What We Liked - the Construction-execution Approach
Authors Ritz and Levy state that:
"The bidding, proposal, and contracting process plays the key role in total construction project management. This process is the lifeblood of the engineering and construction industries. Until we have reached an agreement or signed a contract, construction of the facility is on hold ... The contract itself sets the ground rules and apportions the risks for executing the construction of the work. The overall process is shown schematically in Figure 2.1"
The figure referred to lists the major activities in the relevant three major phases of the project's contractor selection process. It is shown below in Figure 2 and, as readers will observe, it is very generic. More important, perhaps, is the reference to "apportioning the risks for executing the construction of the work". This is a major subject on which whole books have been written. That's because risk events inevitably occur and, unless each of the parties to the contract clearly understands their respective obligations, arguments over "who pays?" erupt. If the relationships between the parties are adversarial, as is often the case under traditional construction contracts, such differences of opinion quickly escalate to full-scale legal action. Unfortunately, the cost and settlement of such cases may well exceed the cost to fix the original damage.
In Figure 2, the Execution Phase Activities in column 3 obviously represent the biggest part of the project and this is where the risks in question actually assert themselves. From our own experience, the so-called risks, that have now become an issue or serious problem, can impact the success of the project in terms of time and cost. However, don't rush to place blame on the immediately associated construction activities shown in column 3, the responsibility of the contractor. Too often, the source of the problem can be traced to a failure to properly conduct the activities shown in column 1, the responsibility of the owner!
Indeed, the authors state:
"The owner eventually assumes the lion's share of the risks in selecting the basic design of the facility, developing the conceptual design, and selecting the site of the work. The contractor's risk occurs in the construction-management areas of labor supply, productivity, schedule, and local site conditions."
Unfortunately, the division of risk is not that clear cut because a risk/problem may well be traced to some failure on the part of the owner in its earlier activities. If the resulting problem holds up the work and/or reduces the productivity of the contractor's workforce, then the contractor has a financial claim against the owner.
1. Development Phase
2. Contracting Phase
3. Execution Phase
Selection of bidders
Invitation for proposals
by owner and contractor
Figure 2: The contractor selection process (and beyond)
The authors also rightly declare that:
"The construction bidding, proposal, and construction process is initiated by the owner, who has a project to build. There are about as many approaches to contracting as there are owners. Each combination of owner and project has some unique features that need to be covered by contract."
"Here we are concentrating on how the owner wishes to perform the work. Each one of these approaches is subject to further variations introduced by the type of contract used. The owner can use the following contracting principles:
- Hiring a general contractor who will perform some of the work and/or subcontract
the specialized portions of the work via a negotiated process
- Utilizing a design-build arrangement often referred to as a turnkey
involving a single entity of designer-contractor: a designer and contractor
working together under a joint-venture type contract
- Awarding the design of the project to the owner's own design consultants and
engaging a third-party builder through a competitive bidding process
- Hiring a construction manager (CM) to act as an owner's agent, usually working
through both the design and construction process."
The subsequent chapters in the book deal in detail with the management of these Execution Phase efforts with especial emphasis on project control. Along the way, as will be noted from the list of chapters provided earlier, a couple of chapters are thrown in covering Total Construction Project Management for the Twenty-First Century and Green Buildings and Sustainable Construction.
11. Ibid, p23
12. Ibid, p45
13. Ibid, p24
15. Ibid, p25
16. Ibid, Chapter 8
17. Ibid, Chapters 10 & 11