Construction Management

Construction management encompasses the planning, coordination, and control of construction projects from inception to completion. This discipline integrates technical knowledge with management skills to deliver projects on time, within budget, and to specified quality standards while ensuring safety.

Project Delivery Methods

Design-Bid-Build (Traditional)

Owner contracts separately with designer and contractor
Sequential process: design completed before bidding
Clear separation of design and construction responsibilities

Advantages: Competitive pricing, clear scope Disadvantages: Longer duration, potential for claims

Design-Build

Single entity responsible for both design and construction
Overlapping design and construction phases
Single point of responsibility

Advantages: Faster delivery, single point of contact Disadvantages: Less owner control, difficult to compare bids

Construction Management at Risk (CMAR)

CM provides pre-construction services during design
CM guarantees maximum price (GMP)
Early contractor involvement

Advantages: Early cost input, collaborative approach Disadvantages: Potential conflicts of interest

Integrated Project Delivery (IPD)

Multiparty agreement with shared risk and reward
Collaborative decision-making
Building Information Modeling (BIM) integration

Cost Estimation

Types of Estimates

Type	Accuracy	Purpose	Basis
Conceptual	-30% to +50%	Feasibility	$/SF, historical
Preliminary	-15% to +30%	Budget	Major quantities
Detailed	-10% to +15%	Bid	Complete takeoff
Bid	-5% to +10%	Contract	Detailed pricing

Cost Components

Direct Costs:

\text{Direct Cost} = \text{Labor} + \text{Material} + \text{Equipment}

Labor Cost:

\text{Labor Cost} = \text{Quantity} \times \frac{\text{Hours}}{\text{Unit}} \times \text{Hourly Rate}

Productivity:

\text{Productivity} = \frac{\text{Output}}{\text{Input}} = \frac{\text{Units Installed}}{\text{Labor Hours}}

Material Cost:

\text{Material Cost} = \text{Quantity} \times \text{Unit Price} \times (1 + \text{Waste Factor})

Equipment Cost:

\text{Equipment Cost} = \text{Ownership Cost} + \text{Operating Cost}

Indirect Costs (Overhead)

Project Overhead:

Field office and supervision
Temporary facilities
Safety and security
Insurance and bonds

General Overhead:

Home office expenses
Corporate administration
Typically 5-15% of direct costs

Markup

\text{Bid Price} = \text{Direct Cost} + \text{Overhead} + \text{Profit} + \text{Contingency}

Contingency: Typically 3-10% depending on project risk

Project Scheduling

Work Breakdown Structure (WBS)

Hierarchical decomposition of project scope:

Project
Phases
Work packages
Activities

Critical Path Method (CPM)

Activity Parameters:

Duration (D)
Early Start (ES)
Early Finish (EF) = ES + D
Late Start (LS)
Late Finish (LF) = LS + D
Total Float (TF) = LS - ES = LF - EF

Forward Pass (calculate ES, EF):

ES_j = \max(EF_i) \text{ for all predecessors } i

EF_j = ES_j + D_j

Backward Pass (calculate LS, LF):

LF_i = \min(LS_j) \text{ for all successors } j

LS_i = LF_i - D_i

Critical Path: Activities where TF = 0

Project Duration: EF of final activity

Activity Relationships

Type	Notation	Description
Finish-to-Start	FS	Successor starts after predecessor finishes
Start-to-Start	SS	Successor starts after predecessor starts
Finish-to-Finish	FF	Successor finishes after predecessor finishes
Start-to-Finish	SF	Successor finishes after predecessor starts

Lag: Delay between activities (positive value) Lead: Overlap between activities (negative lag)

Program Evaluation and Review Technique (PERT)

Three-Point Estimate:

t_e = \frac{t_o + 4t_m + t_p}{6}

Where:

$t_o$ = optimistic duration
$t_m$ = most likely duration
$t_p$ = pessimistic duration

Standard Deviation:

\sigma = \frac{t_p - t_o}{6}

Project Duration Variance:

\sigma_P^2 = \sum \sigma_i^2 \text{ (for critical path activities)}

Probability of Completion:

Z = \frac{T_S - T_E}{\sigma_P}

Where $T_S$ = specified duration, $T_E$ = expected duration.

Resource Leveling

Objective: Minimize resource fluctuations while maintaining project duration

Methods:

Activity splitting
Float utilization
Duration extension (if necessary)

Schedule Compression

Crashing: Add resources to reduce duration

\text{Crash Cost Slope} = \frac{C_c - C_n}{D_n - D_c}

Where:

$C_c$ = crash cost
$C_n$ = normal cost
$D_n$ = normal duration
$D_c$ = crash duration

Fast-Tracking: Overlap sequential activities

Contract Administration

Contract Types

Lump Sum (Fixed Price):

Fixed total price for defined scope
Contractor assumes cost risk
Requires complete design

Unit Price:

Price per unit of work
Quantities may vary
Final cost = $\sum$ (Unit Price × Actual Quantity)

Cost-Plus:

Reimbursement of actual costs plus fee
Owner assumes cost risk
Variations: Cost + Fixed Fee, Cost + Percentage, GMP

Payment Terms

Progress Payments:

\text{Payment} = \text{Work Completed} - \text{Retainage} - \text{Previous Payments}

Retainage: Typically 5-10% withheld until completion

Change Orders

\text{Change Order Value} = \text{Direct Cost} + \text{Overhead} + \text{Profit}

Typical markup on changes: 15-25%

Claims and Disputes

Common claim types:

Delay claims
Changed conditions
Acceleration
Scope changes

Project Control

Earned Value Management (EVM)

Key Metrics:

Planned Value (PV): Budgeted cost of work scheduled

PV = \text{BCWS}

Earned Value (EV): Budgeted cost of work performed

EV = \text{BCWP} = \%\text{Complete} \times \text{BAC}

Actual Cost (AC): Actual cost of work performed

AC = \text{ACWP}

Budget at Completion (BAC): Total project budget

Cost Performance

Cost Variance:

CV = EV - AC

Cost Performance Index:

CPI = \frac{EV}{AC}

CPI > 1: Under budget
CPI < 1: Over budget

Schedule Performance

Schedule Variance:

SV = EV - PV

Schedule Performance Index:

SPI = \frac{EV}{PV}

SPI > 1: Ahead of schedule
SPI < 1: Behind schedule

Forecasting

Estimate at Completion (EAC):

If future work at budgeted rates:

EAC = AC + (BAC - EV)

If future work at current CPI:

EAC = \frac{BAC}{CPI}

Combined index:

EAC = AC + \frac{BAC - EV}{CPI \times SPI}

Estimate to Complete:

ETC = EAC - AC

Variance at Completion:

VAC = BAC - EAC

To-Complete Performance Index:

TCPI = \frac{BAC - EV}{BAC - AC}

Construction Safety

Key Metrics

Incident Rate:

IR = \frac{\text{Number of Incidents} \times 200,000}{\text{Total Hours Worked}}

Experience Modification Rate (EMR): Comparison to industry average

Safety Management

Hazard identification
Risk assessment
Control measures hierarchy:
- Elimination
- Substitution
- Engineering controls
- Administrative controls
- Personal protective equipment (PPE)

Real-World Application: Project Schedule Development

Developing a CPM schedule for a building construction project.

Schedule Analysis Example

import math
from collections import defaultdict

# Activity data: (ID, Duration, Predecessors)
activities = {
    'A': {'name': 'Site Preparation', 'duration': 5, 'predecessors': []},
    'B': {'name': 'Excavation', 'duration': 8, 'predecessors': ['A']},
    'C': {'name': 'Foundation', 'duration': 12, 'predecessors': ['B']},
    'D': {'name': 'Underground Utilities', 'duration': 6, 'predecessors': ['B']},
    'E': {'name': 'Structural Steel', 'duration': 15, 'predecessors': ['C']},
    'F': {'name': 'Roofing', 'duration': 8, 'predecessors': ['E']},
    'G': {'name': 'Exterior Walls', 'duration': 10, 'predecessors': ['E']},
    'H': {'name': 'MEP Rough-in', 'duration': 12, 'predecessors': ['D', 'E']},
    'I': {'name': 'Interior Finishes', 'duration': 18, 'predecessors': ['F', 'G', 'H']},
    'J': {'name': 'Final Inspections', 'duration': 3, 'predecessors': ['I']},
}

# Forward pass
es = {}
ef = {}

def get_es(act_id):
    if act_id in es:
        return es[act_id]

    preds = activities[act_id]['predecessors']
    if not preds:
        es[act_id] = 0
    else:
        es[act_id] = max(get_ef(p) for p in preds)

    return es[act_id]

def get_ef(act_id):
    if act_id in ef:
        return ef[act_id]
    ef[act_id] = get_es(act_id) + activities[act_id]['duration']
    return ef[act_id]

# Calculate ES and EF for all activities
for act_id in activities:
    get_ef(act_id)

# Project duration
project_duration = max(ef.values())

# Backward pass
ls = {}
lf = {}

# Find successors for each activity
successors = defaultdict(list)
for act_id, data in activities.items():
    for pred in data['predecessors']:
        successors[pred].append(act_id)

def get_lf(act_id):
    if act_id in lf:
        return lf[act_id]

    succs = successors[act_id]
    if not succs:
        lf[act_id] = project_duration
    else:
        lf[act_id] = min(get_ls(s) for s in succs)

    return lf[act_id]

def get_ls(act_id):
    if act_id in ls:
        return ls[act_id]
    ls[act_id] = get_lf(act_id) - activities[act_id]['duration']
    return ls[act_id]

# Calculate LS and LF for all activities
for act_id in activities:
    get_ls(act_id)

# Calculate float and identify critical path
print(f"CPM Schedule Analysis")
print(f"=" * 70)
print(f"\n{'Activity':<5} {'Name':<22} {'Dur':>4} {'ES':>4} {'EF':>4} {'LS':>4} {'LF':>4} {'TF':>4} {'Crit':<5}")
print("-" * 70)

critical_path = []
for act_id in sorted(activities.keys()):
    tf = ls[act_id] - es[act_id]
    is_critical = tf == 0
    if is_critical:
        critical_path.append(act_id)

    print(f"{act_id:<5} {activities[act_id]['name']:<22} {activities[act_id]['duration']:>4} "
          f"{es[act_id]:>4} {ef[act_id]:>4} {ls[act_id]:>4} {lf[act_id]:>4} {tf:>4} {'YES' if is_critical else '':<5}")

print(f"\nProject Duration: {project_duration} days")
print(f"Critical Path: {' -> '.join(critical_path)}")

# Calculate critical path length
cp_duration = sum(activities[a]['duration'] for a in critical_path)
print(f"Critical Path Duration: {cp_duration} days")

Your Challenge: Earned Value Analysis

Perform earned value analysis for a construction project to assess performance.

Goal: Calculate EVM metrics and forecast final project cost and completion.

Problem Setup

import math

# Project data at month 6 status date
project_status = {
    'budget_at_completion': 2500000,  # $
    'planned_duration': 12,            # months
    'current_month': 6,

    # Work packages with planned and actual progress
    'work_packages': [
        {'name': 'Foundations', 'budget': 400000, 'planned_pct': 100, 'actual_pct': 100, 'actual_cost': 420000},
        {'name': 'Structural', 'budget': 600000, 'planned_pct': 80, 'actual_pct': 70, 'actual_cost': 450000},
        {'name': 'MEP', 'budget': 500000, 'planned_pct': 50, 'actual_pct': 40, 'actual_cost': 230000},
        {'name': 'Exterior', 'budget': 350000, 'planned_pct': 30, 'actual_pct': 25, 'actual_cost': 100000},
        {'name': 'Interior', 'budget': 450000, 'planned_pct': 10, 'actual_pct': 5, 'actual_cost': 30000},
        {'name': 'Sitework', 'budget': 200000, 'planned_pct': 60, 'actual_pct': 55, 'actual_cost': 115000},
    ]
}

BAC = project_status['budget_at_completion']

# Calculate EVM metrics
PV_total = 0
EV_total = 0
AC_total = 0

print(f"Earned Value Management Analysis - Month {project_status['current_month']}")
print(f"=" * 75)
print(f"\n{'Work Package':<15} {'Budget':>10} {'PV':>10} {'EV':>10} {'AC':>10} {'CV':>10} {'SV':>10}")
print("-" * 75)

for wp in project_status['work_packages']:
    pv = wp['budget'] * wp['planned_pct'] / 100
    ev = wp['budget'] * wp['actual_pct'] / 100
    ac = wp['actual_cost']
    cv = ev - ac
    sv = ev - pv

    PV_total += pv
    EV_total += ev
    AC_total += ac

    print(f"{wp['name']:<15} ${wp['budget']:>9,} ${pv:>9,.0f} ${ev:>9,.0f} ${ac:>9,.0f} ${cv:>9,.0f} ${sv:>9,.0f}")

print("-" * 75)
print(f"{'TOTAL':<15} ${BAC:>9,} ${PV_total:>9,.0f} ${EV_total:>9,.0f} ${AC_total:>9,.0f} "
      f"${EV_total-AC_total:>9,.0f} ${EV_total-PV_total:>9,.0f}")

# Calculate performance indices
CV = EV_total - AC_total
SV = EV_total - PV_total
CPI = EV_total / AC_total
SPI = EV_total / PV_total

print(f"\nPerformance Indices:")
print(f"  Cost Variance (CV): ${CV:,.0f}")
print(f"  Schedule Variance (SV): ${SV:,.0f}")
print(f"  Cost Performance Index (CPI): {CPI:.3f}")
print(f"  Schedule Performance Index (SPI): {SPI:.3f}")

# Status interpretation
cost_status = "Under budget" if CPI > 1 else "Over budget"
schedule_status = "Ahead of schedule" if SPI > 1 else "Behind schedule"

print(f"\nProject Status:")
print(f"  Cost: {cost_status} ({abs(1-CPI)*100:.1f}%)")
print(f"  Schedule: {schedule_status} ({abs(1-SPI)*100:.1f}%)")

# Forecasting
EAC_cpi = BAC / CPI  # Assuming current performance continues
EAC_combined = AC_total + (BAC - EV_total) / (CPI * SPI)
ETC = EAC_cpi - AC_total
VAC = BAC - EAC_cpi

print(f"\nForecasting:")
print(f"  Estimate at Completion (EAC): ${EAC_cpi:,.0f}")
print(f"  Estimate to Complete (ETC): ${ETC:,.0f}")
print(f"  Variance at Completion (VAC): ${VAC:,.0f}")

# To-Complete Performance Index
TCPI = (BAC - EV_total) / (BAC - AC_total)
print(f"  To-Complete Performance Index (TCPI): {TCPI:.3f}")

if TCPI > 1.1:
    print(f"  WARNING: Meeting budget will be very difficult (TCPI > 1.1)")
elif TCPI > 1.0:
    print(f"  CAUTION: Improvement needed to meet budget")
else:
    print(f"  Project can meet budget with current performance")

# Schedule completion estimate
months_remaining = project_status['planned_duration'] - project_status['current_month']
estimated_duration = project_status['current_month'] + months_remaining / SPI
schedule_variance_months = estimated_duration - project_status['planned_duration']

print(f"\nSchedule Forecast:")
print(f"  Estimated completion: Month {estimated_duration:.1f}")
print(f"  Schedule variance: {schedule_variance_months:+.1f} months")

What corrective actions would you recommend based on this analysis, and how would you prioritize them?

Construction Management

Construction Management

Project Delivery Methods

Design-Bid-Build (Traditional)

Design-Build

Construction Management at Risk (CMAR)

Integrated Project Delivery (IPD)

Cost Estimation

Types of Estimates

Cost Components

Indirect Costs (Overhead)

Markup

Project Scheduling

Work Breakdown Structure (WBS)

Critical Path Method (CPM)

Activity Relationships

Program Evaluation and Review Technique (PERT)

Resource Leveling

Schedule Compression

Contract Administration

Contract Types

Payment Terms

Change Orders

Claims and Disputes

Project Control

Earned Value Management (EVM)

Cost Performance

Schedule Performance

Forecasting

Construction Safety

Key Metrics

Safety Management

Real-World Application: Project Schedule Development

Schedule Analysis Example

Your Challenge: Earned Value Analysis

Problem Setup

ELI10 Explanation

Self-Examination