Management Principles

HNC Construction Year Two Evening

Module Management Principles
Course Tutor
Ian Everritt
Assignment Three
Assignment title
Housing Project
By
Paul Wych
19/05/2010
Word Count
2,915.

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Table of Contents
1. Executive Summary....................................................................................................................3
2. Task One......................................................................................................................................4
2.1 Budget Preparation - Estimated costs...................................................................................4
2.2 Actual costs...............................................................................................................................4
2.2.1 Material Takeoff.................................................................................................................5
2.2.2 Pricing the Material and Equipment................................................................................5
2.2.3 Construction Equipment...................................................................................................5
2.2.4 Labour.................................................................................................................................6
2.2.5 Special Conditions............................................................................................................6
2.2.6 Transportation and Waste Disposal...............................................................................6
2.2.7 Construction Management...............................................................................................7
2.2.8 Project Management.........................................................................................................7
2.2.9 Health and Safety..............................................................................................................7
3. Task Two......................................................................................................................................8
3.1 Access.......................................................................................................................................8
3.2 Organisation..............................................................................................................................8
3.3 Routes around site...................................................................................................................8
3.4 Cabins and storage..................................................................................................................9
3.5 Temporary services..................................................................................................................9
4. Task Three....................................................................................................................................10
5. Task Four......................................................................................................................................11
6. Executive Summary.....................................................................................................................15

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1. Executive Summary
The following work examines the processes that a construction project goes
through to achieve a build on time and within budget. The thought process that
goes into the layout of a site to produce maximum efficiency can play a vital part
in the budget. I have looked into the issues and the need for the compliance to
quality standards along with statutory compliance.

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2. Task One

2.1 Budget Preparation - Estimated costs

Cost estimating is the prediction of the probable construction cost of a specific
building project. A cost estimate can be an important management tool during the
design phases of a project providing information about the build and the project
budget.

All projects begin with an idea and end by filling a need. Most projects at conceptual
design require changes to present an acceptable workable solution. The conceptual
cost estimate is becoming more important to owners, architects, and builders. It is a
tool for determining required funding and to gauge the needs of a project. This tool
continues to be refined during the design stages of the project. The cost estimate
accounts for all items that will generally be included in the general contractor’s bid.
The cost estimate is prepared by breaking down the items of work using a standard
format and determining the cost of each item from experience and a database of
current construction cost information. A cost estimate should not be confused with a
project budget.

When estimating cost data may be collected from similar projects and published
reports. The basis of the cost data should be documented as part of the detailed
backup for the estimate. The amount of data collected will depend on the time
available to perform the estimate and the type of estimate, as well as the budget
allocation for the estimate’s preparation. When using the collected cost data, the
estimator must be aware of the source of the data and make adjustments where
necessary. Data from one project may not be consistent or comparable with data
from a different project. For example, if historical costs data is used, the costs may
not be applicable due to escalation, regulatory changes, or geographical differences.

2.2 Actual costs

As the project develops and more detail is available, the estimate also will be in more
detail. Following are some general steps that may be used for developing the actual
costs of a detailed estimate:

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2.2.1 Material Takeoff

A material, labour and equipment takeoff is developed from the drawing and
specification review. The amount of detailed taken off will vary with the amount of
design detail. The takeoffs are divided into categories or accounts, and each account
has subaccounts. Each project or program should have an established code of
accounts. Each account should be considered, even when developing planning
estimates, to help eliminate any omissions or oversights.

2.2.2 Pricing the Material and Equipment

On fixed price or lump sum contracts the material cost should be the cost a
contractor will pay for the material and does not include any mark-up for handling by
the contractor. Once the quantity takeoff is complete, the next step is to price the
individual items. Several acceptable ways of pricing material are by verbal or written
quotations, up-to-date catalogue price sheets, estimating manuals, and historical
data. The current material price should be used whenever possible. If old prices are
used, escalation must be added to make the prices current as of the estimate date.
Escalation beyond the date of the estimate is included as a separate item.

2.2.3 Construction Equipment

Equipment and tools are required to install the materials. Databases can be used to
obtain an equipment usage relationship with the materials. Large equipment may be
estimated on an activity basis or may be estimated for the duration of the project.

Pricing can be obtained from verbal or written vendor quotes, estimating manuals,
and from historical data. Current prices should be used whenever possible, or prices
should be adjusted to reflect prices at the time of the estimate date.

Some fixed price or lump sum contract projects require special tools or equipment for
completion of the work. An example of this is a heating, ventilation, and air
conditioning project that might require a large crane for setting an air handling unit on
the roof of a building. The cost of the crane would be considered a direct cost.
Examples of construction equipment are small tools and hand held power tools.
These costs would be included as an indirect cost. On cost-plus-fixed-percentage

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contracts, all costs for construction equipment and small tools are considered as
direct costs.

2.2.4 Labour
Several good publications provide an estimate of the labour hours required for a task
that the estimator should use unless adequate experience has given the estimator a
more accurate base for determining labour hours required. One important item that
must be remembered when using general estimating publications is that these
publications are based on a national average construction project for mainly private
industry.

2.2.5 Special Conditions

Consideration must be given to all factors that affect construction. Some of these
factors are:

• Availability of skilled and experienced manpower and their productivity;

• The need for overtime work;

• The anticipated weather conditions during the construction period;

• Work in congested areas or in radiation areas;

• Security requirements imposed on the work area; and

• Use of respirators and special clothing.

Special conditions may be estimated by applying a factor; for example, 10 percent

was applied to the labour hours for loss of productivity due to work in a congested
area. Other items may be calculated by performing a detailed takeoff. An example of
this would be an activity that could only be performed over a 2-day period. Overtime
would be required to complete the activity and the number of hours and rates could
be calculated.

2.2.6 Transportation and Waste Disposal

If waste disposal is required as part of a project, the waste classification must be
identified. Based on the waste classification, disposal options can be identified. If
waste is land filled, the nearest appropriate landfill can be identified so transportation
and disposal costs can be calculated.

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2.2.7 Construction Management

A construction manager is responsible for construction activities. This responsibility
includes subcontracting, purchasing, scheduling, and a limited amount of actual
construction.

2.2.8 Project Management

The estimate for project management must consider the time element from start
through to completion of the construction project. Other factors to consider are the
complexity of the project, the design group, the client for which the project is to be
performed, and the extent of procured items. Projects involving travel must also
include those costs.

2.2.9 Health and Safety

This function is involved with the review and approval of the design package as well
as the health and safety health surveillance throughout the course of the
construction period. Factors affecting this element are the type of project, operational
area where the construction takes place, the amount of work requiring radiation
surveillance, and any other special health and safety requirements. The portion of
health safety that is an audit function is not funded by construction and need not be
included in the estimate.

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3. Task Two

The appropriate layout of temporary facilities on a construction site has a large

impact on construction safety and productivity. For the duration of a project the site
layout may need to be efficiently re-organised at various intervals to satisfy the
schedule requirements and to maintain site efficiency.

3.1 Access
• What is available allowing for Local Authority or emergency requirements? ie
Access traffic flow, safe entry.

• The size, weight and maneuverability of plant, if access is limited this will
restrict what plant can be used?

3.2 Organisation
• Ensure all facilities are conveniently located

• Consider the placement of materials in relation to construction process to

avoid double handling

• Organised to facilitate the ease of movement around the site.

3.3 Routes around site

• Roads may be needed to move materials around the site. ie inadequate
surfaces could lead to plant becoming bogged down and stuck.

• There are three ways of providing roads during construction:

– Lay permanent roads before construction process starts. Means

completing all services before roads are laid. Also runs the risk of
damage to roads by heavy plant or traffic during construction process.

– Lay a hard-core base along the route of the permanent road. Traffic
and water can however, damage the subsoil below the hard-core. This
can mean replacing the hard-core and the damaged soil.

– Lay roads along the most convenient routes to suit construction. By

laying the base coat only of tarmac

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3.4 Cabins and storage

Accommodation is required for the following purposes:

• Canteen, WC and washroom facilities, Site manager and office staff, clerk of
work, etc.

• Storage facilities will be required, these may be lockable cabins for valuable
and desirable items and those which must be protected from the elements, or
storage compounds for materials which can be left outside.

• Special stores and compounds are required for chemicals, explosives, gasses
and fuels.

• Consideration must be given to the type of material to be stored and there

protection requirements.

• The storage areas should where possible should be sited to prevent double
handling. ie bricks could be off loaded and stored at different points around
the site.

3.5 Temporary services

• Water, electricity, drainage and telephones will be required on site during the
construction process.

 Money can be saved if these can be tied in to the permanent requirements

 Early procurement input equals maximum influence and benefit

 The design and construction process sequence
 Factors that determine the availability of equipment & materials
 Sourcing & supply strategies
 A co-ordinated project team approach to Procurement Planning
 Impacts of the contracting strategy
 Standardisation and variety control
 Materials planning for commissioning, start-up & operational phases
 Expediting of critical equipment and materials
 Construction planning
 Sequence of availability of equipment and materials.

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4. Task Three
The following Gant chart aims to show the whole construction process and the
sequence of works implemented to achieve project completion.

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5. Task Four

The purchase of a new build property is a more complex transaction than the
purchase of an existing house or building, and some matters additional to those
relevant to a purchase of an existing property must be considered.

The main characteristics of a new build property transaction which make it different
from an ordinary sale/purchase transaction are;

 It is the sale/purchase of a ‘new property’

 It is a sale of part. The developer will usually own the whole site and is
disposing of it in the form of housing plots.
 The developer may adopt a slightly different conveyancing procedure from
that normally encountered. The developer does this for his own convenience
when dealing with a large number of sales simultaneously.

A developer will not normally adopt National Protocol for Domestic Conveyancing as
such when dealing with new-builds, but will at the start of the transaction supply a
package of information, which is very similar to the Protocol package but in a
different form. This will usually include copies of the relevant planning permission,
building regulation consent, Highways Act Agreement and the Water Industry Act
Agreement and Bond.

When acting for you in the purchase of a new build property your Conveyancing
solicitor should ensure that the following documentation/information is obtained;

 Planning permission – they should check whether planning permission has

been granted. Check whether any attached conditions have been or will be
complied with.

 Building Regulations consent – they should check that building regulations

consent was granted. The building regulations control and the methods and
materials to be used in the construction of the property to ensure that proper
standards are maintained in all new-build properties. The lack of building

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regulations consent in a new build property may suggest that it has not been
constructed to the proper standards.

 Structural guarantee – Some form of structural guarantee should be offered. If

any structural defects develop after purchase, the buyer may not be able to
obtain compensation from the developer as he may no longer be in business.
A structural guarantee is likely to be a condition of the mortgage offer in
relation to a new build property.

The NHBC ‘Build mark’ scheme provides a ten year two-part guarantee. The
developer agrees to remedy all defects which occur within two years of purchase. In
the case of a default the NHBC will itself step in. After the first two years, the NHBC
provides an insurance style guarantee that it will rectify specified structural defects
arising in the house during the next eight years. Structural defects are defined to
exclude, for example, defective plasterwork or decorations.

Although the NHBC Build mark scheme is the most common, other similar
insurance-backed schemes do exist, for example the Zurich Mutual New build
Scheme. Alternatively, if the building work was supervised by, for example, an
architect, a certificate to that effect will allow a claim to be brought against such
person in the case of structural defects arising out of negligent supervision.

 Estate Roads – The new estate roads are likely to be adopted (become
publicly maintained) at some point in the future. Your Conveyancing solicitor
should check that a Highways Act 1980 section 38 Agreement has been
entered into with the developer and the highways authority. This is an
agreement between both parties that the developer will be responsible for the
roads. The agreement must be supported by a financial bond, issued by a
bank or insurance company, in a sufficient amount to cover against the
developer defaulting on the Road Agreement.

 Drains and sewers – Your Conveyancing solicitor should check whether the
ownership and maintenance of the drains has been or is to be transferred to
the water authority. To protect the buyer of a new-build property. It is
important that a Water Industry Act 1991 section 104 Agreement and Bond

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has been entered into. This works in a similar way to the Highways Act
Agreement.

 Easements –The contract should provide for the grant to the buyer of all
necessary easements. These must include:

 a right of way over the estate roads until adopted;

 a right to use the drains and sewers;
 a right to use all the pipes and cables for all the other services, for example,
gas, electricity, telephone.
 a right of access to maintain these services.

When looking to purchase a new build property, buyers will often be asked to
exchange contracts and commit to the purchase even before the house is built.
Buyers, therefore, will have to exchange contracts without actually seeing the house
they are buying.

Buyers are often tempted by the sales incentives that accompany new build homes,
such as payment of legal fees, supply of white goods and furnishings. From the
beginning of September, lenders will require builders or developers of any new-build
properties, converted or renovated property to complete a new ‘disclosure of
incentives’ form. This will be reinforced in the CML’s Lenders’ Handbook, which sets
out specific requirements for conveyancers acting on behalf of lenders in property
transactions.

A builder selling a new build property will need to produce a Home Information Pack
(HIP). The HIP must be specific to each plot or property.

The required documents for a new-build HIP are:

 Home Information Pack Index

 Energy Performance Certificate or predicted Energy Assessment for off plan
sales
 Evidence of title
 Searches – local and drainage
 Relevant leasehold and common hold sales information, if appropriate.

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The authorised documents include:

 New Home Warranty documentation (Buildmark)

 Legal summary
 Home use/ contents form
 Home condition report
 Other searches, such as environmental.

Completion of a new build property is different from buying a property in the second
hand market. With builders having to rely on various factors such as supply of
materials and weather conditions, no fixed completion date can ever be given.
When the property is structurally complete, the builder gives written notice to the
buyer that it is ready and the completion must take place within the period specified
in the contract, usually 10 working days.

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6. Executive Summary
During the research for this work I have developed a greater understanding of how
the Gant chart is a critical tool for construction project management. The budget
preparation process for a construction project has to take in account many factors
that can impact on a site. For example if a budget does not allow for tight access to a
site then deliveries could be impacted and as such could slow the construction
process.

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