Construction Engineering CCE 4004

1
Construction EngineeringCCE 4004

• Lecture 2
• Construction Industry Project Development
• Project Delivery Systems

2
Lecture Outline

• Construction Industry
• Statistics
• Characteristics
• Facility Delivery Process.
• Facility Delivery Systems.

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Statistics

• 8 - 12 GNP
• 900 Billion dollars of activity per year
• Approximately 1 million contractors
• Less than 50 of annual volume performed by top
  400 contractors
• Over 70 contractor associations
• Over 10,000 local and national labor
  organization.
• Approximately 6.0 million workers

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Statistics (Contd)

• Research and development (RD) 0.4 of annual
  sales (automative gt 3 of annual sales and drug
  companies gt5)
• Total replacement cost of built environment
  (public and private) gt 21 trillion dollars 1992
  dollars

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Characteristics

• Long history - Attachment 1
• Protect - drive - Attachment 2, 3, and 4
• Fragmented - types of construction.
• Residential (50)
• housing and apartments
• Commercial Institutional (25)
• building ( office space, institutional)
• Infrastructure (20)
• telephone, railroads, civil projects (dams,
  tunnels, airports, wastewater, water, highways,
  bridges )

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Characteristics (Contd)

• Industrial (5)
• manufacturing ( steel, auto, consumer products )
• power ( coal, nuclear, fossil )
• process (plastics, paper, pharmaceutical )
• Transient nature
• Dynamic/continually changing
• Non-repetitive
• Lack of data
• Lack of standardization

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Characteristics (Contd)

• Low tech
• Large number of participants ( Attachment 5 )
• Legal and regulatory requirements

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Facility Delivery Process

• Process in which ideas are transformed into
  useful facilities
• Every construction project is completed with a
  Facility Delivery Process
• Facility delivery process structure
• Planning
• Design
• Construction
• Startup and Commissioning
• Operation and Maintenance

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Facility Delivery Process (contd)
5-15
High
Planning
2-20
Design
65-93
Construction
Ability to Influence Cost
0.5-5 Capital Investment
Startup Commissioning
Operation Maintenance
Low
Time
10
Let me see those blueprints again
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Facility Delivery Process (cont'd)

• Planning
• owner expresses a need for a new facility
• concepts are worked out
• feasibility studies are a must

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Facility Delivery Process (cont'd)

• Design
• Where the majority of engineering takes place
• Detailed plans and specifications are developed
• Owners initial ideas are further refined
• Owner gives go-ahead
• Contract is bid and awarded

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All we do is put it on paper. Its your job to
build it.
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• There Comes A Time in The History Of Every
  Project When It Becomes Necessary to Shoot the
  Engineers and Begin Production

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Facility Delivery Process (cont'd)

• Construction
• Where the physical manifestation of the design
  appears
• Design often continues through construction
• Startup and Commissioning
• Verifying whether the constructed facility
  operates as designed

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Facility Delivery Process (cont'd)

• Operation and Maintenance
• Owner accepts built facility
• Facility continues in OM until it is renovated
  or decommissioned

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Methods of Delivery

• Selecting a project delivery system depends on
• Complexity of the project
• Owner's resources and risk management
• Past experience
• Corporate policy
• Value of time
• Value of innovation
• Owner assumes risk in selecting a project
  delivery system losses occur if need is not met.

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Traditional Delivery System

• Design-bid-build
• Also known as hard money or competitive bid
  contracts
• Has three sequential phases
• Design AE hired to develop design
• Bid/Award usually competitively bid by several
  contractors then awarded to lowest responsive
  bidder or most qualified bidder
• Construction begins after design and bidding are
  complete

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Traditional Delivery System

• Organizational chart for traditional delivery
  system

20
Design-Build Delivery System

• Single company is responsible for both design and
  construction

21
Design-Build Delivery System

• Forms of design-build organizations

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Agency Construction Management

• Owner hires construction manager separately from
  A/E and general contractor
• Owner assumes greatest risk

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Construction-Manager-at-Risk

• Owner contracts with designer and construction
  manager separately
• Construction manager assumes greatest risk

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Other Delivery Systems

• Owner design-builder
• Owner has own in-house designers and in-house
  builders

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Other Delivery Systems

• Owner construction manager
• Owner contracts with a designer but uses own
  in-house construction manager

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Practical Recommendations

• A successful project does not just happen!
• There are numerous factors, general and
  project-specific, that can influence the outcome
  of a project
• Project-dependent factors certain types of
  projects have different signs of success.

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Summary

• Construction industry is
• LARGE
• DIVERSE
• UNIQE
• COMPLEX players, defined roles and
  responsibilities, timing of participation,
  practice-sports, arts
• Construction is important to the economy as it
  affects costs, prices, and our international
  competitiveness.
• We need to separate the forest from the trees,
  i.e., take a holistic view of the facility
  delivery process.

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Summary (cont'd)

• Owner always takes a risk in selecting a project
  delivery system
• A key issue is total time from concept to
  completion, dependent on the owner's needs
• Each project delivery system can be used with
  several different commercial terms