BCT 100

Overview of the Construction Industry

The Construction Industry

• What is the ‘Construction Industry’?

• Who works in this industry?

• Why is it important?

Construction….

• Is misunderstood by the average person

• Accounts for 16% of the GNP in the US

• Is an ever evolving industry

Construction is influenced by:

• Materials Available• Knowledge/Innovation of the builders• Skills Available in the Labor Force• Needs and Functions of the Proposed Structure• Desires of the Building Owners• Climate• Research and Development of New

Technologies

Categories of Construction

• Residential Buildings

• Nonresidential Buildings

• Engineering Facilities

• Industrial Facilities

Residential Buildings

• Structures which house people. Single and Multi Family structures. Apartments, Townhouses, Retirement Homes, Assisted Living, Condominiums

Residential Buildings

Modern Residential Design Has Few Limits

Non-Residential Buildings

• Institutional, Educational, Commercial (Hotels, Restaurants, Bars, etc), Religious, Agricultural, Recreational, Medical

Non-Residential Buildings

• Institutional, Educational, Commercial (Hotels, Restaurants, Bars, etc), Religious, Agricultural, Recreational, Medical

Non-Residential Buildings

• Institutional, Educational, Commercial (Hotels, Restaurants, Bars, etc), Religious, Agricultural, Recreational, Medical

Engineering Facilities

• Infrastructure (Dams, Tunnels, Bridges, Highways, Canals), Utilities, Treatment Plants, Marine Structures

Engineering Facilities

• Infrastructure (Dams, Tunnels, Bridges, Highways, Canals), Utilities, Treatment Plants, Marine Structures

Industrial Facilities

• Heavy Industry. Refineries, Chemical Plants, Power Generation Plants, Transmission Lines, Oil Rigs, Smelters

The Variables in Construction

• Scope of Work

• Cost

• Quality of the Construction

• Time to Complete

The Variables in Construction

Scope of Work:

• How big is your project?• Does the size of your project

increase once on site?• Who is responsible for increasing

the size of the project?

The Variables in Construction

Cost:

• What is the budget /

• Contract Sum?

• What factors can impact Cost?

• Who is responsible for increasing the cost of the project?

Cost (con’t)• Construction spending in 1988 was

estimated at 3.22 trillion dollars

• In 2007, construction spending was estimated to be near 4.8 trillion dollars

• 15% of industrial workers employed in the US work in the construction trades

• On average, 5% of all workers in the United States work in construction and related fields. The current economic downturn has temporarily altered this.

The Variables in Construction

Quality:• Do Drawings and Specifications

indicate level of quality?

• What factors can impact Quality?

• Who is responsible for maintaining project quality?

The Variables in Construction

Schedule:• Does the contract stipulate a

completion date?• What factors can impact Schedule?• Who is responsible for maintaining

project schedule?

Schedule• Unlike Cost, Scope and Quality, the

Contractor may not be able to fully manage and control the project schedule

• Why?

• Some critical items may be beyond the control of the contractor.

The Three Major Elements

• Engineering

• Construction

• Project Management

The Three Major Elements

Engineering

• Includes: Architectural Services, Engineering Services including Structural, Mechanical, Civil, Geotechnical.

• All Design and Documentation and Specifications

The Three Major Elements

Construction

• Includes: General Contractor, Sub-Contractors such as Plumbers, Electricians, Framers, Concrete, Masons, HVAC installers, Flooring, Tile, Cabinetry, Drywall, Insulation.

• All Construction and Installation, Hands-On work

The Three Major ElementsProject Management

• Includes: Project Manager, Contract Administrator (Architect), Construction Manager, Owner.

• All non-construction and non-design based construction administration work, including planning in the beginning, bidding, permitting, approvals, correspondence, change orders, rfi’s, payment certif., etc.

Education – 3 Different Tracks

• Professional Schools – Architects and Engineers

• Technical / Professional Education – Project Management / Construction Specialist

• Hands-on Training / Apprenticeship – Union and Non-Union on the job training

Effective Work Teams

• “A chain is only as strong as its weakest link”

• Interaction with others on the team is crucial to success

• Everyone must be a member of some team

• We are all members of the ‘Construction Team’

Is There A Productivity Problem?

Leibing states that the construction industry has consistently had low productivity when compared to other business sectors

•Business Roundtable studies

•What Improves Productivity

•Why Does Productivity Matter?

Importance of Relationships

• Construction Companies of all shapes and sizes

• Vast majority are small, owner-operated, often family run businesses

Project Delivery Systems

• Traditional

• Alternative

Alternatives in project Contractual Relationships

The Traditional Delivery System

Design / Bid / Build

• Architect/Owner agree on Program• Architectural Design and Documentation• Submit to Contractors for Bid Prices• Selection of Contractor • Contractor Builds based upon bid set• Architect oversees work is done according

to the drawings and specification• Changes are documented and priced as a

Change Order

Pros / Cons of Design / Bid / Build

• Architect maintains total control over the project from inception to completion

• Time consuming

• Inefficient to design in a vacuum, bid, then revise design based upon builder input

NST: Negotiated Select

• Design Team and a Select Construction Team review the documents and value engineer details to agree on a contract price/design.

• Highest satisfaction ratings from all parties involved.

Pros / Cons of Negotiated Select

• Architect maintains total control over the project from inception to completion, BUT

• Works with Builder early to discover potential problems

• Need a Builder that the Owner can trust

• No Competitive Pricing

Alternative Delivery Systems

Construction Management

• Construction Manager is introduced

• CM represents the interests of the owner

• CM bridges between the Design Team and the Constructors to identify efficiencies

• Owner may or may not be contractually related to the Design Team and the Construction Team

Types of Construction Management

• Construction Manager- For Fee

CM is paid a percentage of the construction cost for management services

• Construction Manager- At Risk

CM is paid a percentage of cost, but also, Guarantees Final Maximum Price. Some argue this is a conflict of interest

Pros / Cons of Construction Management (CM)

• CM works directly with the Owner, representing their interests

• Intended to reduce supervisory requirement of Architect

Design / Build

• Design Team and Construction Team work for the same company

• Bid Phase is replaced with continual evaluation of cost throughout the design and documentation process

• Owner is contractually related to the Design/Build Team

Pros / Cons of Design Build

• Accelerates the process, by eliminating bidding

• Owner no longer has the Architect as an independent commentator on the construction work

• Design services are usually inferior

Integrated Project Delivery

• Architect and Constructor review the project goals BEFORE the drawings are produced, working together with the consultants and discuss the ‘Best’ methods, and materials, to achieve the Owner’s requirements, Architect’s intent while keeping an eye on Constructability, Cost, Energy Efficiency and Sustainability

What is Value Engineering?

• Architect and Constructor review the drawings and discuss the ‘Best’ methods, and materials, to achieve the Architect’s intent while keeping an eye on Constructability and Cost