101 Construction Management Basics – Must Be Known !

101 Construction Management Basics – Must Be Known !

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Construction project management combines the responsibilities of a traditional project manager with the skills and expertise of the construction industry. Because construction projects are always changing, a successful construction project manager needs a wide range of skills and abilities to manage diverse teams and projects.

If you’re new to construction project management, this article will walk you through the must-know basics, and the essential principles of budgeting, finance, organization, scheduling, conflict, and legal issues.

What Is Construction Project Management (CPM)?

The Project Management Institute (PMI) defines project management as “the art of directing and coordinating human and material resources throughout the life of a project by using modern management techniques to achieve predetermined objectives of scope, cost, time, quality, and participating objectives.” In the case of construction project management, you can simply take PMI’s definition and put it into a construction context for a definition of a construction project manager.

Construction project management involves the planning, coordination, and control over the various tasks involved in construction projects. This could include different types of construction projects, like agricultural, residential, commercial, institutional, industrial, heavy civil, and environmental. 

It typically includes complex tasks that change dramatically from project to project, and requires skills like strong communication, knowledge of the building process, and problem solving. 

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The Role of a Project Manager in Construction Management

Construction project managers help ensure the project is tracking along to plan. They manage the project so it finishes on time and on budget, and that their team completes it according to building codes, plans, and specs. Other functions can include specifying scope, budget, and schedules, selecting subcontractors and workers, developing communication strategy for resolving conflicts, and more.

The Construction Management Association of America, a US construction management certification and advocacy body, says the 120 common responsibilities of a construction manager fall into these seven categories: 

  • Project management planning
  • Cost management
  • Time management
  • Quality management
  • Contract administration
  • Safety management
  • CM professional practice (managing the project team, defining roles and responsibilities, etc). 

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The Role of a Contractor in Construction Management 

Once the design phase has been completed, the construction project manager will assign contractors to a project through a bidding process. Contractors are chosen using one of three common methods: low-bid selection, best-value selection, or qualifications-based selection. 

Contractors should be able to handle public safety, time management, cost management, quality management, decision making, math, drawings, and human resources.

Construction Project Management Basics

Construction project management is a complex field, requiring knowledge in many different areas like finance, mediation, law, business, and more.

For construction PMs just entering the field, here are the basic principles you should understand:

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How to Obtain a Construction Management Project

The project owner will share project information to a large group of contractors, general contractors or subcontractors to solicit bids. The process starts with a cost estimate from blueprints and material take-offs, telling the owner how much money he or she should expect to pay in order for the contractor to complete the project. 

There are two kinds of bids:

  • Open bid: Used for public projects and usually promoted with advertising, an open bid invites all contractors to submit their bid.
  • Closed bid: Reserved for private projects, a closed bid is when the owner sends invitations to a select number of contractors so only they are able to submit a bid. 

Then, once the owner receives all the bids for the project, he or she can select the contractor through a number of ways: 

  • Low-bid selection: This method focuses on the project’s price. Contractors submit their bids with the lowest price they would complete the project for, and the owner chooses the contractor with the lowest one.
  • Qualifications-based selection: This selection method picks a contractor solely based on qualifications. The owner will ask for a request for qualifications (RFQ), which gives an overview of each contractor’s experience, management plans, project organization, and budget and schedule performance. 
  • Best-value selection: Combining both price and qualifications, the owner looks for the contractor with the best cost and best skillset.  

And finally, once the owner chooses a contractor, there are four different kinds of payment contracts they can agree upon:

  • Lump sum: A lump sum contract is the most common. The contractor and owner agree on the overall cost of the project and the owner is required to pay that amount whether or not the project fails, or if it exceeds the initial price.
  • Cost-plus-fee: The owner pays the total cost and a fixed fee percentage of the total cost to the contractor. This is the most beneficial contract for the contractor, since any additional costs will be covered. 
  • Guaranteed maximum price: The guaranteed maximum price contract is the same as the cost-plus-fee, except there is a set price so the total cost and fee cannot exceed.
  • Unitprice: This contract is chosen when both parties are unable to determine the cost ahead of time. The owner provides specific unit price to limit spending.

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Business Models for Construction Projects

While the bidding process typically stays the same regardless of the type of construction project, there are two forms of business models in the construction industry:

  • Design, bid, build contracts: The most popular model of construction management, design, bid, build contracts allow the owner to choose a contractor after the design phase has already been completed by an architect or engineer.
  • Design-build contracts: This model is the opposite of the design, bid, build contract. Design-build contracts are when the design and construction phases are completed by the same entity (referred to as the design-builder or the design-build contractor). This model is used to reduce completion date since the design and construction phases can happen at the same time.

Project Management Principles and Process

Once the bidding process is complete, the construction phase can begin. Although the phases of a construction project are different than traditional project management, they still include and follow many of the same principles. 

All construction project managers should know the five phases of project management, as developed by the Project Management Institute. 

1-Initiation

At the beginning of the project, you must create and evaluate the business case in order to determine if the project if feasible and if it should be undertaken. Stakeholders do their due diligence and feasibility testing may occur, if needed. If all parties decide to move forward with the project, a project charter or project initiation document (PID) is created, including the business needs and business case. 

2-Planning

Next, the project team develops a roadmap for everyone to follow. During this phase, the project manager creates the project management plan (PMP), a formal, approved document to guide execution and control. The PMP also documents scope, cost, and schedule baselines. Other documents included in the planning phase include:

  • Scope statement and scope documentation: A document that defines the business need, benefits, objectives, deliverables, and key milestones.
  • Work breakdown structure (WBS): A visual representation that breaks down the scope of the project into manageable chunks.
  • Communication plan: This plan outlines the communication goals and objectives, communication roles, and communication tools and methods. Because everyone has a different way of communicating, the communication plan creates a basic framework to get everyone on the same page and avoid misunderstandings or conflict.
  • Risk management plan: This plan helps project managers identify foreseeable risks, including unrealistic time and cost estimates, budget cuts, changing requirements, and lack of committed resources

3-Execution

This is when the work begins. After a kick-off meeting, the project team begins to assign resources, execute project management plans, set up tracking systems, execute tasks, update the project schedule, and modify the project plan. 

4-Performance and Monitoring

The monitoring phase often happens at the same time as the execution phase. This step is all about measuring progress and performance to ensure that items are tracking with the project management plan.

5-Closure

This last phase represents project completion. Project managers sometimes hold a post-mortem meeting to evaluate what went well in the project and identify failures. Then, the team creates a project punch list of any tasks that didn’t get accomplished, performs a final budget, and creates a project report.

Via Smartsheet

Post Author: Zahi Baroudi

3 thoughts on “101 Construction Management Basics – Must Be Known !

  • Awad Suliman

    (September 24, 2016 - 6:59 AM)

    subjectThank you, for this valuable please let us have more in construction managment and innovations in other countries.

  • Abdul Qayyum

    (September 23, 2016 - 1:48 PM)

    helpful in managing the quality/quantity and avoiding overrun of time and money. Thanks a lot.

  • Awad Suliman

    (September 22, 2016 - 8:04 AM)

    very valuable subject ,thank you.

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