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Whilst many construction projects adhere to traditional design and building procedures, there is a significant growth of modern practices in management for building companies. Design and planning stages in construction projects normally include clear objectives, but may also impose constraints such as cost estimates and timescales. Construction companies are increasingly adopting approaches to project design and implementation used in other specialist industries, and although these specialist industries have different procedures and practices, and use different technologies, it is their approach to managing projects that could be followed in building construction. (Barrie, Donald S, and Boyd C. 1984)
The Project Management Institute identifies clear areas of knowledge needed by project managers, (Halpin, Daniel W, and Ronald W, 1980) and these are:
Project integration management. This identifies elements of the project that need to be coordinated,
Project scope management. This identifies what work needs to be done and any limitations needed,
Project time management. This establishes an acceptable timescale,
Project cost management. This establish clear budget controls for the project,
Project quality management. This attempts to forecast practical problems that may need to be overcome,
Project communications management. This establishes systems of communication for all those involved,
Project risk management. This identifies any potential risks that need to be overcome, and
Project procurement management. This clarifies what resources will be needed.
Integrated Management Systems Within Construction Organisations
Construction organisations need to coordinate their human and material resources effectively to complete projects successfully. Managers are responsible for planning, monitoring and overcoming problems in construction projects, but their work may be restricted by organisational procedures. Construction organisations also need to respond to clients' demands for further improvements in building design and construction.
Construction companies that are more successful often have integrated management systems so that management at all levels has good access to information, communicates effectively, and has flexible management styles and working practices. A balance needs to be established between organisational procedures and structures and management's influence on decision-making.
Organisation and Management - The relationship
People, procedures, information, structure and purpose are all elements that make up the organisation of a company, and whilst each element is separate, they all interrelate within the structure. How well these elements are managed will be critical to the success of the company.
The relationship between management and organisational structures is difficult to determine as researchers have concluded findings that are often different, and have found positive and negative elements of each.
Traditional and modern approaches
Organisations whose systems are based on traditional approaches to work practices identify elements, such as planning, decision-making, organising and controlling that are based on experiences and achievements.
Organisations that take a modern approach to procedures and structures recognise that the organisation itself is a social system, and is volatile and subject to change. As a result, greater success and technological advances can be made, and focus on workers, working practices, information, structure and purpose.
However, most organisations adopt both traditional and modern approaches and accept that modern approaches have developed from the experiences of traditional systems and procedures. There is growing pressure on construction companies for newer designs, technological advances in building structures, as well as the need for more homes for a growing world population. Modern approaches have required improving skills in construction and greater use of computer and Internet technology to improve standards further.
The Role of Management
Effective management systems are of critical importance to the success of an organisation, and management is responsible for the organisation's efficiency, wealth, development and, particularly in times of recession, long term existence.
Management needs to monitor the work of the company's employees, as well as physical resources used, and managers work more successfully when working in teams or groups, rather than within traditional structures or when individual mangers work independently. Integrated management teams have areas of responsibility to achieve project targets, and include:
Objectives and Targets - budget and timescale restrictions, maintaining quality standards,
Employees - procedures for training, monitoring and evaluating their performance,
Technology - access to information, fast and efficient communication, and
Structures - operation, production, control and evaluation.
Management needs to plan, organise and monitor the functions of an organisation, and may also need to source resources and monitor working practices. The principle role for managers is decision-making across all processes of an organisation, not simply planning and achieving targets. Decisions made by management have a direct impact on the organisation's planning, structure and monitoring phases.
An integrated management approach is likely to achieve targets within agreed timescales and budget and lead to the success and profitability of the company. This integration and team working practices allow differing views on direction and procedures to be considered, which becomes a central information source and available through computer technology and the Internet to all those involved in the construction project.
The Role of an Organisation
People working together to achieve an end product may be a simplistic description of an organisation, as it also has processes and tasks with communication systems. However, processes may limit flexibility for improvements within the organisation and it needs to take account of society's values within its own environment. The organisation's environment is subject to change in relation to its own society and to external pressures.
Simple input-output procedures may be used to understand the structures and systems within the construction industry. This enables the organisation to design and evaluate its objectives and performance.
The varying degrees of satisfaction of clients help to measure the output of a construction organisation, as well as analysis of the services provided and procedures for measuring value that may be available. However, measurements may vary between clients as the criteria used for each analysis of outputs would be different, as all construction projects are likely to be different overall. Clients' levels of satisfaction will differ widely based on the complexity of the building structure when compared to buildings with less complexity.
An organisation uses inputs or resources that are then transformed into a product or service that is its output. These inputs include employees, materials, budget and data and may be described as the following:
Employees - skilled and non-skilled labour, clerical and office staff, training staff and medical staff,
Materials - raw materials for construction or assembly, machinery, buildings and office supplies,
Budget - bank deposits held, shareholders investments, income from sales and client bad debts,
Data - paper records, computer data information.
Relationship with society
Management needs have a good understand and empathy for the people within the organisation to achieve success. The attitudes of employees will affect their productivity and commitment to the organisation. The socio-human needs within an organisation may change over a period of time and management needs to react to these changing needs. The levels of integration of the attitudes of all people help to improve cooperation and coordination, and the organisation will be more likely to achieve its objectives successfully.
The most effective approach to managing risk elements is achieved when clear procedures are followed, and is critical to the success or failure of any organisation and its potential income. Risks with the highest chance of potential loss or the highest likelihood of occurrence and are normally dealt with as a priority. Risks with lower levels of identified risk are then addressed in a descending order of priority. Errors in prioritising risks for an organisation may have a negative impact that could be very serious. Risks with likely occurrence, but with low loss predictions, and also high loss predictions on risks with a low level of predicted occurrence are common approaches taken by managers.
Engineers, architects, managers and building surveyors and other professionals in the construction industry need a clear explanation of risks that are likely in projects and how to address any concerns about these. Consistent predictions regarding risks within projects may be made by professionals in construction organisations as these help them make better judgements when analysing project risk. This essay focuses on the avoidance of all possible risks in projects, but does not present a simple checklist for handling risks.
Analysis of risk
"Risk and uncertainty characterize situations where the actual outcome for a particular event or activity is likely to deviate from the estimated forecast value.ââ‚¬â„¢ââ‚¬â„¢ (Aldousari r,.....) Management needs to have a full understanding and knowledge of the potential damage of risks to the organisation, as well as identifying where risks may occur. Risk has a dynamic capacity, which means that the outcome may be better or worse that expected. Also the degree of better or worse may also be dynamic, and these elements within risk are often referred to as 'upside and downside' risks.
If a manager adopts a high risk element with a low likelihood of occurrence within a project, the outcome may be higher profit, but may result in problems and losses. However, if managers adopt a low risk approach that would eliminate all risks, the restrictions imposed may result in lower profits. The approach to risk management needs to address how to take reasonable and sensible risks, but not to attempt to avoid all risk in any project. Risks will also include subcontracts, materials, machinery, as well as timescale and budget predictions.
"Exposure to the possibility of economic and financial loss or gain, physical damage or injury, or delay as a consequence of the uncertainty associated with pursuing a particular course of action." (Champman, 1991)
Statistics have shown that when business decisions are made on a regular basis, they may help to predict future risk, as many would have a direct link to decisions regarding projects management. The risk areas often used to base judgements are:
High likelihood __ high effect
High likelihood __ low effect
Low likelihood __ high effect
Low likelihood __ low effect
The effects might be upside or downside, positive or negative. The low likelihood __ low effect is the least important type of risk category.
Managers are often described as risk neutral, risk seekers or risk averse. When managers are seen as risk seekers, they clearly accept a greater potential for risk and higher profits, but risks may result in losses for the organisation. When managers are described as risk averse, they attempt to identify all possible risks and apply restrictions and controlling procedures to avoid such risks; this is a common approach for most organisations. However, managers are not simply risk seeker or risk averse and there is a wide variance of approach to risk assessment. Risk assessment is often dependent upon individual managers or even teams of managers and their experience and training in this issue.
Sources of risk
Common sources of project risk have been observed by researchers, and Praftery (1994) proposes five sources of project risk and these are: Dimension, Intensity, Complication, Innovation and Physical Location.
Research has indicated common weakness in risk assessment, such as projects that overrun the projected timescale and those where the estimated budget is exceeded. Such weaknesses have a significant impact on the organisation's profitability and future success in attracting contracts. Praftery (1994) also identified six causes of risk that may affect projects from external elements, and these are:
Inflation - rising costs during the project timescale.
Price Escalation on Input Resources - increasing costs of resources.
Market Situation - periods of economic crisis.
Materials and Work - availability of resources.
Political Uncertainty - political unrest or changes in government.
Climate - weather and climate implications.
Table 1. Categories of sources of risk
Client/government regulatory agencies
Bureaucratic delays, changes in local regulations.
Changes in government funding policy, liaison between several funders.
Definition of project
Change in project scope
Authority of project manager, involvement of outside bodies.
Adequacy to meet need, realism of design programme
Local customs, weather windows
Permanent plant supply
Degree of novelty, damage/loss during transportation
Experience, financial stability
Excessive wastage, reliability of quality
Industrial relations, multi-racial labour force
Resale value, spares availability
Remoteness, access to site
Relevance to specific project availability
Exchange rates and force majeure
Praftery identified the Risk Management Cycle (Figure 1) that demonstrates a methodical approach to risk in its recognition, analysis and response. The decision maker can make a reasonable response to the level of risk shown by the recognition and analysis phase.
Figure 1 Risk Management
Risk Management Strategy
A risk management strategy needs to be incorporated within policies of organisations and a significant element is risk ownership, and whether risk may be transferred elsewhere. Budget risk or contingency funding is another important element that project managers need to address. Risk management strategies often include systems, responsibilities and assessment, as managers need to be concerned about the investment committed by the organisation.
This diagram demonstrates the risk management strategy that helps managers to protect their project goals.
An effective risk management strategy needs to be linked to the successful outcome of the project, and risk appraisal is more successful when the action taken is related to results. Also, communication within project management is very important, and the identification and evaluation phase should include as many people as possible. The success aspects that focus on responsibility and contribution ownership are management support, insight, incentive, openness, participation of key personal and learning. Therefore, these aspects should be combined with risk management methods. Identification and response phases should be focused on the risk processes, but not on simple checklists.
Technological Developments and their impact on Project Management within Construction
Many construction companies now use a server for their information, rather than individual computers, and systems such as Electronic Document Management System (EDMS) enable a company to manage and share its documents. As a result, information is easily accessible and can be modified efficiently. Sharing and communicating company documents is of critical importance, and particularly for project management. (Matheu, 2005) Construction companies need to use information technology to develop quality management systems that give access to authorised people to project databases by creating web-based tools.
Analysis and interpretation
Conflict relationships often occur as there are many stakeholders and phases in a construction project, and these are usually related to communication problems. (Matheu, 2005) Computer technology is increasingly being used in the construction industry to address such problems and the Internet enables a collaborative working environment. (Rojas and Songer, 1999) Recently, an Internet-based Project Management System (WPMS) has been developed to help manage construction projects, and this promises to help documentation, and improve the way project teams work.
Information technology is now making a major impact on planning, decision-making and control, due to the flow, speed and reliability of information. This is particularly important for the effective handling of project information and communication flow, which has significantly changed how workers, managers and clients interact. Information is now available to managers and other employees in a faster and more reliable way, and in larger quantities than ever before. Information now has to be systematically managed and information networks carefully designed and monitored.
However, some companies still use paper-based project management systems that often experience duplication, lower profit and organisational difficulties. Training for new work practices is important for communication and information management, as this can take advantage of new possibilities of a project web, so that working procedures will be better and more efficient.
Law courts that deal with construction defects need clear evidence from experts who are knowledgeable about their subject, and it is in companies' interests to ensure detailed information can be made available if defects lead to legal disputes of risk ownership. This is achieved more successfully when experts work closely with lawyers to negotiate equitable settlements. (Thomas E. Miller, 1999)
Budget overspends and delayed timescales can be expensive for the contractors and clients. (Burati and Farrington 1987; Josephon and Hammerlund 1998; Opfer 1999) Defective components detected late during building work are responsible for up to 15% of construction costs (Burati and Farrington 1987) and routine maintenance has identified up to 5% of construction cost wasted due to renewing defective components (Josephson and Hammerlund 1998).
Aims and Objectives
When the completed building or construction does not meet the reasonable expectations of the client, or there has been a failure to comply with standard building regulations, construction defects are evident. There may also be weaknesses in design, planning, supervision, inspection, the construction of any building or observed weaknesses of the construction. Common and expensive construction defects include: Structural integrity, Expansive soils, Mechanical, Electrical, Water intrusion, Thermal and moisture protection, Doors, windows and glass, and Finishes.
Analysis and interpretation
Construction defects are defined in law courts in the following categories: Design deficiencies, Material deficiencies, Construction deficiencies, or Subsurface deficiencies.
Design Deficiencies - The client believes that the original design contained defects that are the responsibility of the construction company. One common problem in building projects relates to roofing defects that leak in wet weather.
Material Deficiencies ââ‚¬" Poor quality building materials such as windows that leak in wet weather or do not function correctly, despite being installed correctly. Defects in materials may also be due to being damaged or when poor quality materials are used.
Construction Deficiencies - insufficient monitoring and inspection during construction of poor quality working practices and may be identified by cracks, dampness or electrical and plumbing problems.
Subsurface / Geotechnical Problems - If the subsurface is not correctly compacted and prepared for adequate drainage, structural defects are likely to occur such as vertical and horizontal settlement (subsidence) and movement (expansion). Soil conditions are a significant problem for construction projects.