Construction and Project Management
Construction management is a professional service method that provides project owners with effective management of the project's schedule, cost, quality, safety, scope, and functionality. Construction management operates in harmony with all project delivery methods. Regardless of the environment, the primary responsibility of the Project Manager is to save the owner and investor money and successfully complete the project at the lowest cost and highest quality.
This management style consists of three main components.
- The owner who commissions the project and directly or indirectly finances it through various methods.
- The architect/engineer who designs and manages the project.
- The general contractor who supervises daily operations and manages subcontractors.
The Project Manager represents the interests of the owner and provides direct oversight for the owner across the entire project. The role is to collaborate with all parties to ensure the project is delivered on time, within or under budget, and to the quality, scope, and functional standards expected by the investor or owner.
The Project Manager, qualified through a combination of education and experience, works with the owner, architect, general contractor, and other stakeholders to determine the optimal sequence of construction operations, develop detailed schedules and budgets, and establish plans for project safety and security. This requires using construction knowledge, advanced planning techniques such as Project Management Information Systems (PMIS), and critical path methods to help the owner manage risks effectively.
The program manager prioritizes feasibility by organizing and implementing criteria for Cost, Technical Aspects, Application, Finance, Management, Scheduling, Quality, Sustainability, Function, Safety, and Scope in the best possible way.
The project manager can adapt or change the bidding process strategically based on the nature of the work.
Construction Management typically defines two types of bidding processes:
Open bidding: These bids are publicly announced, allowing interested parties to participate in the bidding process. Open bidding is commonly used in public projects. Any contractor can submit a bid.
Closed bidding: The project owner selects a group of contractors and only accepts bids for the construction project from them. This bidding process is carried out solely by the institution, private enterprise, or project authority, and the evaluation is conducted by the owner or their authorized representative, either independently or with a committee.
After receiving bids from general contractors, project owners select the best one using any of the following methods:
Lowest bid: This method involves selecting the contractor offering the lowest price.
Best Value Selection: This method evaluates both the contractors' qualifications and the price to select the contractor with the best price-quality ratio. The project owner closely examines the bid proposals submitted by contractors to make a decision.
Qualification-based selection: This method focuses on the qualifications of the contractors. To do this, project owners analyze each contractor's qualification submissions to determine which one is the most qualified for the project.
Types of Construction Management Contracts
These construction contracts are legal agreements between the project owner, who needs to outsource site work, and the contractor or subcontractor performing the work. Their purpose is to clarify issues such as project scope and payment terms, ensuring everyone is on the same page.
In some projects, a manager, chief, or site engineer may also be involved to facilitate the process. One of the most significant mistakes in construction contracts is drafting them solely with a legal expert. Considering manufacturing details, construction principles, and public works regulations, drafting them with the input of a construction expert will eliminate all risks in court.
While legal language ensures enforceability in construction contracts, it cannot stand alone. In case of disputes, technical language, which guarantees both parties' rights and identifies the rightful party, will put you in a better position.
Lump Sum Contract: A lump sum or fixed-price contract defines the total price for completing the project. Unit prices are determined to find the total amount, or the total is agreed upon for a turnkey project.
Cost-Plus Contract: Cost-plus fee contracts consist of two parts:
- A fixed fee agreed upon by the project owner and contractor.
- Additional costs incurred as the project progresses.
Guaranteed Maximum Price: It is the same as a cost-plus contract but includes a maximum price cap.
Time and Material Contract: This type of contract is used when there is uncertainty about the project scope. The general contractor charges hourly rates for labor and materials under this agreement.
Unit Pricing Contract: This contract is used when costs cannot be predetermined. It sets unit prices for materials and is structured accordingly.