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Construction Management
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Table of Contents

Chapter 1 History and Basic Concepts 1 Bridges and History 1 1.1 Historical Perspective 2 1.2 Great Captains of Construction 3 1.3 Panama Canal 5 1.4 Other Historic Projects 9 1.5 Construction versus Manufacturing Processes 9 1.6 Project Format 11 1.7 Project Development 12 1.8 Construction Technology and Construction Management 13 1.9 Construction Management Is Resource Driven 14 1.10 Construction Industry 14 1.11 Structure of the Construction Industry 15 1.12 Differing Approaches to Industry Breakdown 16 1.13 Management Levels of Construction 16 Review Questions and Exercises 19 Chapter 2 Preparing the Bid Package 20 Online Plan Rooms 20 2.1 Project Concept and Need 21 2.2 Establishing Need 22 2.3 Formal Need Evaluation 23 2.4 Conceptual Drawings and Estimates 23 2.5 Preliminary and Detail Design 24 2.6 Notice To Bidders 30 2.7 Bid Package 32 2.8 General Conditions 34 2.9 Supplementary Conditions 37 2.10 Technical Specifications 38 2.11 Addenda 41 2.12 The Estimate and the Decision to Bid 41 2.13 Prequalification 42 2.14 Subcontractor and Vendor Quotations/Contracts 42 2.15 Bid Bond 43 2.16 Performance and Payment Bonds 44 2.17 Cost and Requirements for Bonds 45 Review Questions and Exercises 46 Chapter 3 Issues During Construction Phase 48 Project Rework Reduction 48 3.1 Acceptance Period/Withdrawal 49 3.2 Award of Contract/Notice to Proceed 49 3.3 Contract Agreement 50 3.4 Time Extensions 50 3.5 Change Orders 52 3.6 Changed Conditions 52 3.7 Value Engineering 53 3.8 Suspension, Delay, or Interruption 56 3.9 Liquidated Damages 56 3.10 Progress Payments and Retainage 57 3.11 Progress Reporting 58 3.12 Acceptance and Final Payment 58 3.13 Summary 59 Review Questions and Exercises 60 Chapter 4 Construction Contracts 62 Web-Based Contracts 62 4.1 Contract Environment 63 4.2 Process of Purchasing Construction 63 4.3 Major Construction Contract Types 65 4.4 Competitively Bid Contracts 65 4.5 Stipulated-Sum Contracts 66 4.6 Unit-Price Contracts 67 4.7 Negotiated Contracts 70 4.8 Project Delivery Methods 72 4.9 Design-Build Contracts 73 4.10 Design-Build in a Consortium Format 74 4.11 Construction Management Contracts 75 4.12 Construction Management At-Risk 76 4.13 Comparing Project Delivery Methods 76 Review Questions and Exercises 77 Chapter 5 Legal Structure 79 Joint Venturing 79 5.1 Types of Organization 80 5.2 Legal Structure 80 5.3 Proprietorship 82 5.4 Partnership 82 5.5 Corporation 84 5.6 Comparison of Legal Structures 86 Review Questions and Exercises 89 Chapter 6 Impact of Taxes 91 Taxation in Ancient Egypt, Greece, and Rome 91 6.1 Introduction 92 6.2 Why Taxes? 92 6.3 Types of Taxes 93 6.4 Income Tax Systems 93 6.5 Taxation of Businesses 94 6.6 Business Deductions in General 95 6.7 Taxable Income: Individuals 96 6.8 Itemized Deductions, Standard Deductions, and Personal Exemptions 96 6.9 The Tax Significance of Depreciation 97 6.10 Marginal Tax Rates 99 6.11 Tax Credits 100 6.12 Tax Payroll Withholding 101 6.13 Tax Payment Schedules 101 6.14 Marginal, Average, and Effective Tax Rates 102 6.15 Net Operating Losses 102 6.16 Summary 103 Review Questions and Exercises 104 Chapter 7 Project Planning 105 Building Information Modeling 105 7.1 Introduction 106 7.2 Developing the Work Breakdown Structure 108 7.3 A Work Breakdown Example 109 7.4 Work Packages for the Gas Station Project 110 7.5 Determining Sequence of Work Packages 112 7.6 Estimate Development and Cost Control Related to the Work Breakdown Structure 113 7.7 Role of Code of Accounts 114 7.8 Summary 116 Review Questions and Exercises 116 Chapter 8 Project Scheduling 117 Four-Dimensional Modeling 117 8.1 Introduction 118 8.2 Estimating Activity Durations 119 8.3 Bar Charts 120 8.4 Activity Precedence Diagrams 122 8.5 Generalized Relationships 127 8.6 Overview of the Critical Path Method Scheduling Procedure 131 8.7 Forward Pass (Traditional Relationships) 132 8.8 Backward Pass (Traditional Relationships) 133 8.9 Critical Path 135 8.10 Activity Floats 136 8.11 Scheduling the Small Garage Project 138 8.12 Generalized Relationship Scheduling Computations 141 8.13 Working to Calendar Dates 147 8.14 Summary 148 Review Questions and Exercises 149 Chapter 9 Scheduling: Program Evaluation and Review Technique Networks and Linear Operations 153 Lean Construction 153 9.1 Introduction 154 9.2 An Example Program Evaluation and Review Technique Network 156 9.3 Program Evaluation and Review Technique Shortcomings 158 9.4 Linear Construction Operations 159 9.5 Production Curves 160 9.6 Line of Balance Concepts 162 9.7 Line of Balance Applied to Construction 165 Review Questions and Exercises 168 Chapter 10 The Mathematics of Money 171 Using Life Cycle Cost to Assess Sustainable Construction Costs 171 10.1 Introduction 172 10.2 Interest in Action 173 10.3 Time Value of Money 174 10.4 Interest 174 10.5 Simple and Compound Interest 175 10.6 Nominal and Effective Rate 176 10.7 Equivalence and Minimum Attractive Rate of Return 177 10.8 Discount Rate 178 10.9 Importance of Equivalence 178 10.10 Sunk Costs 178 10.11 Cash Flow Diagrams 179 10.12 Annuities 180 10.13 Conditions for Annuity Calculations 181 10.14 Calculating the Future Value of a Series of Payments 181 10.15 Summary of Equivalence Formulas 183 10.16 Worth Analysis Techniques: An Overview 185 10.17 Present Worth Analysis 186 10.18 Equivalent Annual Worth 187 10.19 Internal Rate of Return 188 10.20 Limitations of the Internal Rate of Return Method 189 10.21 A Practical Example Using Present Worth Analysis 189 10.22 Comparison Using Equivalent Annual Worth 190 10.23 Summing Up 192 Review Questions and Exercises 193 Chapter 11 Project Cash Flow 195 Scenario Testing 195 11.1 Cash Flow Projection 196 11.2 Cash Flow to the Contractor 197 11.3 Overdraft Requirements 198 11.4 Comparison of Payment Schemes 199 Review Questions and Exercises 204 Chapter 12 Project Funding 207 Build Operate and Transfer (BOT) 207 12.1 Money: A Basic Resource 208 12.2 Construction Financing Process 209 12.3 Long-Term Pro Forma Example 210 12.4 Mortgage Loan Commitment 212 12.5 Construction Loan 213 12.6 Owner Financing Using Bonds 215 Review Questions and Exercises 217 Chapter 13 Equipment Ownership 218 Radio Frequency Identification Application in Construction 218 13.1 General 219 13.2 Equipment Owning and Operating Costs 220 13.3 Depreciation of Equipment 221 13.4 Straight-Line Method 223 13.5 Declining Balance 224 13.6 Production Method 226 13.7 Depreciation Based on Current Law 227 13.8 Depreciation Versus Amortization 228 13.9 Interest, Insurance, and Tax Costs 229 13.10 Operating Costs 231 13.11 Overhead and Markup 232 Review Questions and Exercises 233 Chapter 14 Equipment Productivity 234 Laser-Based Machine Control 234 14.1 Productivity Concepts 235 14.2 Cycle Time and Power Requirements 237 14.3 Power Available 239 14.4 Usable Power 242 14.5 Equipment Balance 246 14.6 Random Work Task Durations 249 Review Questions and Exercises 251 Chapter 15 Construction Labor 253 Biometric Identification Recognition 253 15.1 Labor Resource 254 15.2 Short History of Labor Organizations 254 15.3 Early Labor Legislation 255 15.4 Norris-LaGuardia Act 256 15.5 Davis?Bacon Act 257 15.6 National Labor Relations Act 257 15.7 Fair Labor Standards Act 258 15.8 Union Growth 259 15.9 Labor Management Relations Act 259 15.10 Other Labor Legislation 262 15.11 Vertical Versus Horizontal Labor Organization Structure 263 15.12 Jurisdictional Disputes 263 15.13 Union Structure 265 15.14 National Unions 266 15.15 State Federations and City Centrals 267 15.16 Union Locals 267 15.17 Union Hiring Halls 268 15.18 Secondary Boycotts 268 15.19 Open-Shop and Double-Breasted Operations 270 15.20 Labor Agreements 270 15.21 Labor Costs 271 15.22 Average Hourly Cost Calculation 275 Review Questions and Exercises 277 Chapter 16 Estimating Process 279 Estimating Using Handheld Devices 279 16.1 Estimating Construction Costs 280 16.2 Types of Estimates 280 16.3 Detailed Estimate Preparation 282 16.4 Definition of Cost Centers 284 16.5 Quantity Takeoff 286 16.6 Methods of Detailed Cost Determination 288 16.7 Problems with Unit-Cost Method 290 16.8 Resource Enumeration 291 16.9 Work Package or Assembly-Based Estimating 294 16.10 Summary 297 Review Questions and Exercises 298 Chapter 17 Cost Control 300 Leadership in Energy and Environmental Design Certification 300 17.1 Cost Control as a Management Tool 301 17.2 Project Cost Control Systems 301 17.3 Cost Accounts 302 17.4 Cost Coding Systems 304 17.5 Project Cost Code Structure 304 17.6 Cost Accounts for Integrated Project Management 308 17.7 Earned Value Method 310 17.8 Labor Cost Data Collection 313 17.9 Charges for Indirect and Overhead Expense 316 17.10 Project Indirect Costs 317 17.11 Fixed Overhead 320 17.12 Considerations in Establishing Fixed Overhead 321 Review Questions and Exercises 322 Chapter 18 Materials Management 325 Fiber Reinforced Polymer Rebar 325 18.1 Material Management Process 326 18.2 The Order 326 18.3 Approval Process 333 18.4 Fabrication and Delivery Process 335 18.5 Installation Process 336 18.6 Material Types 336 Review Questions and Exercises 339 Chapter 19 Safety 340 Safety in Trenches 340 19.1 Need for Safe Practice 341 19.2 Humanitarian Concerns 342 19.3 Economic Costs and Benefits 342 19.4 Uninsured Accident Costs 345 19.5 Federal Legislation and Regulation 346 19.6 Occupational Safety and Health Administration Requirements 348 19.7 How the Law Is Applied 348 19.8 Safety Record Keeping 352 19.9 Safety Program 352 Review Questions and Exercises 359 Chapter 20 Construction Operations (Available on website at www.wiley.com/college/halpin) Appendices 361 Appendix A Typical Considerations Affecting the Decision to Bid 362 Appendix B Performance and Payment Bond 365 Appendix C Standard Form of Agreement Between Owner and Contractor On the Basis of a Stipulated Price 370 Appendix D Standard Form of Agreement Between Owner and Contractor on the Basis of Cost-Plus 383 Appendix E Arrow Notation Scheduling Calculations 397 Appendix F AGC Builders Association of Chicago: Typical Agent Job Descriptions 403 Appendix G Compound Interest Tables 409 Appendix H Plans for Small Gas Station 435 Appendix I Site Reconnaissance Checklist 438 Appendix J The Cumulative Normal Distribution Function 440 Appendix K WebCYCLONE Users Manual (Available on website at www.wiley.com/college/halpin) Bibliography 442 Index 445

About the Author

About the Authors Daniel W. Halpin DANIEL W. HALPIN is Professor Emeritus and retired Bowen Head of the Division of Construction Engineering and Management at Purdue University. He is a graduate of the U.S. Military Academy at West Point and received the MSCE and PhD degrees in Civil Engineering from the University of Illinois in 1969 and 1973. Prior to attending Illinois, he served in the U.S. Army Corps of Engineers receiving the Bronze Star Medal for service in the Republic of Vietnam. His awards include the Walter L. Huber Civil Engineering Research Prize (1979) and the Peurifoy Construction Research Award (1992) both given by the American Society of Civil Engineers (ASCE). ASCE recognized his achievements with distinguished membership (Dist.M.ASCE) in 2006. Also in 2006, the Construction Industry Institute (CII) awarded him the prestigious Carroll H. Dunn Award of Excellence, CII's highest award. He is a member of the National Academy of Construction (NAC) and was named a Distinguished Alumnus of the Department of Civil and Environmental Engineering at the University of Illinois in 2008. Bolivar A. Senior BOLIVAR A. SENIOR is Associate Professor in the Department of Construction Management at Colorado State University. He has extensive experience in the management of construction projects. He headed Senior Brown Associates, Inc., consultants in the area of planning and control, and served as project manager for several companies in his native country, Dominican Republic. He has published many articles and a book in the areas of project planning and control, financial management and construction management education.

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