Construction Industry in year 2014

Year 2013 is a year that full of challenges to all of the construction industry players. Some might have it as a nice Year but for some it is not a prosperous year. Whatever it is, soon the year of 2013 will become history.

As we are approaching the new year, 2014, let we start equip our self with fresh strategy to tackle new challenges in this construction field. Embrace the technology and  increase our knowledge in construction. We might need to refurbish our machinery, plant and Equipment for 2014. We might need to increase our manpower to fulfils the next year commitment. We might need to start looking for new strategy to secure more contract.

The bottom line is, how good have we done in year 2013 in solving any issue that we facing with regards to this construction work. It will always be good to look back on what we had done and learn from there for betterment. For the year to come let us refresh our knowledge in this industry. Here, in this blog, There are articles that are useful for next year planning. Just take a look at the archive and you will find it useful.

HAPPY NEW YEAR, 2014.

Estimating construction works

Estimating construction cost is always a tedious task to do. No how it is, this process is the most important part of the work before contractor even decide to take the work or not. However it is always a good practice to do the estimation before commitment is make to any of the construction work.

Normally there is two type of conventional contract. The two type are Contract with Bill of Quantities and Lump Sum Contract. Regardless what type of contract that contractor are dealing with, the different is Lump Sum contract normally do not include the quantity in their document because regardless of the quantity, the price that contractor offered is count. This type of contract normally do not entertained any type of claim that involve the increase in any quantity unless it increment is substantially affecting the cost. Some country have their own set of rules that need to be adhere to in order t make such claims.

Referring to the topic today, Estimating Construction Works. In general I would like to say that the overall work cost consist of three(3) major structure. The structure is The Actual cost for the physical works, The Preliminaries and general and the third structure is profit margin.

The Actual cost. What does it meant? The Actual cost is the estimation on the cost that needed to build and complete the major scope of works. Lets say it is to build a guard house. To build the guard house what are the things that involve that without those item contractor will never be able to complete the works. There are four(4) major item that must be include in this estimation. The four(4) major items are Construction Materials, Plants and Machineries, Man powers and wastage. However, for the Plants and machineries and manpower it is always tied up to the duration that needed to construct the guard house. Apart from these, the materials is always govern by the quantity and the unit price. For a Lump sum Contract, contractor have to do their own Quantity take off exercise.

The second structure is The Preliminaries and General. Among the item that always fall under this category are:-
1. Insurances
2. Performance bond
3. Site office, transport provision for the superintending Officer and site store.
4. Electricity, Water and Telecommunication,
5. Cost for compliance to Local Authorities Regulations
6. Mobilisation and demobilisation
7. As-built drawings
8. Relocation of existing Services or properties
9. Reporting and meeting expenses
10. Any other item that is not necessary required to complete the works but needed to ensure the smooth flow of the whole works.

Normally under Lump sum Contract this structure is only describe as preliminaries and general as one item. Hence contractor need to do their own breakdown item in order to have a build up cost for this Preliminaries and general total cost.

The third Structure is The profit margin.This profit margin is depend on how much contractor want to make. out from the project.

There is lots of software out there that can expedite this cost estimation work.

PROJECT SCHEDULING OR PLANNING, WHO'S RESPONSIBLILITY IS IT?

Before we proceed further let us look through the definition and the importance of project scheduling or project planning.

Definition of project scheduling: 

Project Scheduling is A Process of listing the detail breakdown of works to on how to achieve the project goal by determined the when to start and finished, what is the work sequence and who is responsible for the task.

The important of Project Scheduling:

Project scheduling is a tool that will guide a construction project from the beginning until completion and a tool to maximize the profit for a project.

In any type of planning or scheduling the crucial part of it is input that need to be as accurate as it can be. To have all the required input, the scheduler will not only need his own experience and knowledge but also input from other parties within his organization. Those parties are as the chart below.

CHART 1

Refer back to the chart 1 above, there is few parties involve. Each of this party will provide the scheduler with different type of information. By gathering all of this essential data and incorporate it into the work program or project schedule, a project will have a proper, practical and realistic target date for completion. The Table 2 below show us what are the information that we can get from each of the different parties involve.

TABLE 2

Base on Chart 1 and Table 2, a proper and realistic schedule is everybody Job. If either one of the element is missing or not captured in the project schedule it can be a misleading schedule which must be avoid. As an answer to our question “Who’s responsible is the project scheduling?” we summarized it as it is the responsible of the Project Scheduler. He or She is the key personnel that will get the project Schedule done with the input from various parties involve.

Making money or Losing money in Construction.

Why contractor loosing money when doing construction? There is few reason why contractor always mentioning that they are loosing money a particular project. If we wanted to list down all of the reason, it will be quite a number of it. However let we know some of the reason.

1. Poor Project Planning by contractor.

2. Lack of understanding or knowledge on the current market trend for resources.

3. Ignorant on the principal, "make thing right at the first attempt".

4. Fail to ascertained all necessary cost that is not reflected in the contract Bill of quantity or drawing.

5.Bidding a project for the sake of winning it without thinking and analysed the pricing that been inserted during bidding process.

6. Fail to examine each of single page of the tender document  when doing the estimation.

7. Fail to notice what is the term and condition stated in the tender document during tendering process.

First of all let we jump to the item no.6 and no.7. Item no.6 is related to item no.7. Why is this so? The reason is if the bidder do not read carefully the tender document, he will tend to lose the important information which is not clearly stated in the bill of quantity. This scenario  always happened in a Lump Sum Contract. For instant, Inside the contract there might be special condition of contract which form part of the contract. What written inside the special condition of contract is Contractor need to abide to local authority, authority body or government agency rules and regulation. Then we derive from this clause, Who are these local Authority? 

Now we go deeper. Local authority,  can be any authority that have direct involvement in your project. For example Department of Occupation Safety and Health(DOSH), Local Council, Construction Industry Board, Board of engineers, Labour Department, Board of contractor under government and National board of Environment. Each of this department or authority body have their own rules and regulation which contractor need to comply with. For instant DOSH. When you do a construction project, You must first registered your project with them. registration might be no cost implication but the set of rules that you need to follow will required you to provide enough safety equipment and precaution. As and example, You are required to hire a full time safety office. how much is the cost that you need to pay for the Safety Officer for the whole duration of the project? second, You must provide all necessary safety gear for all of your workers at site. How much will it cost? This two item will easily cost you thousands dollar per month and just if imagine if your project duration is one year. How much do you think the cost will be? I have seen lot contractor underestimate this item or ignorant to this rules. When the project awarded to them then only they start grumble that they did not priced for it. Who's mistake is this? Sometime inside the Bill of quantity it only mention as "Contractor to provide all necessary safety and heath personal,equipment and ect for the whole duration of project" or even it being lump into an item as preliminaries and General. Then when this happened in the Bill of Quantity contractor will just insert some Amount which is most of the time under estimated. At the end of the day this item alone had cost a huge some to contractor.

As for item 7. worse case scenario, the special condition of contract does not allow for any claim on lost and expense due to whatever reason and also it does not allow for any price fluctuation claim for construction material as per current market rate for the month particular month when the purchase are make. If the increase of material price is very marginal, most probably contractor still can absorb the the cost. But if it happened as the scenario during the year 2004 until 2007 where the price of steel and other construction material gone up substantially,  What will be the cost that contractor need to pay? most probably it will contribute to a huge losses to contractor. Hence it is very important that during tendering stage contractor need to know what is the basis and the content of the tender document.

For all contractor, be cautious with the term and condition in the tender document when you do your estimation. If you already gone through these scenario don't let it happened again and for those who have not come across this type of rule and regulation, let this article become and important information for you to minimised your will be loses.

Project scheduling

“I have been in this construction industries for years by now; I got the experience and knowledge. That is why I don’t really need to produce a work schedule. It’s all in my head.”

Have you ever met a person that telling you the same reason as above? If you throw me that question my answer is “YES”.

There is no doubt that those who already successfully completed construction projects already know all the sequence of works and what does it takes to complete a project. However I still want to emphasized that it is important to have a systematic work schedule. The reason is you are not going to supervised each and single task of a project by yourself. In actual fact, if you are project managers or coordinators you will have to deal with your construction supervisors, subcontractors, client, consultant and suppliers. All of these parties will be interested to know what your work schedule is. The information stated in your project will enable them to delegates, giving instruction, executing and monitoring the progress for whatever necessary works to complete the project. Without your project schedule every parties involve will be in the dark.

Why do I emphasize that it is important for you to have a proper project schedule? Here is the reason why?

Project scheduling will allow us to analysed our cash flow against our work plan whether what we plan can be achieve with the current available cash in hand, current machinery, plant and equipment and also manpower that we have. After analysed , if we found out we can’t complete the project with our current resources, then we have to explore other option on how to complete the project before we make any decision to proceed with the work schedule. In other words Project scheduling will help us to minimize our losses in term of Value.

Work without a plan is a plan to fail. Without a project schedule we will be lost. We do not know when to start, how long it take for us to complete the project, what is the sequence of work, When to start our procurement of material, when to mobilized essential machinery to start a particular task, what is the effect of public holiday and bad weather have to our plan and the list goes on. Missing the step of preparing a proper project scheduling can lead to a situation that it is too late for us to amend the damages that already happened during construction period.

 It is a compulsory requirement in most of the contract document. We are required by our client to submit our project schedule for our project for their approval.

It is a tool that will help us to defend our self when we have to stop part of the work due to the instruction by the client which leads to the delay in completion of the project.

It is very essential instrument when we decide to make a claim for extension of time and also to claim for our loss and expense (if allow in the contract). If approval to our claim is granted it can save us from the liquidated and ascertain damages which might be imposed to us as per mention inside the contract (if any).

Project Schedule will help us to monitor our project health whether we are ahead of schedule, on track, slightly delay or even fall under sick project which is bound for contract termination.

Project schedule will help us to instruct our team on what task to do, when must it start and when must it finish.

All of the reason listed above, have their impact on the monetary value. To summarize all of this we can say that a Project scheduling is a tool that will guide a construction project from the beginning until completion and a tool to maximize the profit for a project. As what business person had and will always have in their head, “The purpose of making Business is to make more money not to lose it in whatever circumstances”.

Critical Path Method in project scheduling.

Critical path is an important element in project scheduling. Every scheduler or planner officer need to identify which is the task(s) that will form the critical path of the project. Critical path always consist of series of task or work that must not be delayed, start or commencement date and must finish on a fixed date. If there is any delay occurred in commencement of any task or work that form a critical path, then there is very high possibilities that the project going to be delay in completion. When this situation happened, contractor will have to plan for a catch-up program to make sure that the project can be completed with-in the approved construction period. However in this section we will not discussing on the catch-up program or plan.

How to determine the critical path of a project? In actual fact, regardless of what scheduling software that planner(s) officer or Scheduler(s) officer used to produce a work program or work plan for a project, the basic theory of the Critical path calculation is always the same for any brand of project scheduling software.

There are two types of critical path calculation that can be used to identify a critical path. The two types of calculation are Forward pass calculation and Backward Pass calculation.

Forward pass calculation can be used to determine when or on what date a project can be completed. The calculation will start from the beginning of the project and at the end we will be able to know when a project can be completed with estimated numbers of resources that available.

Backward pass calculation can be used when we are given a fixed date on when to complete a project. This method always required us to analyze the availability of our resources and their output in order to complete the project as required. By knowing our capacity of resources we will be able to estimate the duration required to complete each and single task of a project. With this information than we start the calculation from the given finished date and we will know the latest date we must start our work which normally known as late start.

Theoretically, Critical path will always having the same figure for the early start and the late start. Thus there is no number of floating days allow. Mathematically the float day is equal to “0”. All series of task or works that have no float days or “0” floating days will fall in a critical path of a project.

Critical path in Microsoft project, by default is always colored with red in Gantt Chart.

WORK PROGRAM BY MICROSOFT PROJECT : STEP BY STEP GUIDE

Work program is an important element in any Construction project. It is a document where it will become a guide for those involve in the project  on when to start and complete a particular project component or task. In actual fact work program is contractor plan on when to start the project and how we plan to complete the hole project. A project without work program, in other words, is a project without target and is about to fail. As the successful person always say “ FAILURE TO PLAN IS A PLAN TO FAIL”.

There is numbers of software that can be utilized to create a work program. Among them are Microsoft Projects, Primavera and  Agile project planning. However in this article, we will show how to create a work program by using MICROSOFT PROJECT. We are using MICROSOFT PROJECT 2010 VERSION (Trial Version Copy)

.

Microsoft project can be purchase on-line through Microsoft website.

How to create the work program using Microsoft Project?  Below is basic step to step.

Step 1:

Open your Microsoft project software. Below is how the Microsoft project look like.

Under Default display you will find there is eight (8) columns available. The column named as indicator, task, duration, start, finish, predecessor, resources and add new column.

 Step 2:

Set up the working time for your calendar. This can be done by clicking on the FILE tab.

A display like this will appear on your screen. Next, click the “OPTION” button on the display page.  A “Project option” will appear as below.

At this “Project Option” page, click the “schedule” button. It will bring you to the display as below.

On this page, you can start customized your working days, working hours and many more to suite your requirement. One you done with the option you can save your file under a name.

  

 Step 3:

Start inserting all of the scope of works that necessary to complete the whole project. To do this. Click on the “TASK” tab. The window is as below.

Inside the “Task Name” column, you can start type in ever task that is needed to complete the whole Project. Below is how the completed task looks like.

After finish key-in all the task. Now you can arrange the task into level.

Step 4:

Select the task that you want it to be a sub-task to the earlier task , then click the indent task icon to make it a sub-task.

Below is how the partially complete Work Program look like after the task being arrange into different level.

  

Step 5:

Insert the Duration for each of the task in the Duration column. Below how it look like after you insert the duration.

Step 6:

Insert your start date for the first task that you plan to become the first activity for the whole project. This first task should be a task that must start in order for the project to start.  The start date must be inserted in the Start column. Your finish date for the task will be automatically calculated by Microsoft project software. Your next subsequence task start and finish date will be calculated automatically after you insert the Predecessor for each of the Task.

Below is how your partially completed work program looks like.

Step 7:

For each task in your work program, insert the predecessor task number in the predecessor column.. Predecessor is a task that starts before this task. By doing this it will link the task to another task. Below is how the work program appears on your screen after you completed this step.

Now after this step 7, your already complete the whole scheduling works. This is already a complete work program. In actual on screen display you will see it like the picture below.

From the display, you can see on your right, there is bar chart for each of the task and it is link to another task. This chart show how each of the task link to another or in another word sequence of each task. The arrow from one bar to another bar is showing the sequence of the task which automatically generated when you key-in each of the predecessor for each of the task. This chart is called Gantt chart.

In real construction project there is lot of task involve in order for contractor to complete the whole project. In this situation we need to identify which is the longest sequence of task that will be critical in the project. In other words, if one of the task is delayed it will delayed the whole project. How to Identify it by using Microsoft Project Software. Read the step 8 below.

  

Step 8:

To identify the longest critical sequence of task in a project click the “FORMAT TAB”.

Under the “Format” word (as picture above), you can see the word “Critical task”, “Slack” and “Late Task”. Click the box next to the” Critical Task”.  It will automatically generate which sequence of work is Critical. This method is called “Critical Path Method”.

Once you are done with this action, it should display a series of red bar which these are the critical task that MUST NOT BE DELAYED IT START AND FINISHED DATE. Contractor needs to Start this these critical task as planned in the work program or you will not be able to complete the whole project as planned.

 The picture below is showing the Critical task of the project and also it is the Critical path for the whole project. Delaying either one of the task within this path resulted in delay in completion of the project.

Site management for contractor.

Site management is a very important field that shall not be neglected by any contractor. Armed your project with proper site management personnel which will help contractor to ensure a smooth work flow environment and in return will help in the success of a project.

Site management is inclusive of 

1. Site safety

2. Work place arrangement eg: site access road, storage and machinery yard and site office.

3. Site personnel

4. Sequence of works

5. Documentation

Each of the listed area above, need to be properly address and plan in order to make the site management that is going to be implement will achieve its objective.

A construction site that was operated without a well-planned site management always resulted as an unsafe site. For example, a site without proper site management, we can see construction waste is everywhere and this will pose a great danger. If accident happened, there will be lost in working hours and this lost is equal to lost in productivity which can be translate to money.

As we already know the important of site management in construction, now the question is how to put it into practice? The key to a good site management is to develop the site management plan or guideline. The content of this site management plan shall consist of all of the listed above. Personnel need to be appointed and their authority and responsibility clearly mentioned. layout of the site shall also be include to show the planned location of any important machinery yard, office, store or even where a heavy machinery shall be station during construction to ensure smooth activity.

There is some more parameter that can be included and it depends on the type of construction. If one cannot develop your site management plan it can always be out source by engaging professional.

Part of site management is the arrangement of site. The picture below can explained what site arrangement is.

Risk management in Road construction

Risk management in construction is a field that should not be put aside by any contractor. Risk management is important to help us delivered the end product with in the stipulated time frame without lost or minimum lost in our profit margin and the most important is maintaining our good reputation.

Road construction,just like other construction work, it is prone to risk. Whatever risk that involve in construction, at the end of the day, it will count as dollar and cent. In-view of this situation, contractor have to find ways to mitigate this loses.

How to minimized and address this issue? Before we discuss any further, let's take a look at what is some of the scope of work involve. Below are some of the scope of work involve.

1. Earthwork

2. Bridge

3. Sub-base

4. Road-base

5. Tar seal ( ACB,ACW,Tack coat & Prime coat)

6. Road paint or Road marking

7. Guard rail & other road furniture

8. Street lighting.

As listed above, we can see there is eight(8) trades involve to roughly complete the road.Indirectly this information is telling us that we need eight specialist team. Then how to relate this with risk management? Here how to address this. Since we already know what trade involve, The next step is doing brain storming. This is important to identify any possible risk that will involve in each of the trade. This is basic rule of risk management. It will be impossible to come out with risk management plan without knowing what possible risk to take into account. The root to risk management is " what is the risk that we expecting to occur with-in those trade". Only by knowing what is the risk that we can start working the plan that is the best management or solution to prevent or minimized the risk.

Now let we look in to the earthwork trade. What is the possible risk that we have that will prevent us from completing this task as per required time frame as agreed in the contract. Let list down some of the possible risk.

Possible risk in earthwork.

1. Bad weather
2. Machine breakdown
3. increase in fuel and diesel pricing
4. accident
5. impact to environment
6. increase in cost of material

since we already know the possible risk that will affect the work, than only we can plan on how to manage the risk. As we know, if we allow the possible risk to take place or happened, it will resulted into lost of profit or even jeopardize our reputation, what we need to do is to lay a proper plan of risk management to address these event. For example, we look in to the bad weather (rainy day), first we better look at the number of days throughout the month of previous years. Do some calculation, find out how may days is raining day of the month of the previous years. let say it is average of 10 days. This simply mean that we have a risk of non-workable day of 10 days of the same month which resulted in less productivity of the month. However we are tied by the contract that we need to complete the work at a determined date. Hence what is our choice that we have to manage this risk? May be one of the choice is increase the number of work force at the particular month. As now we have the solution to this risk, then the next step is to documented it in our risk management plan. When the event happened we already know what is the consequence and how to address it.

The easiest way out to address any risk in construction is we can always outsource this various trade with certain contract sum to others. In doing this we have the option to outsource the whole trade or only the works. This strategy will help us in a way, should there be any of the risk listed above happened, we already passed this unpredictable situation to others.Thus we can maintain our profit. However a proper agreement have to be prepared and terms and conditions must be clearly stated. One disadvantage of this type of risk management is we are putting our  reputation at a risk if the appointed team do not have a risk management plan.

FREE SAMPLE METHOD STATEMENT FOR RETAINING WALL CONSTRUCTION.

Stage 1.

1.       Before proceed with any works, survey and setting out shall be conducted to 

       provide the guide on levels and alignment for the construction of the Reinforce 

       concrete Retaining Walls.

2.       Survey and setting out shall be done in the present of Resident Engineer or his 

       representative.

3.       Request for inspection shall be submitted prior to start the works.

Stage 2.: Earthworks (Excavation)

1.       Earthworks can only commence after the setting out was done and accepted by 

       Resident Engineer.

2.       The sequence of the Earthworks is as the following Diagram 1.

Diagram 1.

3.       The excavation at Sequence 1 will be done until it reaches the proposed platform level 

       where it will provide wider temporary diversion during the construction of the Retaining

       wall structure.

4.       The excavation work at sequence 2 will only commence after the completion of sequence 1.

5.       The sequence 2 will provide access for existing traffic during the excavation work 

       activities at sequence 1.

6.       The Layout after completion of earthworks activities for both sequences will be as the 

       following Diagram 2.

 Diagram 2

Stage 3: Construction of RC Retaining Wall Structure.

Level  1: Piling Works

1.       Piling works will commence after the completion of first half of the sequence 2 

       earthworks.

2.       The sequence of the piling works will be done starting form the end Chainage 

       of the Retaining wall progressing to the front Chainage.

3.       The excess of drive R.C pile will be cut as soon as the Piling works reaches 

       practical numbers of piling points to enable the pile cut off activities.

Level 2 : construction of the R.C Retaining wall Base.

1.       The construction of the base will commence as soon as after the preparation of the

       pile head reaches the practical length of the standard steel bar supply length or 

       available safe working area. (eg. Standard steel bar supply length / pcs = 12m )

2.       All of the installed reinforcement must be free from rust, properly tied and being 

      installed according to construction drawings and specifications.

Level 3: Concreting works.

1.       Concreting works will only commence after the installed reinforcement being 

       inspected and accepted and approved for next sequence of works by Resident Engineer 

      or his or her representative.

2.       The sequence of concreting activities will also start from the end chainage of the R.C 

      Retaining Wall base.

3.       Concreting works will commence as soon as the installed reinforcement for the base 

      reaches the possible delivery concrete volume to site per day and practical output of

      the concreting works.

4.       Prior to concreting activities, all installed formworks for the base shall be properly secure 

      to avoid formwork failure.

5.       During concreting activities, test cube and numbers of the cube to be prepared shall be 

      as per directed by Resident engineer or his or her representative.

6.       There shall be no concreting activities during raining day.

7.       The flow of the installation of the reinforcements and concreting activities shall be as 

       per diagram 3.

Diagram 3

Level 4: Construction or R.C Wall.

1.       The construction of the R.C concrete wall shall proceed as soon as the Concreted base 

       is ready to accept the next sequence of the works.

2.       Construction of the wall shall start for both side of the retaining wall concurrently. 

      However some section of the wall might need to be left open to suite the site condition and 

      the movement of machineries.

3.       R.C wall construction activities shall start from end chainage of the retaining wall.

4.       The height of each wall that is ready for concreting shall not exceed 2.4 meter high. This is 

       to avoid the formwork failure.

5.       Prior to fully erect the formwork, wall reinforcement must be inspecting by Resident engineer 

       or his representative for acceptance and approval for next sequence of work.

6.       Prior to concreting activities formwork shall be properly secured to avoid formwork failure 

      during concreting activities.

7.      There shall be no concreting activities conducted during raining day.

8.       Flow of the R.C Wall Construction is as shown in the following Diagram 4.

 

Diagram 4

Stage 4: Backfilling to completed Retaining Wall.

1.       Backfilling activities will commence as soon as the fully completed section of the 

      retaining wall is ready to received backfill material and also practically safe for the 

      other on-going construction activities for remaining Retaining wall structure.

2.       Each layer of backfill shall be not more than 500mm thick and shall be properly 

      compacted before laying of subsequence layer of backfill. This process is repeated 

      until the whole height of the retaining wall if filled.

3.       Backfill activities will commence from the end chainage of the retaining wall towards

     the CH 6 + 200.

Stage 5: Miscellaneous works.

1.       Miscellaneous works will commence upon completion of the whole retaining wall 

      structure inclusive of backfilling works.

2.       The miscellaneous works are the flexible pavement, drains and  road furniture.

Overall sequence of the stages: