PRE 843 – CONSTRUCTION MANAGEMENT

Answer Question One and Three others. Question 1 carries 40 marks, while
others carry 20 marks

Question 1
a (i). State 7 categories of the responsibilities of a construction managers as
identified by the Construction Management of America (CMAA) (2
marks)
(ii). List ten characteristic features of construction projects (2marks)
b (i). Name the hallmarks of professionalism in the construction industry.
(ii). List five phases that most construction projects have to undergo.
(iii). Mention the 3M of a general management that play significant roles in the
Construction industry. (4 marks)
c. State four categories of constructed facilities in the construction industry.
Cite three examples for each category.(4 marks)
d. Enumerate the factors that distinguish the structure and organization of the
construction industry of one country from the other in a developing or
developed nation. (4 marks)
e. Differentiate between the conventional system of tendering and fast track
system of tendering. (4 marks)
f. List three interrelated subsystems and three fundamental views of a GIS.
(4 marks)
g (i). Who is a lead (prime) consultant?
(ii). State the client’s obligation in project development construction. (4
marks)
h (i). Why was the due process office (Budget monitoring and price intelligence
unit) set up by the Federal Government of Nigeria?
(ii). What are the effects in the Nigerian Construction industry?(4 marks)

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i. Explain briefly the two basic geo – spatial data models for representing real
world objects (GIS data) in GIS environment. (4 marks)
j. List two distinct approaches of drafting specifications clauses. Which of
them is preferred by the contractors and why? (4 marks)

Question 2
a (i) State the benefits of GIS technology to the development of the construction
industry in developing and developed countries of the world. (4
marks)
b. Explain briefly the role of an Engineer in investigating, design, development
and reporting of a construction project located in Delta State to the Client
(the State Government) (12 marks)

Question 3
a. State the parties involved in the construction industry and briefly discuss
their roles. (10 marks)
b. Explain the main methods of selecting a tenderer for a construction contract.
(10 marks)

Question 4
a (i). Enumerate the two common reasons usually for rejecting tenders in “open
tendering”
(ii) In what circumstances can an otherwise satisfactory tender be rejected in
favour of a highest tender? (5 marks)
b. Explain the effect of selective (invited) tendering to the Nigerian
Construction Industry. (5 marks)
c. Enumerate the format of representing the following in GIS environment.
i. Aerial photographs
ii. Oil and Gas Pipelines

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iii. CAD drawings
iv. Uniben Sport Complex
v. Engineering Drawings (10 marks)

Question 5
a. Write short notes on the following:
i. GIS data
ii. Force Majeure
iii. Risk in Construction Projects
iv. Retention Money
b. Explain briefly GIS applications in the construction industry. Cite three case
studies. (8 marks)
c. Mention the duties of the engineer as related to supervision of works and
administration of contracts which:
i. Can be delegated
ii. Cannot be delegated (4 marks)

Question 6
a. Explain the importance of the construction industry to the development of
any country. (10 marks)
b. What are the challenges and the way forward for the Nigerian Construction
Industry? (10 marks)

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 CHAPTER FOUR

TENDERING PROCEDURES
The purposes of tendering procedures are:
 to select a suitable contractor at an appropriate time

 to obtain an acceptable offer from them

The key factors that determines the tendering procedures and contractual
arrangements are:
 the required time to select a contractor
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  the time to start on site

The selection of a contractor can be by the following:

 Automatic Selection. This is achieved by setting up a measurable criterion
of eligibility and measuring contractors against it. This occurs in open
tendering where any contractor may apply for the project and the lowest
bidder gets the contract.

 Subjective selection. In this case, the client or his consultant nominates a

single contractor without a formal comparison with other contractors.

 Combination of both.

There are two different system of tendering:

 Conventional System. Tenders are based on accurate bills of quantities. The
selection of contractor and obtaining an acceptable offer occur
simultaneously.

 Fast – track System. The contractor is selected before the design is

completed. This is to the advantage of the client. The involvement of the
contractor in the design process will result in more efficient project delivery
through improved constructional forms, and more efficient use of the
contractor’s resources which will help in savings in production costs. The
overlapping of the design and construction processes will shorten the overall
planning and construction period.

PRE-QUALIFICATION OF BIDDERS (EXPRESSION OF INTEREST)

Prequalification is essential for large projects of considerable complexity and size.
It is aimed at streamlining the number of firms that bid for a contract and to ensure
that it is only the firms that are capable bid for the contract. Expression of Interest
is an initial exercise for identifying competent firms (contractors), who will be

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invited to participate in the tendering process. It deals mainly with the technical
proposal.
To avoid inexperienced contractors tendering, an advert can be published inviting
them to be prequalified for tendering, when they will have to supply information as
to their previous experience of the class of work involved; the availability of plant
and personnel and information as to their financial standing. The client’s
consultant will carefully examine all such applications and recommend to the client
which contractors he considers are capable and sufficiently experienced to
undertake the proposed works.

QUESTIONS
 If no company has been selected to be lead consultant, enumerate criteria for
selection of contractors.

 The hallmark of professionalism – knowledge, wisdom and integrity – is

obvious in ideal tendering process. Discuss.

REQUIREMENTS FOR SUCCESSFUL PRE-BIDDING EXERCISES

1. Size of the Firm
2. Area of Operation
3. Nature of Work
4. Familiarity with the Work Terrain
5. Standard of Workmanship
6. Organizational Ability
7. Capability of the Firm
8. Experience and Past Performance on Similar Project
9. Financial Standing

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10. Established Skills in a Particular Field of Operation
11. Current Commitments
12. Extent to which the Organization subcontracts specialized trades
13. Ability to contribute to design decisions if this is required
14. Responsibility and Integrity of the Firm

INVITING TENDERS

The four main methods of selecting a contractor for a job are as follows:

a. OPEN TENDERING (ADVERTISING FOR COMPETITIVE

TENDERS)

This refers to tenders sought by public advertisements. In open tendering,

everyone is invited to submit tenders. The full advantage of full competition
as per pricing is obtained. It is transparent and open to ensure that only the
competent bidder gets the job, does it and paid as at when due.

This has led to the upsurge in the number of tenders submission received
from contractors especially from firms who have inadequate experience or
unsatisfactory financial standing.

b. SELECTIVE OR INVITED TENDERING (LIMITED

COMPETITION)

This is used to mean tenders sought from a selected list of firms known to be
interested in undertaking the work and have the necessary capabilities as
well as the financial standing. The advantage of this is that it eliminates the

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 undesirable factors highlighted in Open Tendering but renders it more
difficult for contractors of good standing who are not on the list to secure the
opportunity of tendering in a field that may be new to them.

c. NEGOTIATION OF CONTRACT WITH A SELECTED

CONTRACTOR

In special cases of urgency, or work in which a particular contractor has

exceptional experience, the practice of negotiating a contract with a selected
firm of known integrity may be adopted with satisfactory results.

d. JOINT BIDS

This is the case where 2 or more contractors submit a tender jointly on large
contracts, especially where the financial and other commitments are heavy.
If the tender is successful, the group may form a special company for
executing the particular contract.

One member of the group undertakes responsibility of the project, but there
should be a MOU binding the group as regards the responsibilities of each
member to the project.

EVALUATION AND SELECTION OF TENDERS

 The tenders are evaluated from the technical, commercial, contractual and
managerial aspects. Contractor’s confirmation and clarification are sought
on various matters which do not conform to the tender requirements or those
that have not been offered by the contractor.

Usually separate meetings are held with each contractor to obtain

clarification and also to bring all the offers in line with the tender
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 requirement. The tenderers usually visit the site and they are accompanied
by the lead consultant for further information. The pre-bid conference will
clarify the various issues to the tenderers and other queries are clarified via
correspondence till the due date for the bidding.

 The actual evaluation process involves the checking the acceptability of the
offer against technical specifications, management specifications,
commercial and contractual terms and conditions. Normally the lowest
bidder who is technically and managerially acceptable is awarded the
contract.
 Tenders should be carefully scrutinized particularly to discover any
omission, mistake or exceptional price. While in law, the contractor must
undertake to operate at the price tendered whether it was a mistake or not.
However, it is unwise for the lead consultant to recommend the acceptance
of a tender containing a mistake without drawing the attention of the client
to it. The lead consultant should scrutinize the tenders to expose prices that
are exceptionally high or low. Such exceptionally high prices may result
from errors of the bidder and should be referred to him for clarification. In
some cases, the bidder may purposely put a high price on an item of work
which he believes is underestimated in the Bill of Quantities. It is therefore
useful for the lead consultant to tabulate the prices of all tenders in order to
assess a reasonable range price for each item.

REJECTION OF TENDER
In Open Tendering, tenders can be rejected based on the following:

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  Inadequate Experience on the Job

 Doubtful financial standing of the tenderer

 Prices quoted for the work may be manifested as inadequate and it is

sometimes in the interest of the client to accept a tender which would result
to a serious loss due to inexperienced bidding.

 Shorter time of completion of the project might make a satisfactory tender

rejected in favour of a higher tender.

 Poor Technical consideration could make a tender be rejected despite his

financial standing and lowest price bid.

CHAPTER FIVE

TYPES OF CONSTRUCTION CONTRACTS

a. Measurement Contracts

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i. BILL OF QUANTITIES CONTRACTS
It is based on a detailed bill of approximate quantities (computed as
accurately as possible by the Engineer) which includes brief descriptions of
work to be done against each item of which the contractor has entered a unit
rate of price. The contract price is the aggregate amount of the various
quantities priced at the various rates.

During the performance of the work, the work done is paid for in accordance
with the rates and prices tendered by the contractor before-hand whether in
competition or otherwise.

Advantages

 It results in payment to the contractor in accordance with the work done.

 It limits the price to be paid. The client pays exactly the tendered sum
based on the drawings.
 It gives freedom to alter the work of construction and yet remains the
basis of fair payment between client and contractor.

 It forms the basis of comparison of tenders since all tenders price is

exactly on the same basis.
 It gives every tenderer a very clear conception of the amount, the kind
and the detail of work to be carried out.

ii. SCHEDULE OF RATES CONTRACTS

In this case, a comprehensive list of items of work covering the operations
which a client may want is usually prepared. The contractor is invited to
affix his rates to the items or quote percentage above or below rates
previously entered by the Lead Consultant.

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 This type of contract is extremely useful when the full extent of work to be
done cannot be foreseen e.g. contracts for the sinking of borehole for water
supply since it is not possible to state in advance how deep the borehole
must be in order to produce a given quantity of water.

It can be used when it is needful to commence work of construction before

the design and contract drawings are ready.

The schedule of rates is similar to but not the same a bill of quantities. The
differences are:

 In schedule of rates contract, quantities against the individual items

are either not inserted or they are entered in estimated amounts or in
round figure provisional quantities.
 More items are scheduled for temporary work than what appears in a
Bill of Quantities.
 The scheduled items used to describe operations by the contractor is
less than in a Bill of Quantities.
 There is no implied guarantee that all or any of the work scheduled
will be carried out.

b. LUMP SUM CONTRACTS

This consists of a single fixed sum and the contractor undertakes to carry out
all the work shown on the drawings and specified for that sum. Before a
lump sum offer is called for, the specifications and drawings must be
completed in every detail. A bill of quantities may even be provided to assist
the tenderer as regards every operation he must do thus assisting in the
calculation of his total offer.

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 Typically houses, garages can be built using the lump sum contracts. Lump
sum contracts work quite well, provided:

 The job is not very large

 The work required can be precisely described all in details.
 There is no great risk attached to its construction
 No large or numerous alterations are called for during construction

Advantages

 It gives the contractor clear straight forward job to do.

 It avoids a lot of detail measurement and accounting work.
 It gives the client assurance of a fixed total price.
 It has apparent advantage of saving the engineer the trouble of producing
a Bill of Quantities

Disadvantages

 It runs into trouble when the client or the lead consultant request for an
alteration of the design or some additions during construction or if the job
runs into unforeseen problems.

c. COST RE-IMBURSEMENT CONTRACTS

in all the contracts listed below, a comprehensive list is prepared of all the
heads of expenditure such as salaries, wages, insurance, materials, plants,
tools, consumables etc. the total of the expenditure actually incurred under
these headings will be allowable cost. A fee is agreed beforehand for the use
of the general resources of the contractor’s organization, such as the head

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 office overheads and profit. The cost of the allowable cost and fee is the total
cost to the client.

i. COST PLUS PERCENTAGE FEE CONTRACTS

The fee is a percentage of the allowable cost. This type of contract is
justifiably unpopular. The less efficient the contract is the more the cost of
the works and the more his profits. Since the contractor cannot do anything
without the approval of the Lead Consultant, and the Lead Consultant would
demand a very efficient process from the Contractor, both will dislike the
method.
It is suitable in times of emergency so as to give enough time to draw up
some other form of contract.
ii. COST PLUS FIXED FEE CONTRACTS
The fee is a fixed lump sum usually based on an agreed estimate cost. This
type of contract is acceptable provided the contractor is efficient. This
method puts the Contractor and the Lead Consultant to work together, so
that they can act jointly to produce the highest quality of workmanship
possible at the most economic cost. It can also give great freedom to adopt
different methods of construction or to tackle unusual problems or get rid of
unforeseen troubles.
iii. COST PLUS FLUCTUATING FEE CONTRACTS
The fee is tied to the allowable cost by some form of sliding scale
iv. TARGET PRICE CONTRACTS

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 It is much like the cost plus fixed fee contracts but the fee to the contractor
increases if the final cost of the work is less than the estimate; decreases if
the final cost is more. Usually a basic fee is quoted as a percentage of an
agreed target estimate.
It is designed to encourage the contractor to apply economy on the job but in
practice it does not work. For instance, a cost plus contract is not feasible
when all the operations on a job can be specified, drawn out and quantified
in advance. A Bill of quantities contract can be used, giving good
competition of prices, assurance of final cost and freedom of altering cost
based on competition. This method is not suitable because the extent of
work cannot be measured in advance and all the operations cannot be
foreseen and the risks attached to the job is large. It then becomes difficult to
set a target.

d. ALL-IN CONTRACTS
in this type of contract, the client through his Lead Consultant states his
requirement in broad and general terms only and invites contractors to
complete proposals and terms of payment for the design and construction
and if required the commissioning, operation and maintenance for limited
periods of the project. The all-in contract can be a measurement, lump sum
or cost reimbursement contract.
This method has been in use in in gas works, chemical and oil industries
having simple civil engineering content.
In civil engineering, this method suits the construction of:

 Repeated structures such as factory buildings and small industrial

developments where the contractor uses ready- made design.

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  Large projects which are highly competitive and favours tender bids.
 Turnkey projects where a client only wishes to deal with one man and
has no interest in design process.

CONTINGENCIES, UNCERTAINTY AND RISKS

The occurrence of the unforeseen and the total extent, presents an opportunity for
insurance and protection. This is best secured by awarding a measurement contract
to a contractor who by reason of his experience and reputation can obtain cover
against the risks at competitive rates in insurance market or may decide to bear the
risks.

The extent and nature of the risk imposed under a measurement contract will have
a direct bearing on the contract price. If a particular risk is disproportionately large,
it becomes economical for the client to bear the risk. On the other hand, the client
may want to secure protection in the contract against any construction contingency.
In this case, the client would charge higher prices so that in effect so that the client
is forced to pay the premium against the risks included in his contract. If the risk
do not materialize, the client would have paid more than he needed for his works;
but if the cost of meeting the risks exceeds the premium paid, the resulting deficit
may be made up from extra profits made elsewhere on other jobs.

Under the Italian law, subsurface conditions are the client’s responsibility, not the
contractor’s. the client assumes the risk. However, a contractor may chose to
assume the risk in order to lower the bid price to beat competition.

FORCE MAJEURE

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Force majeure is a common clause in contracts that essentially frees both parties
from liability or obligation when an extraordinary event or circumstance beyond
the control of the parties, such as a war, strike, riot, crime, or an event described by
the legal term act of God (hurricane, flood, earthquake, volcanic eruption, etc.),
prevents one or both parties from fulfilling their obligations under the contract. In
practice, most force majeure clauses do not excuse a party's non-performance
entirely, but only suspend it for the duration of the force majeure.[2][3]

Force majeure is generally intended to include occurrences beyond the reasonable

control of a party, and therefore would not cover:

 Any result of the negligence or malfeasance of a party, which has a

materially adverse effect on the ability of such party to perform its
obligations.[4]
 Any result of the usual and natural consequences of external forces.
o To illuminate this distinction, take the example of an outdoor public
event abruptly called off.
 If the cause for cancellation is ordinary predictable rain, this is
most probably not force majeure.
 If the cause is a flash flood that damages the venue or makes
the event hazardous to attend, then this almost certainly is force
majeure.
 Some causes might be arguable borderline cases; these must be
assessed in light of the circumstances.
 Any circumstances that are specifically contemplated (included) in the
contract—for example, if the contract for the outdoor event specifically
permits or requires cancellation in the event of rain

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EFFECTS OF PROJECT RISKS ON ORGANIZATION

Uncertainty in construction comes from many sources and involves many

participants in the project. Each participant tries to minimize its own risk and this
could result to a conflict which may be detrimental to the project. Only the owner
has the power to moderate such conflicts as it alone has the power to assign risks
through his contractual relationship with other participants. By so doing, the
contractual prices are expected to be lower than those in which all the risks are
assigned to contractors.

In the problem of uncertainty, incentives must be provided if any of the

participants is expected to take a greater risk. The willingness of a participant to
accept risks reflects their professional competence.

Risks in construction may be classified in a number of ways. One form of

classification is as follows:

1. Socio-economic Factors

 Environmental Protection
 Public Safety Regulation
 Economic Instability
 Exchange Rate Fluctuation

2. Organizational Relationships

 Contractual Relations
 Attitudes of Participants
 Communication

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3. Technological Problems

 Design Assumptions
 Site Conditions
 Construction Procedures
 Construction Occupational Safety

CHAPTER SIX

CONTRACT (TENDER) DOCUMENTS

CHAPTER SEVEN

CERTIFICATION

a. INTERIM CERTIFICATE

This shows the amount payable to the contractor. The certificate is based on
the monthly statements usually prepared by the contractor and shows the
total quantity of work done to date under each item of the BOQ in
accordance with the monthly measurement previously made between the
Resident Engineer and the Contractor’s Agent, with appropriate additional
works ordered and executed to date and for value of materials on site and the
deductions from retention money and amounts previously paid. The
statement is usually forwarded by the Resident Engineer to the Engineer

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 who will after verification prepare and forward to the client the interim
certificate.

b. COMPLETION CERTIFICATE

This is issued by the engineer when in his opinion the works have been
substantially completed. The engineer may also issue the certificate of
completion for any completed part of work or if requested by the contractor
issue such a certificate with respect to any substantial part of works which
has been completed to his satisfaction and occupied or used by the client.

c. RETENTION MONEY

This represents the percentage of contract earnings usually stipulated in the

contract documents that is retained by the client during the period of
construction. Part of the retention money (usually half) becomes due when
the completion certificate is issued and the balance due at the end of the
maintenance period.

d. MAINTENANCE PERIOD

The issuance of a completion certificate marks the commencement of the

maintenance period. At the end of the maintenance period (usually stated in
the contract) the works must be delivered to the client’s specification
considering fair wear and tear as it were when the completion certificate was
issued. The contractor must make good any defects during the period. If any
item of maintenance for which the contractor is responsible remains to be
carried out at this time, the client is entitled to withhold from the balance of
the retention money the estimated payment for such works until has
completed them. Failing to do the client may complete it at the contractor’s
expense.
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