National Institute of Business Management

Chennai - 020
EMBA/ MBA

Elective: Construction Management (Part -1)

Attend any 4 questions. Each question carries 25 marks

(Each answer should be of minimum 2 pages / of 300 words)

1. Explain Construction industry contributions to economic

growth.

1. Role of construction industry in national development

The role the construction industry plays in socioeconomic
development is illustrated in Figure 1. The industry is a distinct sector
of the economy which makes its direct contribution to economic
growth like all the other sectors such as agriculture, manufacturing and
services. It also provides the basis upon which the other sectors can
grow, by constructing the physical facilities required for the production
and distribution of goods and services. The industry has great
employment-generation potential as labor-intensive technologies are
economically viable for most items of construction work. Watermeyer
and others (1995) found the following multipliers in employment
opportunities in items of (labor-based) construction:

(a) excavate and back-fill for water reticulation,

(b) excavate, lay pipes and back-fill for water reticulation,
(c) construct concrete block paved roads and
(d) construct water-bound macadam roads.

The construction industry also has potential for generating

activity and employment in other sectors of the economy such as
manufacturing, transport, commerce and financial services owing to its
inter linkages to other sectors. Figure 1 highlights the linkage effects of
construction activity.

A study by Turin (1973) of all major countries in the 1960s

showed that construction accounted for between 3 and 8 per cent of
gross domestic product and between 2 and 10 per cent of total national
employment. Capital formation in construction was over half of gross
fixed capital formation. The construction industry purchased over half
of its input requirements from other sectors such as manufacturing.
Edmonds and Miles (1984) studied 116 countries for the period 1974 to
1979 and found figures similar to those of Turin (1973). Similar
relationships were again found by Low and Leong (1992) who studied
the role of construction in the economies of around 180 countries and
territories between 1970 and 1984.

Like earlier studies, Low and Leong (1992) found major

differences between countries at different levels of development.
Countries with a high GDP per capita had higher per capita value added
in construction, as well as per capita gross output in construction. In
countries with GDP per capita of between US$4,000 and US$14,000,
value added in construction was an average 2 to 14 per cent of GDP;
whereas for those with GDP per capita of below US$2,000 the range
was 2 to 8 per cent. Employment in construction was between 15 and
40 persons per thousand in the population in countries with GDP per
capita of over US$4,000, and less than 15 persons per thousand for
those with a per capita GDP of less than US$4,000.

2. Role of contractors in national development

The role contractors play in national socio-economic
development is evident from the part the industry plays in this process
(see Figure 1). The particular importance of the contractor’s role is
cited by many writers as a reason for obtaining sufficient numbers of
contractors, ensuring that they are available in, or able to move to, all
parts of the country where development projects would be required;
and improving upon their efficiency and effectiveness. Setting out a
case for the World Bank’s support for construction industry
development, Kirmani (1988) observed that the lack of capable
construction industries in developing countries was seriously affecting
the efficiency of investments and the pace of economic development.
Many countries were perceiving the Bank’s projects as being too
costly. It was necessary to reduce the delays in the implementation
stage by improving the capacity and efficiency of the domestic
construction industries. As the Bank was also concerned with the
quality and efficiency of the projects financed by its borrowers it
should develop further the enormous potential of the construction
industry for enhancing the productivity and efficiency of investments.

Wider developmental objectives are also cited for schemes aimed

specifically at developing contractors. Watermeyer (1995) suggests that
the key objectives of a contractor-development programme (see Section
VI) are to: (a) optimize job creation opportunities in the construction of
infrastructure and housing; (b) encourage the creation and sustainability
of small-scale enterprises; (c) strive towards fulfilling the country’s
projected construction needs; and (d) enhance the benefits accruing to
the community through their involvement in construction. Thus, a
virtuous cyclical link between contractor development and national
development can be envisaged.

3. Role of small contractors in national development

In every country, small contractors undertake the smaller and
simpler construction projects, invariably using labour-intensive
techniques. The International Labour Organization (ILO) (1993)
observes that small-scale contractors are more liable to choose
employment-intensive solutions than large contractors. Studies show
that small contractors are able to generate income and employment
with relatively little capital per job (Miles and Ward, 1991).
Watermeyer and others (1994) estimated the following average costs
(of overall operations) to generate one man-hour of employment in
South Africa (US$1 = R3.50):
- civil engineering using conventional methods R37
- labour-based civil engineering (mostly by small contractors) R17-19
- housing construction (depending on standard) R19-28
Small contractors are the only firms willing and able to undertake
the small, scattered projects, especially in rural areas, which are among
the key components of development and which are required to satisfy
the basic needs of the people such as housing, health facilities,
sanitation and geographical mobility. The problems and characteristics
of small contractors in developing countries militate against the
countries deriving the benefits which the nature of construction activity
and its linkage effects can offer (see Figure 1). For example, due to an
unfavourable operating environment, as well as poor management and
lack of planning on their own part, the small-construction companies
exist from one minor project to the next (see Section IV). Thus, they
are unable to offer stable employment.
Apart from the direct, immediate and practical usefulness of
enhancing the capabilities, productivity and quality of work of small-
construction companies, the development of such firms has wider and
more long-term benefits. Such firms have the prospect of growing into
medium-sized and large companies (Andrews and others, 1972;
Moavenzadeh and Hagopian, 1984). Thus, they provide the structural
framework for the continuous improvement of the construction
industries of developing countries. Only through successful nurturing
of such firms, realized through systematic promotion and support, as
well as effort by the firms themselves to continuously upgrade their
technical and managerial capabilities and asset base, can developing
countries replace the foreign contractors who play such a dominant role
in their construction industries (Miles and Ward, 1991; Msita, 1993).
A major urban civil works project in Soweto, into which a small-
contractor development programme was incorporated, revealed that
community-based construction undertaken by small firms compares
favourably with conventional construction in terms of cost (6-15 per
cent less expensive for upgrading of secondary water mains; 16-19 per
cent cheaper for installation of low voltage cables; and of similar cost
for upgrading of roads using waterbound macadam). 30 to 65 per cent
of the expenditure was retained in the community. A significant
number of people were employed on the project. The local community
were taught commercial, administrative, managerial and technical
skills. They were also engaged to operate store facilities, monitor
contractors’ work, provide transport of materials where labour-only
contractors are engaged, manufacture certain materials, or provide
security on site.
By their nature, especially their flexibility and “mobility”, small
contractors can add depth, vitality, and resilience to a nation’s
construction industry, and ultimately, the economy. Their improvement
would raise the skill levels and capability of the local construction
industry, thus enhancing construction productivity. The ILO (1987)
observes that the development of small contractors would provide
better value for money in construction through greater efficiency of
such firms which constitute the majority of enterprises in the industry
and undertake a significant proportion of the industry’s workload. It
would reduce the incidence of bankruptcies among small contractors,
leading to savings in costs for clients and greater security of
employment for much of the nation’s construction workers. It would
also result in an increased volume of construction works done by local
contractors, leading to greater retention of profits.

4. Small contractors and rural and community development

As discussed above, the construction industry provides the
necessary physical infrastructure in the often isolated rural
communities. It can also create employment for the local population,
and lead to their social upliftment. As small contractors undertake most
of the projects in the rural areas and the settlements on the fringes of
the large conurbations, they serve as an important vehicle for the socio-
economic development of these areas. Programmes of rural and
community development can also be used to upgrade small contractors.
For example, in Ghana’s Feeder Roads Project in the late 1980s, 30
small-scale locally-based contractors were trained for labour-based
roadwork over a 42-month period.
Thus, in rural and community-development programmes, the
achievement of physical targets is integrated with other aims.
Projects are selected and specifically designed to achieve such
objectives as maximum employment generation directly within
construction and indirectly in related activities; and employment for
women and other disadvantaged groups. A special issue of
the International Labour Review was devoted to the subject of
employment creation through carefully designed public works
programmes. Various papers: (i) considered the economic rationale of
such projects (Gaude and Watzlawick, 1992); (ii) reviewed past
attempts in them and assessed their future potential (Von Braun, Teklu
and Webb, 1992; Edmonds and De Veen, 1992); and (iii) argued the
merits of community participation in the construction of infrastructure
projects (Egger, 1992).

The policy framework for South Africa’s Reconstruction and

Development Programme (African National Congress, 1994) which
provides for a national public works programme specifies that “our
people must be involved in these programmes by being made part of
the decision-making on where infrastructure is located, by being
employed in its construction and by being empowered to manage and
administer these large scale programmes” (clause 1.4.3). Band (1995)
suggests that to meet these provisions, construction projects should
have the following objectives with regard to the community: (i) the
community should be involved in relevant decision-making at all
stages; (ii) the maximum number of jobs should be created; (iii)
entrepreneurship should be actively promoted; (iv) skills should be
transferred to the community; (v) the amount of project funds retained
in the community should be as high as possible; and (vi) the
community should be involved in all relevant aspects of project
implementation. Introducing the road rehabilitation and maintenance
programme in the United Republic of Tanzania using mainly labour-
based techniques, the Government of the United Republic of Tanzania
(1990) observed: “In view of the small investment required in terms of
equipment and tools, the technology should encourage the smaller
entrepreneurs... In view of the huge maintenance workload involved
firms should be able to count on a solid future within this field of
operations” (pp. 12-13).

Adjustments are often needed to the conventional approach to

contract procurement, management and administration for them to be
effective in achieving the potential of rural or
community cum contractor-development programmes. In the United
Republic of Tanzania, it was recognized that some existing government
systems and procedures were not favourable to labour-based contracts.
For example, prompt payment to contractors was considered important
as payment of the labour force on a regular and timely basis is essential
for labour-based contracting. Modifications to standard procedures
would be proposed and would form part of the institutional capacity
strengthening. The Government of the United Republic of Tanzania
(1990) observed that: “In order to achieve the objective of involving the
communities in road maintenance... it will be necessary to maintain
good liaison with local organizations to develop appropriate
methodologies for... maintenance operations” (p. 13). In South Africa,
in 1993, in anticipation of the need to undertake a huge volume of work
in the communities, the major associations of construction employers,
the trade unions and the civic groups, formed the National Council for
Labour Intensive Construction which agreed a framework providing
guidelines for: consultation processes and capacity building;
employment policy including selection criteria, payment systems and
training; overall project management; project management including
consultation of the community and management of training; and
finance (National Council for Labour Intensive Construction, 1993).

2. Examine Product Quality management Processes for

project works in construction.

The specifications usually reference some standard, such as

ASTM, ANSI, ACI, AWS, or other organizations which spell out
quality or workmanship standards. In many cases, the specifications
may use such terms as “Normal and Customary” or “Function for its
Intended Use (purpose)” to define quality.
Workmanship is not defined in Division 01—General
Requirements or the American Institute of Architects  form A201—
General Conditions of the Contract for Construction. The American
Heritage Dictionary defines workmanship as "1. The skill of a
craftsperson or artisan. 2. The quality of something made, as by an
artisan. 3. Something made or produced by workman. 4. The product of
an effort or endeavor." Such terms are not specific and are subject to
some interpretation, which could result in misunderstandings or
disputes.
Testing/Inspections
Certain elements of the project, such as soil compaction, strength
of concrete, welding, etc., are traditionally checked or tested by a third
party (testing and inspection organizations). These tests are conducted
during the execution of the work and the quality of the product is
determined and reported shortly after the tests or inspections are made.
The quality of other elements of the project is checked by the architect
or one of the consultants at some point in time, during an occasional
site visit.
The ultimate quality of the product (project) is reviewed close to
final completion, or the startup process. The architect and/or a
consultant issues a punch list of items that need to be corrected for the
project to be certified that it in fact meets the quality expectation set
forth by the project documents. One indication of the effectiveness of
the contractor’s quality management process is reflected in the extent of
the punch list.
Barriers to Success
There are a large number of factors that may influence the
effectiveness of a project quality management program. Some barriers
to successful management system implementation at construction
organizations involve the very nature of the construction process. The
projects are unique, locations vary, work volume fluctuates, staff
changes, the work is labor intensive, the workforce tends to be
transient, projects are subject to change and delays, the key team
members routinely change, the supply chain is extensive, multiple
organizations are involved that have differing visions, values,
processes, and practices, weather can vary, some partners fail to deliver
on their promises, the industry is generally confrontational rather than
cooperative in relationships are driven by general self interest.
In addition, the industry is conservative and slow to embrace
change. Most contactors are small and lack sophistication and
resources. Effectively managing quality becomes challenging due to
these and a multitude of other factors.  
Contractor Quality Management Process
All contractors make an effort to control quality, but generally
most of them do not have a robust quality management process in
place. In many cases, they do not have a written program either.
Traditionally, the project superintendent is responsible for the quality
of the work. And the superintendent depends of the different craft
workers to follow normal and customary industry practice when it
comes to the quality of the work. Such a process depends a lot on to the
ability, knowledge, discretion, and diligence of workers, and the
supervisor’s persistent and careful oversight.
Under such a “loose” management system, as mentioned above,
there are many factors that come into play which must be managed well
to ensure that the resulting quality of the work will meet expectations.
The workforce must be qualified, so keeping qualified workers on the
payroll and managing the worker workloads, as well as the hiring
practices, come into play. Ensuring that the supervisor has the time to
oversee work quality and manage it effectively becomes important.
Having management oversight of the quality process will ensure that
standards are met. To some extent, this is how many of the construction
firms try to ensure the achievement of contact quality requirements.
A more structured approach is to draft a quality management
program, devise a quality management process, train supervision on the
process, implement a control system, hold people specifically
accountable, and review performance and results. Continuously
improve the process where possible. Following is a framework for a
sample quality management process that may become the basis for
managing quality of the project delivery process at a construction
company.
Failure to meet project quality requirement can have a number of
negative connotations on the project delivery process. It creates extra
work for the parties involved, but has the greatest impact on the
contractor, though it may negatively influence the designer and the
owner to some extent. It can damage business relationships and
possibly lead to time-consuming and costly litigation for contractors. In
a. research study conducted a few years ago, the findings revealed that
costs associates with rework (having to redo a step or portion of
construction due to poor craftsmanship or change in plan) were as high
as 12 percent of the total project cost and required as much as 11
percent of the total project working hours.
Quality Assurance and Quality Control
The construction project quality is managed by a program which
has two different elements. One is the quality control (QC) program
and the other is the quality assurance (QA) process. These two
elements have somewhat different functions. Whether you are the
project owner, the designer, or the contractor, each has a stake in the
effectiveness of the QA/QC management process. If the quality of the
product comes into question, and rework is required, it can become a
costly proposition and may become an issue for the contractor. Some
unacceptable quality issues can lead to costly litigation and damage
reputations and relationships. Therefore, managing quality is an
important aspect of a successful project delivery process.
The quality control element defines how the contractor expects to
manage the quality requirements of the project as defined by the
specifications. And the quality assurance element define the steps the
contactors will take to ensure it. The first thing contractors need to
reassure themselves of is that there is a clear understanding of any
vague specified quality standard and that workmanship is linked to
specific and measurable standards. If there is no way to clarify them or
there is complexity involved in the work, then a mockup or sample of
the work should be made and approved so that it may be used as a
standard to which subsequent work may be compared. This can also
prove cery useful in managing quality with subcontractors.
Elements of a Quality Management Process
Following are the elements involved in the development of a
quality management process
Quality Standards
Review of the specifications for any quality requirement is an
important first step in understanding and managing the resulting project
quality. Documentation of clarifications of any of the quality
requirements, and understandings arrived at with the designer and/or
project owner becomes part of the quality standards. This sets the basis
for the contractor’s quality management program (CQMP). This
information must be provided to the project staff.
Contractor Quality Management Program
The contractor’s quality management program is a written
document defining the contractor’s processes, practices, and
procedures, which are to ensure the project’s quality requirement are
met or exceeded. The program has two elements which are the quality
control plan and the quality assurance procedures.
QC Plan: Quality control (QC) is the contractor’s definition of how the
project quality will be managed during construction of the project. Any
unique project quality requirement must be defined in a project specific
document. It defines who is responsible for achieving the quality
standards and how this is to be accomplished. It establishes a
framework with defined procedures and practices to ensure that the
completed product meets or exceeds the project specified quality
requirements. 
QA Process: Quality assurance (QA) is defined as the process or
procedure the contractor will engage in to ensure that the required
quality of the project is achieved. This process defines the inspection
requirements, the timing of the inspections, written report, and who is
to receive and review them, and in the event that any need for
correction who and how it will be done, with the appropriate defined
follow up.

Managing Quality
Quality Assurance Personnel: The role of the quality assurance
personnel is to ensure that the quality control program is functioning
properly and its intent is carried out diligently.
QA Procedures:
Review adequacy of the quality assurance plan:
•Determine if the work practices are such that the expected
quality standard will be met.
•Examine the quality of the ongoing and completed work to
determine that it meets or exceeds the project requirements.
•Ensure that the material used meets project quality standards.
•The finished work is sufficiently protected from harm or damage.
•Issue a report of acceptable work as well as any substandard
work.
•Track the corrective work and issue status report until
satisfactory completion.
•Examine the quality control methods being used to determine if
the supervisor is properly controlling construction activities.
•Review processes, practices and procedures. and identify
possible areas for change so as to improve the quality of the
resulting work
•Recommend any changes to project staff and/or management.
•Review QC documentation to ensure adequacy of systems.
Quality Management Process Outline:
Introductory Statement
1.Program Elements
•Policy and Procedures
•Goals and Objectives
•General Quality Management
•Roles and Responsibilities
•Approvals and Reviews
•Document Control
•Process Improvement
•Project-Specific Quality Management Plan

2.Preconstruction (some activities may not apply)

•Review of Plans and Specifications
•Quality standards
•Review Requirements
•Clarify Any Ambiguity
•Samples or Mockups
•Constructability Reviews
•Documenting Existing Conditions
•Material Management
•Transportation Factors
•Receiving at the Jobsite
•Storage and Protection
•Subcontractor factors
•QA/QC Program
•Field Procedures
•Fabrication Shop Inspections
•Testing
•Requirements
•Procedures
•Documentation

3.Construction Operations
•Zero Defect Program
•Quality Assurance Administration
•Roles and Responsibilities
 •Inspection and Testing Plan
•Inspection Checklists
•Quality Assurance(QA) Process
•Specified Quality Requirements
•QA Process
•Pre-Installation Meeting and Inspection
•First Work-in-Place Meeting and Inspection
•Follow-Up or Daily Inspections
•Inspections
•Inspection schedule
•Pre-Cover-Up and Pre-Closure Inspections
•Documentation
•Written Report
•Digital Pictures
•Nonconformance Procedures
•Report
•Tracking
•Correction
•Material Verification
•Water Intrusion Prevention
•Preconstruction
•Inspections During Construction
•Protection of the Work

4.Closeout
•Closeout Procedures
•As Builts
•Punch List Work Management
•Systems Turnover Practices
•Startup
•Testing of Systems
•Training of Personnel
•Documentation
•O&M Manuals
•Final Acceptance

5.Postconstruction
•Warranties
 •Warranty Management During the Warranty Period
•Warranty Callbacks after the Warranty Period
•Resulting Damage
•Postconstruction Documentation
6.Abbreviations
7.Glossary of Terms
8.References
9.Attachments
•Meeting Documentation
•Preconstruction Meeting Agenda
•Pre-installation Meeting Minutes
•First Work-in-Place Meeting Minutes

•Reports
•Daily Quality Control Inspection Report
•Subcontractor's Daily Quality Control Inspection
Report
•Nonconformance Report
•Checklists
•Construction Site Inspection Checklist
•Preclosure Inspection Form
•Logs
•Inspection and Testing Log
•Nonconformance Report Log
•Digital Photo Log
•Warranty Work Log
•Sample Plans
•Subcontractor's Site Specific Quality Control Plan
•Inspection and Testing Plan
•Water Intrusion Management Plan
•Sample Punch List

Conclusion
A contractor must have a robust quality management program as
it is critical to the overall success of a construction project. An effective
program creates a process for clarifying standards and requirements,
established means and methods for managing the process, defines
responsibilities and accountabilities, and adds another avenue to more
effectively manage the supply chain, while it reduces misunderstanding
and potential conflict. It effectively facilitates and manages the
collection of data, identifies performance discrepancies and
nonconforming work, and substantially increases efficiency by
reducing defects and punch list work, which aids in. improving the
working relationship with the design team and the project owner. It
systematically manages quality and enhances the contractor’s project
delivery, increases productivity, eliminates or reduces waste, and
ultimately improves profitability.

3.Explain activity costs and BOQ work-item relationship in

contracted projects.

Activity-based costing (ABC) is a methodology for more

precisely allocating overhead costs by assigning them to activities.
Once costs are assigned to activities, the costs can be assigned to the
cost objects that use those activities. The system can be employed for
the targeted reduction of overhead costs. ABC works best in complex
environments, where there are many machines and products, and
tangled processes that are not easy to sort out. Conversely, it is of less
use in a streamlined environment where production processes are
abbreviated.
The Activity Based Costing Process Flow
Activity-based costing is best explained by walking through its
various steps. They are:
1.Identify costs. The first step in ABC is to identify those costs that we
want to allocate. This is the most critical step in the entire process,
since we do not want to waste time with an excessively broad project
scope. For example, if we want to determine the full cost of a
distribution channel, we will identify advertising and warehousing costs
related to that channel, but will ignore research costs, since they are
related to products, not channels.
2.Load secondary cost pools. Create cost pools for those costs incurred
to provide services to other parts of the company, rather than directly
supporting a company’s products or services. The contents of
secondary cost pools typically include computer services and
administrative salaries, and similar costs. These costs are later allocated
to other cost pools that more directly relate to products and services.
There may be several of these secondary cost pools, depending upon
the nature of the costs and how they will be allocated.
3.Load primary cost pools. Create a set of cost pools for those costs
more closely aligned with the production of goods or services. It is very
common to have separate cost pools for each product line, since costs
tend to occur at this level. Such costs can include research and
development, advertising, procurement, and distribution. Similarly, you
might consider creating cost pools for each distribution channel, or for
each facility. If production batches are of greatly varying lengths, then
consider creating cost pools at the batch level, so that you can
adequately assign costs based on batch size.
4.Measure activity drivers. Use a data collection system to collect
information about the activity drivers that are used to allocate the costs
in secondary cost pools to primary cost pools, as well as to allocate the
costs in primary cost pools to cost objects. It can be expensive to
accumulate activity driver information, so use activity drivers for which
information is already being collected, where possible.
5.Allocate costs in secondary pools to primary pools. Use activity
drivers to apportion the costs in the secondary cost pools to the primary
cost pools.
6.Charge costs to cost objects. Use an activity driver to allocate the
contents of each primary cost pool to cost objects. There will be a
separate activity driver for each cost pool. To allocate the costs, divide
the total cost in each cost pool by the total amount of activity in the
activity driver, to establish the cost per unit of activity. Then allocate
the cost per unit to the cost objects, based on their use of the activity
driver.
7.Formulate reports. Convert the results of the ABC system into reports
for management consumption. For example, if the system was
originally designed to accumulate overhead information by
geographical sales region, then report on revenues earned in each
region, all direct costs, and the overhead derived from the ABC system.
This gives management a full cost view of the results generated by each
region.
8.Act on the information. The most common management reaction to
an ABC report is to reduce the quantity of activity drivers used by each
cost object. Doing so should reduce the amount of overhead cost being
used.
We have now arrived at a complete ABC allocation of overhead costs
to those cost objects that deserve to be charged with overhead costs. By
doing so, managers can see which activity drivers need to be reduced in
order to shrink a corresponding amount of overhead cost. For example,
if the cost of a single purchase order is $100, managers can focus on
letting the production system automatically place purchase orders, or
on using procurement cards as a way to avoid purchase orders. Either
solution results in fewer purchase orders and therefore lower
purchasing department costs.
Bills of Quantity
Nature of Bills
Bills of Quantities comprise a list of items of work which are
briefly described. The Bills also provide a measure of the extent of
work and this allows the work to be priced. The work included in the
item is defined in detail by the rules in the Method of Measurement.
The item descriptions are therefore a shorthand to allow the relevant
rules of the Method to be identified. The measure may be a single item
or number, dimension (linear metre, square metre, cubic metre), time
(hrs, weeks) or weight.
Function of Bills
The Bills of Quantities may serve a number of functions as:
A breakdown of the tendered price, with no contractual status, but
providing information for the selection from tenderers.
An estimate measure of the work for the tendered price, to be used to
arrive at a revised contract price once the actual quantities of work
carried out are measured. This is the remeasure form of contract.
A schedule of rates as the contract basis for valuing variations in the
work.
A basis for measure of the value of work completed for interim
payments.
Method of Measurement
Many contracts are let using Bills of Quantities, although this
does not necessarily mean that the works are to be valued by re-
measurement. The Bills of Quantities are required to be prepared using
rules in a specified Method of Measurement. Many Standard Methods
of Measurement are now in common use.
The Method of Measurement will specify the division of work
into categories. In the building industry the division is usually on the
basis of different trades, and are generally very detailed. In the
engineering industry the division is usually less complex and composite
items are used describing the completed construction operation. There
is normally a division for preliminary items such as mobilisation, site
set up and insurances. In contrast to the remainder of the Methods,
preliminary items require large lump sums, in some cases timerelated,
but with little detail to allow the build-up to the item to be ascertained.
Standard Methods of Measurement have become increasingly
more complicated. They give rise to claims for additional payment
based on interpretation of the Method. The tendency has been for the
Methods to provide detailed sub-division of work and therefore scope
for claims based on ambiguities of interpretation, failure to measure the
tendered Bills in accordance with the Method and the application of
exceptions to measure.

Practice in the Building Industry

 The item description simply identifies the extent of work priced,
but the detailed requirements are to be found in the Specification and
Drawings. In JCT Forms the specification of the works is included in
the Bills of Quantities in the form of lengthy preambles.

The practice in the Building industry is to set out in the Bills of

Quantities particulars required by the Conditions of Contract, with
detailed specification for the work. Determining the precedence of such
documents in interpreting the contract may create difficulties, since the
Bills of Quantities will be a specially written or "one-off" document in
contrast to the printed standard conditions. The normal rule (in absence
of express terms) is that specially prepared documents will take
precedence over standard printed conditions J Evans & Sons
(Portsmouth) Ltd -v- Andrea Merzano Ltd (1976).

Mistakes in Bills

Mistakes in the bill descriptions or quantities are unlikely to be

remedied as a legal rectification of the terms of the contract to reflect
the true intention of the parties. It is more likely than not, that the
common intention will be that the tendered price should prevail, rather
than a price revised to account of the error. Most standard forms of
contract which adopt Bills of Quantities make provision to deal with
errors in bill descriptions and quantities, distinct from the effect of
variations.

Apportionment of Responsibility for Bills

The use of a Bill of Quantities in a re-measurement contract

requires the responsibility for the consequence of the following risks to
be defined, independently of the effect of variations to the Contract.
The preparation of the Bills of Quantities may be incorrect, with items
omitted which should have been included in the tendered Bill for the
original work described in Drawings and Specification. The Bills of
Quantities may not have been prepared in accordance with the Standard
Method of Measurement for the original work described in the
Drawings and Specifications.
 The final quantities of work for an item may be different to the
estimate in the tendered documents. The change in the final quantities
of work for an item may so upset the balance of resources and plant and
material and/or the method of working, to make the unit price for the
item inaccurate.

The actual quantity of work for an item may differ from the estimate at
tender for a number of reasons. In the case of excavation for instance
the removal of unsuitable material or the extent of rock or the extent of
tunnelling in particular classifications of ground, may only be estimated
from ground investigation information and not known until work is
carried out. Similarly the length of piles driven to a specified set may
not be known precisely at each pile location.

As a matter of business efficacy, a term will be implied (in the absence

of express terms) that the cost of the work for a Bill item which has not
been priced by the contractor is included in the prices entered
elsewhere in the Bill. In a measurement contract it is necessary to
ascertain how the parties intended to price the differences between as-
built quantities from those estimated at tender, independently of the
effect of variations. The following item valuations are possibilities:

Apply the contract rates unaltered to the changed quantities for the item
of work;

Adjust the contract rates for the item of work, if the difference in
quantities makes the balance of the rate inaccurate, leaving all other
items including preliminaries unaltered. If this is the intention
contractor’s will need to have included in the price for quantities -
related site overheads in the prices for work items and not in the
Preliminary Item rates

Adjust the rates for other items of work, when planned execution is no
longer valid due to the difference in quantity for the item of work.

Adjust the prices for preliminary items, which are affected by the
difference in quantities. This will create difficulties unless the
preliminary item is clearly time-related and the effect can be assessed
on a time basis or if there is a build-up of the preliminary item prices.

5. Explain planning of construction manpower.

Manpower Planning
Manpower planning is the process of estimating the optimum
number of people required for completing a project, task or a goal
within time. Manpower planning includes parameters like number of
personnel, different types of skills, time period etc. It is a never ending
continuous process to make sure that the business has the optimized
resources available when required taking into consideration the
upcoming future projects and also the replacement of the outgoing
employees. It is also called as Human Resource Planning.
Large businesses often work on forecasting and upcoming
opportunities in the pipeline. If these opportunities convert into actual
business, they would need manpower to start working on them. But the
dilemma is that what if they hired a large number of people to work on
an almost sure project but at the last moment the project didn't start on
time. What would the business do with the additional skilled
manpower. The other dilemma is that if they kept waiting till the last
moment for a project and when the project starts they might not have
enough manpower to work and deliver. These questions are solved by
the process of manpower planning.
Manpower planning also includes the details like how and when
will new employees be acquired. This whole process is done keeping in
view the goals of the organization, the future predictions for business
and changing technology trends. This helps the organization be
prepared for the future with the
correct manpower at their disposal for business prosperity.
Manpower Planning Process
HR department of every company has to constantly keep an eye
on the human resources that the company has. With every possible
event like change industry dynamics, increase in business requirements,
skills required for a particular technology etc, the need for having better
resources increases. The process and steps for having manpower
planning are as below:
1. Understanding the existing workforce: The HR department has to
thoroughly understand the manpower available with the company. They
should examine the background, skill set, qualification, location etc of
the entire work force so that they have a good idea regarding the pool
of talent which the company has.
2. Forecasting for the future: With constant changes in business
requirements, companies must understand the future trend and which
type of employees would be best suited for their organization. Hence,
companies must examine, evaluate and forecast the type of employee
workforce they want in the future years
3. Recruitment and selection: Depending upon the business
requirements, manpower planning leads to a much more well thought
out recruitment and selection pattern. This totally depends upon the
forecasts made and the business requirements. Hence, candidates with
better qualification, skill set, experience etc are shortlisted as
employees to best suit the future needs.
4. Training the employees: Employees who are a part of the
organization are trained to have the best skills, knowledge and
understanding about the current job as well as the future requirements.
All these above mentioned manpower planning steps help organizations
become better prepared to adapt to new technology, future industry
developments and even to face off with competitors.
HOW MAN POWER PLANNING WORKS
 There have been two basic approaches that have been taken in
developing manpower planning systems for highway construction
organizations. One is the project approach and the other is the program
approach.
The project approach is designed as an operational tool and
dictates to the districts how they are to staff individual projects in the
field. The program approach is designed as a planning tool and assigns
total manpower resources to the districts for their assignment to
individual projects. A significant difference between the two is
accountability. With the project approach, the system, not the district, is
accountable for efficient manpower utilization. W ith the program
approach, each district is accountable for manpower utilization.
The program approach was selected for the Indiana manpower
planning system because district accountability was considered vital,
and because there are several uncontrollable factors that would be
almost impossible to effectively incorporate into a manpower planning
system. These factors require engineering and management judgments
that can best be made in the field and include: fluctuating contractor
work schedules, adverse weather conditions, material delays, strikes,
public reactions to construction projects, etc. The program approach
was also selected because it was felt that the wide geographical
dispersion of the districts made it impossible for the central office to
attempt to manage project staffing on an individual basis as would be
required by the project-oriented system.
The program approach also meets Indiana’s objectives for a
manpower planning program which are to:
(1) accomplish quality construction with minimum supervision;
(2) provide the means for simple and accurate forecasting of
construction supervision manpower requirements;
(3) balance construction manpower allocation to projected program
workloads in each district; and
(4) monitor the allocation and use of personnel during program
implementation.
The manpower planning system developed for Indiana is based
on the concept of applying established staffing standards to the
districts’ annual construction programs. This results in the
determination of manpower requirements for each district on a monthly
basis. A key to this system is the use of established staffing standards
for categories of projects. This allows the compensating error of the
system to ensure that manpower will be available for those projects that
require more than standard manpower by using the excess from those
projects that require less than standard manpower. It is this factor that
places responsibility for manpower utilization where it belongs in the
districts.
The manpower planning system has three key elements: (1)
annual construction program,
(2) project categories, and
(3) staffing standards.
The annual construction program consists of all known and
anticipated contracts that will be active during the construction season
within each district. This program provides the basis for the manpower
planning process. The reliability of the planning process is dependent
upon the reliability of the program. This program also provides the
monitoring capabilities of the system since fluctuations in forecast
workloads can be readily identified by additions or deletions in the
program for each district.
There are 18 established project categories in the manpower
planning system. These categories, being fairly broad in scope, permit a
wide variety of individual project types to be reduced in number to a
more manageable and limited grouping for the assignment of
manpower staffing standards. Staffing standards have been established
for each project category based on a “standard” or average project that
falls within each category. These staffing standards were developed and
established with the participation of experienced engineers from the
field. The end result of the application of annual construction programs
to established categories and staffing standards is a monthly
determination of each districts manpower requirements.
CLOSURE
In closing, I would like to point out that manpower planning
should not be considered a negative reaction to the way Indiana has
managed its construction function in the past. On the contrary, Indiana
has traditionally maintained high levels of service in the construction of
its highway system and has staffed the construction function in a
normally accepted manner. This is reflected in the comparatively low
construction engineering rate of 7.8% This is significant because each
per cent represents approximately 1.9 million dollars in operating costs.
This is a clear indication that Indiana is doing something right
manpower planning will help to ensure that Indiana will remain an
industry leader in the future.