Overview of the Construction Industry, Chapter 2

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Overview of the Construction Industry, Chapter 2
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Overview of Construction Industry

• The construction industry is the second largest
  industry in the United States, behind health
  services, and the largest product producing
  industry.

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Overview of Construction Industry
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Overview of Construction Industry
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Overview of Construction Industry
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Overview of Construction Industry

• It employs more that 6 million people.

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Overview of Construction Industry

• The industry is broken down by type of
  construction
• Residential
• Commercial building
• Heavy civil highway
• Industrial

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Overview of Construction Industry

• The industry is broken down by type of
  construction
• Residential

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Overview of Construction Industry

• The industry is broken down by type of
  construction

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Overview of Construction Industry

• The industry is broken down by type of
  construction

• Heavy civil highway

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Overview of Construction Industry

• The industry is broken down by type of
  construction

• Industrial

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Overview of Construction Industry

• It is further broken down by public works
  (government) or private construction.

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Build Your Future

• Construction is the business of building things

• The most important thing you will ever build is
  your own reputation
• Building your reputation personal ethics

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Ethics

• Best working definition of ethics is
• Doing the right thing
• Bid shoppinggtgt bid depositories
• Under the table payments (bribery)
• How will you know if it is right or wrong?
• You will know!!!
• Could you consume the gift in one day?

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Constructor Code of Conduct

• I. The Constructor shall maintain full regard to
  the public interest in fulfilling his or her
  professional responsibilities to the construction
  industry.

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Constructor Code of Conduct

• II. A Constructor shall not engage in any
  deceptive practice, or in any practice that
  creates an unfair advantage for the Constructor
  or another.

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• III. A Constructor shall not maliciously or
  recklessly injure or attempt to injure the
  professional reputation of others.
• IV. A Constructor shall insure that when
  providing a service that includes advice, such
  advice shall be fair and unbiased.

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Constructor Code of Conduct

• V. A Constructor shall not divulge to any person,
  firm, or company, information of a confidential
  nature acquired during the course of professional
  activities.
• VI. A Constructor shall carry out
  responsibilities in accordance with current
  professional practice.

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Constructor Code of Conduct

• VII. A Constructor shall keep informed of new
  concepts and developments in the construction
  process relative to his or her responsibilities.
• American Institute Of Constructors
• http//www.aicnet.org/

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The Construction Industry

• Engineers and architects who complete studies and
  designs for clients are providing a service.

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The Construction Industry

• Construction is a goods producing industry
• Different than manufacturing
• Custom designed
• One-of-a-kind product (structure/building/bridge)
• Easy-in and easy-out (few barriers)

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Organization of the Industry

• Residential
• Commercial
• Highway heavy civil
• Industrial

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Organization of the Industry

• Owners
• General Contractors
• Construction Managers
• Subcontractors or Specialty Contractors

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Organization of the Industry

• Designers
• Trades
• Insurance companies
• Suppliers

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Organization of the Industry

• Public Works
• Federal
• State
• Local government

Usually awarded to the lowest responsible,
responsive bidder
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Organization of the Industry

• Private Work
• Golden rule

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Organization of the Construction Business

• Vertical Construction

Design by architects
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Organization of the Construction Business

• Horizontal Construction

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Project Delivery Systems

• Design-bid-build. (low bid)
• Negotiated contracts
• Design-build
• Job Order Contracts
• Construction Management (at Risk)
• Best Value Procurement
• Incentive Contracts

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Incentive Contracts

• Bonus for early completion (most common)
• Penalty for late completion - required by law to
  also offer a bonus for early completion
• Liquidated damages are not the same thing!

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Incentive Contracts

• A B contracts
• Contractors bid an amount in dollars, the A
  component of the bid, plus a number of days, the
  B component

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A B Contracts

• Example w/ 10,000 per day for B
• Bidder 1 500,000 and 200 days 2,500,000
• Bidder 2 540,000 and 180 days 2,340,000
• Bidder 2 is the low bidder
• in spite of a higher bid!

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Construction Company Jobs

• College graduates who begin their careers by
  working for a construction contractor normally
  start as a project engineer
• Estimators
• Schedulers
• Project managers

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Assignment
Chp. 2 Review Questions due next class 2.2, 2.3,
2.5 and for your state describe the construction
industry size (), type of contractors, number
of employees, etc. Read the ENR cover story of
Dec. 2, 2002, Leaders Come in all Shapes and
Sizes But the Great Ones Focus on People. Write
a one page paper on your personal leadership
philosophy.