CONSTRUCTION MANAGEMENT

Background of Construction Industry

Construction Industry
construction industry is an industry which is involved in
the planning, execution and evaluation (monitoring) of all
types of civil works.

All civil works such as buildings, roads, water works,

hydro- power works, etc., can be grouped under the
industry termed as construction industry.
 The Construction Industry can be
categorized into three major sectors;
namely,
a) Transport and Communication (Road,
Railway, Airway, and Telecommunication
related physical works);
b) Water and Energy Works ; and
c) Buildings and Other Physical Infrastructures.
 Construction Industry

Transportation Energy
Infrastructure The Construction supply
Industry

Urban Water
development supply
T abl e 2.1: C on str u cti on I n du str y - Sector al L i n k ages

Sectors Building Other Civil Works

A griculture Offices, Storages, Equipment Irrigation Schemes, Rural

Sh ades A ccess R oads
E ducation Offices, Stores Class rooms, Internal and External Roads
Libraries, Laboratories, etc and Installations
E n ergy Offices, Storages, Garages H y dro P ow er Sch em es,
Electricity & Power Stations
and lines
I n dustry& Factories, Offices, Workshops, Internal and External
C om m erce Storages I n stallation s
H ealth Offices, Clinics, Health Centers, Internal and External
Hospitals Roads& Installations
Transportation & Offices Storages, Stations Airports, Roads, Rail Ways,
com m un ication Telecommunication lines

Water Resources Offices Storages W ater su pply & sew erage

distribution lines, Treatment
plan ts
D efen se Offices, camps, Training centers D efen se Sch em es
 Construction Industry is unique from
the other industries due to the
following facts:
i. Fragmented Industry
ii. Unpredictable Work Load
iii. Long Production Cycle
iv. Subject to Environmental Impact
v. Transient Organization Nature
Why Construction ?

 Construction is an enormously important

industry by which societies create most new
values;
 Creates, defines and maintains the built
environment within which most other social
and economic activities take place;
 Most of mankind’s day-to-day activities are
dependent on the infrastructure delivered by
the CI
The History of
Construction
 Since ancient times, mankind has
erected some huge structures

The 6, 550, 000 t and137 The 24m and 180t Axum

m Pyramids of Khufu at The 6,400Km long China Obelisk (Before the 4th century)
Giza (Circa 2500BC) Wall (Around 668 BC)
The Development of Construction
in Ethiopia

 Assignment
 The spectacular structures have been erected.
 Construction projects and their budget (1990 -
2010)
 Estimated cost and time of completion and the
actual cost and time elapsed
 The Causes for over budget and delay
The Current setup in
Construction
 Under the current format major players of the
construction sector are
 Ministry of Infrastructure
 Ministry of Works and Urban Development
 ERA
 Ministry of Water Resources
 Ministry of Mining and Energy
 EEPCo
Characteristics of CI
 Demand for the product
 Demand is usually driven by ‘other’
goods and services; not controlled by
industry,
In the majority of cases, clients
define requirements before the
industry provides it,
Time lags b/w demand and supply is
long.
Characteristics of CI

 Structure of industry:
 Fragmented industry

Sequential process

Need ID Desig Bid Build

n

Client A/E Clien Contract

t or
 Fragmented project
Large uncertainty
participants
Stakeholders

 Definition
Are individuals or groups who has
a vested interest in the project or
its product.

 Are parties who could have a telling effect on the

success or failure of the project
 Major stakeholders of a
construction project Indirect stakeholders’
boundary
Users
(Beneficiaries)

Contractors
Regulatory/Statutory
bodies Suppliers
Client
W o r k e r s
Direct stakeholders’
Trade Financers/ boundary
Unions Financing
Consultants institutions

The general public

Major stakeholders of a
construction project
 Client: is the party (public or private)
under whose tutelage the project is
executed
 Comes up with the investment needs

Idea

Land Capital
Major stakeholders of a
construction project
 Client:
 [Usually] provides the infrastructure
needed
 Takes care of some of the legal
constraints & permits
 Pays for the project’s execution
 Major public clients in Ethiopia;
 Roads (ERA & its regional
counterparts)
 Housing (MoE, MoH, etc)
 Energy (EEPCo)
 Water sector (MoWR)
Major stakeholders of a
construction project
 Consultants: are professional bodies who
design the project
 Change the clients project idea into economic
and constructible artifact
 Make sure that design satisfies requirements
 [Usually] prepare BoQ and contract documents
 If assigned to supervise:
 Look after proper execution of project
 Certify payment certificates
 Issue provisional and final acceptance
certificate
Major stakeholders of a
construction project
 Contactors: is the party that changes the
drawings and specification made by the A/E
into a physical structure
 Provides the resources needed to execute
the project
 Executes the project according to plan
 Monitors project execution
 Rectifies defects
Major stakeholders of a
construction project

 Statutory bodies: are government bodies that

looks after the project’s compliance with the
general public’s interest
 Prepare a general development scheme
and make sure that the project satisfies
that
 Look after the safety, legal, commercial
etc issues associated with the project
 Look into the environmental, cultural,
social etc effect that the project induces
 The major regulatory bodies in the sector
are
Municipalities, The ERA, The MoWR
Major stakeholders of a
construction project
 Suppliers:are parties that supply the varies materials,
equipment and services needed for the project
 Financers/Financial institutions: are institutions like
banks, insurances, pension agencies etc who could
provide loan services for the project
 Workers in the industry: are professionals, occupational
or unskilled laborers who earn their living from working
in the industry or its supply chain.
 Trade (labor) unions: are unions of the working class
that look after unfair treatment of workers (like
payment issues, firing issues) as well as issues related to
occupational health and safety
Major stakeholders of a
construction project

 Project product users: are parties who may

be using the end product of the project
 The general public: are communities of the
locality, the general society of a country or
even the globe who may have a vested
interest in the project
 Other sectors: are sectors which could have
interest in the process or product on the
construction project
Importance of construction

 Construction constitutes about 10% GDP of

many economics; about 30% of developing
countries
 111 million employment worldwide
 Defines, develops and maintains that built
environment where other activities take place
 Provides the second largest work opportunity
(next to Agriculture)
Major works in
construction
Construction

Buildings and related

Infrastructure works
works

Water Resource
Civil work in
Transportation Energy & Mining Development
Communication
works
Major works in construction: Ethiopia
Sector Major outputs
Road sector Upgrading, maintaining (of existing)
and construction of new roads.

Power sector The electrification program based on

generation and transmission of power,
Built huge hydropower projects to
move the nation from rationed power
supply to the verge of power exporter
Water works sector Many irrigation, sanitation &water
supply projects across the country
Housing/building sector Huge number of housing units and
institutional buildings being build
Private sector Vibrant private involvement with many
real estates and buildings (residence,
commercial, factories, etc)
Major works in construction:
Ethiopia
Sector Forecasts
Road sector 106106Km road upgrading, maintenance,
construction at estimated cost of Birr 43.16 Billn

Power sector Huge hydropower projects still under construction.

To name a few Tekeze (2.132 Billion), Gojeb
(1.524Billion)

Water works sector The still running irrigation schemes would cost the
nation more than 21 billion when complete

Housing/building sector To build about 400,000 housing units in the coming

five years

Private sector Can only be forecasted to grow even faster (the

nation has to move to the industrialized. If so, huge
construction expected
Major challenges of the industry:
Ethiopia
 Considerable components of the industry’s
activities are being implemented by international
companies (contractors, suppliers, consultants
etc)
 Reason
 Local firms lack capital (equipment and
machineries), financial, institutional (managerial,
experience reputation, etc), human (competency and
capability), etc resources to satisfy financers’
requirements
 Effect on the industry
 Lost opportunity to build capacity of local firms
 Lose in business and job opportunities for citizens
Major challenges of the industry:
Ethiopia
 Most of the projects delivered have failed under the
conventional project success criteria of being delivered
on time, on budget and to the standard and quality
required
 Reasons:
Incapable industry (capacity and competency)
as seen from quite various aspects
Various unprofessional (particularly in terms
of systems and managerial) and non ethical
practices
Major challenges of the
industry: Ethiopia
• Effect on the industry
• Lost opportunity to improve and
grow
• Huge impact on the country’s
already constrained resource
• Necessity to maintain
infrastructure before their due
period.
Resources for the Construction
Industry

For most of the construction projects, the
resources to look into are the following;

1. Human Resources / Labor or Workmen

2. Financial Resources / Fund

3. Information Resources
4. Physical Resources such as Materials,
Equipment and Other Assets
5. Services and Management.