Overview of Construction Sector _ Unit 1 _ Construction Management _ Final Year (BE) _ Department of Civil Engineering _ TAE _ SPPU _ by Shrikant R. Kate

SPPU
BE CIVIL ENGINEERNG
Construction Management
© Mr. Shrikant R. Kate 1
UNIT-1
Overview of Construction Sector
Shrikant R. Kate
BE Civil, M Tech Construction Management

Syllabus
 Role of construction industry in infrastructure
development.
 Components of infrastructure sector, construction
industry nature, characteristics, size, structure
 Role in economic development, construction
management – necessity, applications
 Project management consultants – role,
 types, selection and appointment process,
 Project overruns and means to combat them, Project
monitoring and reporting systems

1. Overview of Construction Sector
Role of construction industry in infrastructure
development:
• Second largest in employment and
contribution to economic activity after
agriculture
• construction industry value in India is
estimated more than US $ 126 billion

GDP Of Construction Industry In India
India's real estate market is expected to reach
a market size of USD 180 billion by
2020. India to be third largest construction
market globally by 2030, with its contribution
to GDP increasing to 15% by 2030. Size of
the India's construction industry expected to
be USD 1 trillion by 2025.

Role of construction industry in national
development
(a) optimize job creation opportunities in the
construction of infrastructure and housing;
(b) encourage the creation and sustainability of
small-scale enterprises;
(c) strive towards fulfilling the country’s projected
construction needs; and
(d) enhance the benefits accruing to the community
through their involvement in construction.

India GDP From Construction | 2018 |
GDP From Construction in India decreased to
2378.36 INR Billion in the third quarter of
2018 from 2491.03 INR Billion in the second
quarter of 2018. GDP From Construction in
India averaged 2117.79 INR Billion from 2011
until 2018, reaching an all time high of
2491.03 INR Billion in the second quarter of
2018 and a record low of 1861.37 INR Billion
in the third quarter of 2012.

India GDP From Construction | 2018 |

The construction industry is a distinct sector of
the economy which makes its direct
contribution to economic growth like all the
other sectors such as agriculture,
manufacturing and services. It also provides
the basis upon which the other sectors can
grow, by constructing the physical facilities
required for the production and distribution of
goods and services

Indian real estate sector
• Contains four sub sectors:
1. Housing
2. Retail
3. Hospitality
4. Commercial
• These sectors adds about 5-10% of country’s
GDP

Structure of Construction Industry
Construction
Real Estate
Residential
Non
Residential
Commercial
SEZ and IT
Parks
Infrastructure
Energy Railways
Roads and
Bridges
Shipping Ports

Elements of Infrastructure Industry
1. Energy:
• Comprise of Power, Petroleum, Coal and Non-
Conventional sources of energy
• By the year 1990-91, India has installed
capacity of 73,277 MW and actual annual
generation of 264.2 billion kilo watt per hour
(kWh) out of which 192.7 billion kWh is from
thermal and nuclear power

2. Railways:
• Indian Railways is a state-owned national railway
system of India.
• Operated by the Ministry of Railways, in 2015-2016, IR
carried 8.107 billion passengers (more than 22 million
passengers per day), transported 1.101 billion tons of
freight, and had 7,216 stations.
• It is the fourth largest railway network in the world by
size, comprising 119,630 kilometres of total track and
92,081 km of running track over a route of 66,687 km
at the end of 2015-16.
• The track is mostly broad gauge with small stretches of
metre and narrow gauge track. 37% of the tracks are
double or multiple tracked

3. Roads and Bridges:
• India has a road network of over 5,472,144 kilometers as on 31
March 2015
• The second largest road network in the world.
• At 1.66 km of roads per square kilometer of land, the quantitative
density of India's road network is higher than that of Japan (0.91)
and the United States (0.67), and far higher than that of China
(0.46), Brazil (0.18) or Russia (0.08).
• However, qualitatively India's roads are a mix of modern highways
and narrow, unpaved roads, and are being improved. As on 31
March 2015, 61.05% of Indian roads were paved.
• India has less than 3.8 kilometers of roads per 1000 people,
including all its paved and unpaved roads. In terms of quality, all
season, 4 or more lane highways, India has less than 0.07
kilometers of highways per 1000 people, as of 2010. These are
some of the lowest road and highway densities in the world. For
context, United States has 21 kilometers of roads per 1000 people,
while France about 15 kilometers per 1000 people – predominantly
paved and high quality in both cases.© Mr. Shrikant R. Kate 13

4. Shipping:
• Approximately, 90 per cent of the country's trade
by volume (70 per cent in terms of value) is
moved by sea.
• India has the largest merchant shipping fleet
among the developing countries and ranks 20th
amongst the countries with the largest cargo
carrying fleet with 8.83 million Gross Tonnage as
on (01.06.2008) and the average of the fleet
being 18 years.

5. Ports:
• India has a coastline spanning 7516.6 kilometers,
forming one of the biggest peninsulas in the
world.
• There are 12 major ports, 200 notified minor and
intermediate ports. The total 200 non-major
ports are in the following States:-
Maharashtra (48); Gujarat (42); Tamil Nadu (15);
Karnataka (10); Kerala (17); Andhra Pradesh (12);
Odisha (13); Goa (5); West Bengal (1); Daman and
Diu (2); Lakshadweep (10); Pondicherry (2);
Andaman & Nicobar (23).

Recent Developments
• Heavy investments by MNC’s, Developed
Countries in infrastructure, high speed trains,
renewable energy and developing smart cities
• GOI will be spending Rs. 50,000 crore to develop
100 smart cities across country
• US$ 137 billion investment by GOI in
development of rail network
• GOI announced US$ 93 billion for major highway
projects
• World Bank plans to invest US$ 700 million in
existing transport logistics and Dedicated Freight
Corridor (DFC)

Size of Construction Industry
• Indian Construction Industry was approx US$
157 billion in size in FY 14
• PwC research report highlights:
1. Growth Rate of 7-8% per annum over next 10
years
2. Currently 35 million employment
3. 12-15 Contractors account for an estimated
20% of the market

Role of Construction in National
Economic Development
• Construction Industry provides a base /
platform to every other sector
• For every rupee invested in construction there
is Rs. 0.80 incremental earning in GNP
compared to agriculture (Rs. 0.20) and
manufacturing (Rs. 0.14)
• Great potential in generating employment
• Cash flow from rich to poor

Role of Construction in National
Economic Development (contd…)
• In India, every lakh of rupees invested in
construction, about 3100 man days of
unskilled labour, 3000 man days of skilled
labour and 1300 man days of technical
personnel are required
• Employment generated in construction is over
5 % of total employment out of which 51% is
from rural population and 49% from urban /
semi urban areas

Investment in GDP
Investment Amount in Crores
(1979-1980)
Increment in GDP (%)
Agriculture 32,242 20
Construction 1,760 78
Manufacturing 45,515 14
Transport (excluding
railways)
11,330 9
Trade 7,299 69

Project Management Consultancy
• Project management consultancy is one of the
management solution to improve the
efficiency of a project in construction.
• Project management consulting is given to an
independent contractor with experience in
project management who is employed to
execute a particular project.

(contd….)
• This contractor often holds project
management (PM) designations which
contributed assurance of the level of
education and experience at accurate level.
• PMC have at least four-year undergraduate
degree and minimum five year industry
experience.

(contd…)
• Extensive reference checking is standard before
hiring the consultant.
• In project management consulting, the consultant
is in authority and responsible for the successful
accomplishment of the project with in a precise
time frame and on a price budget.
• The firm describes the deliverable items,
benchmarks and responsibility to ensure that the
scope is properly defined.

(contd…)
• Depending upon the industry, the skill set
essential and project to be accomplished,
these are different type of project
management consulting. Personals who work
as consultants in construction industry must
be professional engineers or architects, with
many year project management experience.

Roles and Responsibility of PMC
• Managing projects and specific activities related to
project within given constraints of Time, Budget and
Quality
• To ensure that scope, schedule and costs are rational
and achievable
• Conducting reviews periodically
• Ensuring all project documentation is updated
periodically
• Plan, schedule and control activities in order to achieve
objectives by applying technical, theoretical and
managerial skills
• Ensure risks have proper mitigation and contingency
plans.

Consultant Selection Process
• Consist of following steps:
1. Consultants role determination
2. Determination of consultant’s prequalification criteria
3. Consultancy cost estimation
4. Selection from a list of prequalified candidates
5. Determination of final selection criteria based on work
proposal, bio data and experience
6. Invitation of bid
7. Evaluation on basis of proposal, bio data and bids received
8. Selection of one or more consultant for whole project or
different assignments
9. Negotiation on terms and conditions
10. Appointment

Project Overrun
• Also called as cost increase or budget overrun.
• It means a shortfall of budget that occurs in a result of
unexpected costs
• Reasons:
1. Improper planning and forecasting
2. Shortage of funds
3. Unfeasible cost estimates
4. Underestimating project complexity
5. Prolonged project schedule
6. Lack of backup plan
7. Lack of resource planning
8. Poor performance
9. Change in scope

How to tackle overrun?
• By:
1. Good project plan
2. Time scheduled activities and resources
3. Need of parallel activities
4. Technically sound WBS
5. Multidisciplinary PM team
6. Execution to be supervised by structured
responsibility matrix
7. Commitment of team towards work

Functions of Construction
Management
1. Planning and Forecasting
• Strategic Planning
• Tactical Planning
• Operational Planning
2. Organizing
3. Staffing
4. Directing
5. Commanding
6. Coordinating
7. Controlling

Henri Fayol’s 14 Principles of
Management
1. Division of labor
2. Authority and responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual interest to general interests
7. Remuneration
8. Centralization
9. Scalar chain
10. Order
11. Equity
12. Stability of tenure of personnel
13. Initiative
14. Esprit de corps © Mr. Shrikant R. Kate 30

Project Monitoring System
• It is the process of observing project execution
so that potential problems can be identified in
a timely manner and corrective action can be
taken, when necessary, to control the
execution of the project.
• Following variables are used for tracking in
PMS:
1. Schedule
2. Costs
3. Deliverables
4. Quality

Project Reporting System
• Report must contain relevant data to control
tasks in specific schedule
• Report should be available in time
• Report should be consistent with logic of
planning, budgeting and scheduling system
• Early warning signals of potential problems
and delays in project
• Minimizing the confusion in communication
• Faster management action & response due to
higher visibility

Investment Opportunity Analysis
• The objective of IOA is to ensure that
opportunities are explored and given
appropriate consideration during
development process
• IOA will focus on market segments that are
seen to be the key drivers of growth

Overview of Construction Sector _ Unit 1 _ Construction Management _ Final Year (BE) _ Department of Civil Engineering _ TAE _ SPPU _ by Shrikant R. Kate

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Overview of Construction Sector _ Unit 1 _ Construction Management _ Final Year (BE) _ Department of Civil Engineering _ TAE _ SPPU _ by Shrikant R. Kate