book are trade names, service marks, trademarks or registered trademarks of their respective owners. The publisher is not associated with any product or vendor mentioned in this book. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold on the understanding that the publisher is not engaged in rendering professional services. If professional advice or other expert assistance is required, the services of a competent professional should be of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with the respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose.

3 It is sold on the understanding that the publisher is not engaged in rendering professional services and neither the publisher nor the author shall be liable for damages arising herefrom. If professional advice or other expert assistance is required, the services of a competent professional should be of Congress Cataloging-in-Publication DataHarris, Frank, 1944 Modern Construction Management / Frank Harris and Ronald McCaffer with Francis Edum-Fotwe. 7th ed. p. cm. Includes bibliographical references and index. ISBN 978-0-470-67217-4 (pbk. : alk. paper) 1. Construction industry Management . I. McCaffer, Ronald. II. Edum-Fotwe, Francis. III. Title. 2012 dc23 2012023206A catalogue record for this book is available from the British also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic image: courtesy of design by Meaden in 10 on 12 pt Minion by toppan Best-set Premedia Limited, Hong Kong1 2013 ContentsPreface to the sixth edition xiPreface to the seventh edition xii1 Introduction 1 Structure of the book 2 Objectives and contents 3 Section 1 4 Section 2 4 Section 3 5 Section 4 52 Quality Management 7 Summary 7 Introduction 7 Notions of quality 7 Quality in transition 8 Quality control and inspection 9 Quality assurance 11 Total Quality Management 20A systems approach to managing quality 25 Reference 31 Section 1.

4 Project production Management 333 Production process improvement 35 Summary 35 Introduction to lean Construction 35 Productivity 36 Economic development 37 Energy consumption 39 Sustainability 40 International environmental protocols 41UK emissions 44 Productivity improvement 44 Management systems 48 Management processes (BSI (2002), BS 6079-1:2002) 53 Employee participation 61vvi ContentsMacro key performance indicators 77 References 784 Planning techniques 80 Summary 80 Introduction 80 Planning in Construction 80 Who plans? 81 Planning techniques 83 Other planning techniques 101 Modern Construction planning 107 Data exchange 111 Planning multiple projects 113 Reference 116 Appendix : Normal probability distribution tables 1165 Workforce motivation 117 Summary 117 Introduction 117 Motivation theories 117 Payment systems, remuneration and performance 121 References 1316 Project cost control 133 Summary 133A cost-control procedure for Construction works 133 Systems in current use 134 Points to consider when choosing a cost-control system 145 Management of the carbon footprint 1467 Management of equipment 147 Summary 147 Acquisition of plant and equipment 147 The financing of equipment 148 Systematic plant selection 150 The essential characteristics of a decision situation 151 Setting hire rates 159 Marginal costing 166 Plant maintenance 167 Monitoring of maintenance servicing and exhaust emissions 168 References 168 Section 2.

5 Business Management 1698 Project procurement 171 Summary 171 Introduction 171 Contents viiThe Construction process (BS 6079-1:2002) 172 ISO/BS procurement standards 175 Appointing the team/parties to the contract 176 Public contracts and supplies 178 Project manager/leader 178 The contract 182 Health and safety considerations 186 Categories of contract 190 Separated and cooperative contracts 190 Management -oriented contracts 193 Integrated contracts 197 Discretionary contracts 205 Performance of different contract categories 209 References 2109 Estimating and tendering 211 Summary 211 Introduction 211 Parties involved in estimating and tendering 213 The estimating process 214 BOQ estimating 215 Collection and calculation of cost information 217 Project study 225 Preparing the estimate 226 Tendering adjustments 232 Submitting the tender 234 Estimating in Management contracting 235 Use of estimating software 237 Methods of estimating 240 Reference 24110 Competitive bidding 242 Summary 242 Introduction 242 Part 1.

6 A brief review of bidding strategy 243 Part 2: The importance of accuracy in estimating 250 Part 3: Some ways of using the existing theories 257 Recent developments in bidding 263 Client evaluation of bids 265 References 26611 Company budgetary control 268 Summary 268 Introduction 268 Preparation of budgets 269 The carbon footprint 275viii Contents12 Cash flow and interim valuations 277 Summary 277 Introduction 277 The need for cash flow forecasting by contractors 277 The requirements of a forecasting system 279 Capital lock-up 284 The factors that affect capital lock-up 285 Interim valuations and cash flow 289 Measurement of work in activities 293 Computers and cash flow 294 Cash flow forecast by standardised models 296 Concluding remarks 297 References 29713 Economic assessments 298 Summary 298 Introduction 298 Interest 300 Economic comparisons 303 Profitability measures 305 Inflation 310 Accuracy of future estimates 314 Financial modelling 319 Cost-benefit analysis 323 Some worked examples 324 Appendix.

7 Tabulations of interest and time relationships 332 Section 3: Administration and company Management 33514 Company organisation 337 Summary 337 Introduction 337 The function of a manager 337 Company organisational structures 339 Departments/functions 348 Health, safety, occupational welfare and pensions 356 Educational qualifications and vocational training 358 Corporate Social Responsibility 365 Management attitude 366 Reference 36815 Market planning and business development 369 Summary 369 Introduction 369 Market planning 369 The business-development process 370 References 381 Contents ix16 International Construction logistics and risks 382 Summary 382 Introduction 382 The international environment 383 Conclusions 38917 Information resources and ICT systems 390 Summary 390 Introduction 390 The Construction company s business 390 Processes involved in Construction business 391 Information needs to support business processes 393 Management of contractors information resources 394 Construction information systems 397 The Construction information manager 400 ICT in Construction 401 ICT change within Construction 402 Enablers of current Construction IT 402 Using ICT resources

8 In Construction 403 Construction in a wireless world 414 Information security 41518 Financial Management 416 Summary 416 Introduction 416 Types of businesses 417 Types of capital 421 The control of capital 426 The company accounts 430 Regulatory authorities 444 References 445 Section 4: Self-learning exercises (solutions to the questions are provided on the book s companion website) 44719 Questions Construction Management 449 Questions 45120 Questions operational research (OR) 499 Summary 499 Questions 50121 Questions Six Sigma 511 Six Sigma 512x ContentsProblems 512 Reference 531 Bibliography 533 Abbreviations and acronyms 543 Index 548 The book s companion website is at and offers invaluable resources for both students and lecturers: Solutions to the self-learning exercises PowerPoint slides with discussion topics Journal and web referencesPreface to the sixth editionThe book is intended for students and graduates of civil engineering, Construction manage-ment, building and quantity surveying, and is arranged to reflect site, business and corporate responsibilities embraced by the S/NVQ supervisory and Management levels of career devel-opment.

9 This approach acknowledges that the Modern successful Construction engineer, builder or quantity surveyor needs to be a competent technologist possessing complementary skills and knowledge in Management as well as understanding the business processes. Armed with such expertise the young Construction trainee will be better prepared for decision-making and undertaking executive new edition has been guided by the drive for improvement in Construction industry performance stimulated through the Rethinking Construction and Construction Best Practice restated under the Accelerating Change initiative as committed leadership, client satisfaction, integrated processes and teams, quality Management and social responsibility, the opening overview sets out the key points which are subsequently interweaved throughout the text. The Construction engineer, builder or quantity surveyor is thereby better positioned to understand and implement Modern strategies needed in providing value for money for the client and book begins by emphasising the important role of total quality Management and safe working that now pervades every aspect of Construction activity.

10 The subsequent sections are: project production Management describing the Management techniques employed on site; business Management , which addresses the relevant commercial aspects; and finally admin-istration and company Management covering corporate activities including IT systems and international processes essential in delivering continuous improvement and meeting performance indicators are especially featured, while the principles of lean Construction , concurrent engi-neering, supply networks, re-engineering, value and risk Management are given prominence. The latest contractual innovations, notably design and build, PFI/PPP, term, prime, managing agent, early contractor involvement, framework agreements and alliances, are evaluated, with reverse auctions contrasted with negotiated contracts and detailed pre-selection. Issues for business development and business models, business process outsourcing, matrix manage-ment, incentives and plant hire are also treated.