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Contract & Estimating Chapter 1

Introduction to Construction

Dr Mohamad Syazli Fathi

Department of Civil EngineeringRAZAK School of Engineering & Advanced Technology

UTM International Campus

July 25, 2010

Introduction to Construction Industry

Introduction to ConstructionIntroduction to Construction

“It is a great profession. There is a fascination of watching a figment of the imagination emerge through the aid of science to a plan on paper. Then it moves to realization in stone or metalThen it moves to realization in stone or metal or energy. Then it brings jobs and homes to men. Then it elevates the standards of living and adds to the comforts of life. That is the engineer’s high privilege.”

-Herbert Hoover

Introduction to ConstructionIntroduction to Construction

Construction is the step in which the plans, specifications, materials, and equipment are transformed by a constructor, usually a contractor into a finished facilitycontractor, into a finished facility.Construction is performed to improve the overall quality of life.

Introduction to Malaysian Construction industry

• The construction industry in Malaysia:-– plays an important role in generating wealth and

improving the quality of life for Malaysians through the translation of government’s socio-economic policies into social and economic infrastructure and buildings.

– provide job opportunities for approximately 800,000 people.

– Create multiplier effect to other industries (manufacturing, financial & professional services)

Source: CIMP

The importance of Construction Industry

Public facilityCreate jobs opportunity Infrastructure development Generate economy New technology discovery Increase land valueSocio economy development

Developments in the Malaysian Economy (1Q - 2010)

• The construction sector expanded at a strong pace of 8.7% during the quarter (4Q 09: 9.3%), supported by the implementation of pconstruction-related projects under the second fiscal stimulus package and the Ninth Malaysia Plan.

Source: www.bnm.gov.my/files/publication/qb/2010/Q1/p3.pdf

•The projects include road upgrading, repairs of schools and Government quarters, the double-track rail project, the second Penang Bridge and the new Low Cost Carrier Terminal (LCCT).

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Developments in the Malaysian Economy (1Q - 2010)

• Growth in the non-residential sub-sector also reflected the ongoing construction of office and retail spaces, especially in the Klang Valley.

Source: www.bnm.gov.my/files/publication/qb/2010/Q1/p3.pdf

g y• Meanwhile, the residential

sub-sector continued to expand, supported by better consumer sentiment and low interest rates.

Source: CIDB Malaysia, 2010

Output Value for Construction Sector of GDP

Source: http://www.cidb.gov.my/v6/?q=en/content/490

Construction Demand Index by Sector

Source: http://www.cidb.gov.my/v6/?q=en/content/490

Estimation of Construction output

Source: CIDB Malaysia

Malaysia’s Engineering Achievements- PETRONAS Twin Tower

Number of storeys 88

Height 452 meters above street level

Total built-up area 341,760 sq.meters ( 3.7 million sq. feet)

Design/Architecture Cesar Pelli & Associates [U.S.] in association with KLCC architects.

Location of skybridge Levels 41 and 42

Length of skybridge 58.4 meters

Height of skybridge 170 metres above street level

Vertical transportation 29 double-deck high speed passenger lifts in each tower

Number of escalators 10 in each tower

Stainless steel cladding 65,000 sq. metres

Vision glass 77,000 sq. metres

Concrete [various strengths up to grade 80]

160,000 cubic metres in the superstructures [see also foundation description below]

Steel 36,910 tonnes of beams, trusses and reinforcement

Foundation 4.5 metre [15 feet] thick raft containing 13,200 cubic meters of grade 60 reinforced concrete, weighing approximately 32,550 tonnes under each Tower, supproted by 104 barette piles varying from 60 to 115 metres in length

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Malaysia’s Engineering Achievements- PUTRA LRT

•The system is popular and well-used, as the city's roads are hopelessly gridlocked. Linking the city's People's Park and Gombak, the fast, efficient east-west route services some of the most affluent and heavily populated areas and was completed during 1999. p g•The 29km-long system is the world's second longestfully-automated driverless metro system.

INSPIRING CREATIVE AND INNOVATIVE MINDS

Malaysia’s Engineering Achievements- STAR LRT

STAR was constructed in two phases. •Phase One STARline - Ampang Line which covers a distance of 12km and comprises 13 stations, between Ampang and Jalan Sultan Ismail.•Phase Two STARline - Sri Petaling Line incorporates a 9.5 km extension from Chan Sow Lin station in Kuala Lumpur to the National pSports Complex and the Games Village at Bukit Jalil.

Malaysia’s Engineering Achievements- KL Tower

•Beside the Petronas Twin Towers lies the awesome sight of KL Tower, the tallest tower in Southeast Asia. •It stands majestically atop Bukit Nanas (Pineapple Hill) at 421 meters and 94 meters above sea level, is one of the first ,and perhaps most enduring images a visitor to KL will encounter. •KL Tower was built to endure against wind pressure of 190 miles per hour.•KL Tower, the 4th tallest of its kind in the world, was erected as a telecommunication tower to improve the quality of telecommunications and broadcasting transmissions.

Malaysia’s Engineering Achievements- Formula 1 Circuit

Malaysia’s Engineering Achievements- KL International Airport

KL International Airport (KLIA) is the Hub for Malaysian air transportation system.

Malaysia’s Engineering Achievements- KLIA Ekspress

The KLIA Ekspres is a non stop service connecting KL International Airport and the Hub for Kuala Lumpur transportation system, KL Sentral. The service is non-stop with a journey time of 28 minutes and frequency of every 15 minutes during peak periods. (Non peak would be at every 20 minutes).

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Malaysia’s Engineering Achievements- SMART Tunnel

SMART is an acronym for Stormwater Management and Road Tunnel, a project under the Federal Government initiated to alleviate the flooding problem in the city centre of Kuala Lumpur.

Malaysia’s Engineering Achievements- Putrajaya

Putrajaya is a planned city, located south of Kuala Lumpur, that serves as the federal administrative centre of Malaysia.

Malaysia’s Engineering Achievements- Putrajaya

Putrajaya sits on a magnificent 4,931 hectares spread. Its Masterplan is designed along an axial tangent which runs from the northeast to southeast taking full advantage of the natural gsurroundings. Its undulating terrain treats visitors and residents to commanding vistas of the environment. About 40% of Putrajaya is natural. Lush greenery, botanical gardens are spread across the landscape enhanced by large bodies of water and wetlands.

The Future

“Civil works by ASEAN engineers are exportable items as are their fabricated and engineering products. ASEAN must be a center of excellence in the engineering filed ASEAN engineers mustin the engineering filed. ASEAN engineers must not wait for others to innovate and established new methods and systems for them to copy. They must do research and development on their own methods and systems which should become standards for the rest of the world”

-Tun Dr Mahathir Mohamed

The Service SectorWith the advent of WTO and the push for globalization of trade and services, the emergence of foreign engineers in Malaysia g g g yis inevitable. The service sector is important to Malaysia and it has been identified as one of the three pillars of the economy as Malaysia progresses towards industrialized nation status by 2020.

Malaysia’s share of world exports of commercial services

1990 2002 2007

World Export (US$ Billion)

782.2 1540.5 3060.0

Malaysia’s Export (US$ Billion)

3.77 14.1 27.0

Malaysia’s Share (%) 0.48 0.92 0.9

Sources:1. http://www.miti.gov.my/cms/contentPrint.jsp?id=com.tms.cms.article.Article_15a29a91-7f000010-5e095e09-9907699f&paging=02. http://tradeinservices.mofcom.gov.cn/en/f/2008-05-27/40320.shtml

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Among the mega projects undertaken by Malaysian companies are :

1. New Doha International Airport in Qatar (US$543 million), 2. Mixed development in the Al-Reem Island Project (Zone C) in Abu Dhabi

(US$378 million), 3. Abu Dhabi City Centre (US$429 million), 4. Jizan Economic City in Saudi Arabia (US$2.9 billion) and 5. Shohiba Independent Water & Power Project (US$2.6 billion).

Source: http://biz.thestar.com.my/news/story.asp?file=/2010/3/30/business/5958275&sec=businesshttp://www.mbam.org.my/mbam/index.php?option=com_content&task=view&id=760&Itemid=331

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Construction Industry

“The engine that drives the overall economy”

The importance of Construction Industry

Public facilityCreate jobs opportunity Infrastructure development Generate economy New technology discovery Increase land valueSocio economy development

Construction Industry

Malaysian Infrastructure Comprised of:

– Roads– SMART Tunnels / Tunnels– Bridges– Communication Systems– Power Plants– Distribution Networks– Water Treatment Systems– Others

Entire infrastructure is constructed and maintained by the construction industry.

Classification or Type of construction

I. Residential (30 – 35%)II. Heavy Engineering & Infrastructure

Construction (20 – 25%)Construction (20 25%)III. Commercial/Building Construction (35 –

40%)IV. Industrial (5 – 10%)

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Types of ConstructionTypes of Construction

I. Residential (30 – 35%)– Single family houses, apartments, condos, etc.– Private Financing– Low start-up capital necessary

Labor Intensive– Labor Intensive– Owner = Developer– Architect = Designer

Types of Construction Types of Construction –– cont. 1cont. 1

II. Heavy Engineering & Infrastructure Construction (20 – 25%)– Highway, airports, bridges– Long duration projects

Equipment intensive– Equipment intensive– High contractor expertise

Types of Construction Types of Construction –– cont. 2cont. 2

III. Commercial/Building Construction (35 –40%)

– Government buildings, schools, hospitals, retail, warehouse, etc.P bli & i t fi i– Public & private financing

– Labor and material intensive– Contractor expertise necessary

Types of Construction Types of Construction –– cont. 3cont. 3

IV. Industrial (5 – 10%)– Manufacturing, plants, refineries, steel

mills, etc– Privately funded– Design/build – very large engineering &

construction operations– High initial costs (start-up)

Construction Elements

For any construction project, there are four (4) important elements:

1. Budget1. Budget2. Schedule3. Quality4. Safety

Budget Issues

• $ (Initial $, Cash Flow, Finances)• Purchase, Lease, Subcontract• Labor (People)( p )• Equipment• Materials (manmade/natural)• Suppliers• Time & Productivity• Technology

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Schedule Issues

• Productivity (labor, equipment)• Suppliers• Materials• Materials• Management• Weather• Delays, Interference, Disputes

Constructed Product

• Fulfills the project need• Built in reasonable conformance to the plans• Meets the Specifications• Meets the Specifications• Quality Assurance/Quality Control (QA/QC)– On-site Inspection• Jobsite Safety

ContractContract

Every time a contractor make an offer to do construction work (eg. to build a building, to lay a pipeline) – and every time an offer is accepted a contract is madea contract is made.Marriage is one kind of contract!

• Contract Administration• Construction Engineering Manager

What do you really control?

g g g• Design/Designer• Contractor?• Schedule?• Budget?• Safety?

What is the Likelihood of a Good Product, If You

• Have a GOOD Contractor• Have a GOOD Engineer in Charge (EIC)• Have a GOOD set of Plans/Specifications

What is the Likelihood of a Good Product, If You

• Have a POOR Contractor• Have a GOOD Engineer in Charge (EIC)g g ( )• Have a GOOD set of Plans/Specifications

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Contractual Arrangement

TraditionalDesign & BuildConstruction ManagementOwner - Agent

Project Development Process

Project DescriptionLand Acquisition Site Survey & Soil InvestigationInitial Design Preparation & Construction Site PlanArchitect & Engineering Detailing DesignArchitect & Engineering Detailing DesignEarly estimates preparation & cost controlTender document preparationTender invitation & acceptanceEvaluation & acceptance of tenderContract document preparation & signWork progress preparation & approvedEtc……