PROJECT MANAGEMENT FOR ENGINEERING AND CONSTRUCTION McGraw-Hill Series in Construction Engineering and Project Management CONSULTING EDITOR Raymond E. Levitt, Stanford University Barrie and Paulson: Professional Construction Management: Including CM, Design- Construct, and General Contracting Bockrath: Contracts and the Legal Environment for Engineers and Architects Callahan, Quackenbush, and Rowings: Construction Project Scheduling Griffis and Farr: Construction Project Planning Hinze: Construction Contracts Jervis and Levin: Construction Law: Principles and Practice Koerner: Construction and Geotechnical Methods in Foundations Engineering Liska: Construction Estimating Oberlender: Project Management for Engineering and Construction Oglesby, Parker, and Howell: Productivity Improvement in Construction Peurifoy, Ledbetter, and Schexnayder: Construction Planning, Equipment, and Methods Peurifoy and Oberlender: Estimating Construction Costs PROJECT MANAGEMENT FOR ENGINEERING AND CONSTRUCTION SECOND EDITION Garold D. Oberlender, P~.D., Professor of Civil Engineering Oklahoma State University Scope MANAGEMENT Boston Burr Ridge, lL Dubuque, lA Madison, WI New York San Francisco St. Louis Bangkok Bogoth Caracas Lisbon London Madrid MexicoCity Milan New Delhi Seoul Singapore Sydney Taipei Toronto McGraw -Hill Higher Education A Division of TheMcGran-Hill Companies PROJECT MANAGEMENT FOR ENGINEERING AND CONSTRUCTION Copyright O 2000, 1993, by The McGraw-Hill Companies, Inc. All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. This book is printed on acid-free paper. 2 3 4 5 6 7 8 9 0 FGWFGR 0 9 8 7 6 5 4 3 2 ISBN 0-07-039360-5 Publisher: Thomas Casson Sponsoring editor: Eric Munson Marketing manager: John Wannernacher Senior project manager: Jean Lou Hess Production supervisor: Debra Sylvester Cover design: Rhiannon Erwin Freelance design coordinator: Joanne Mennemeier Supplement coordinator: Mark Sienicki Compositor: GAC hdianapolis Typeface: 10/12 Times Roman Printer: Quebecor Printing Book GrouplFai~field Library of Congress Cataloging-in-Publication Data Oberlender, Garold 0. Project management for engineering and construction / Garold D. 0berlender.--2nd ed. p. cm. ISBN 0-07-039360-5 1. Engineering--Management. I. Title. TA190.024 2000 658.4'04--dc21 99-53231 ABOUT THE AUTHOR Gamld D. Oberlender is professor and coordinator of the graduate program in construction engineering and project management in the School of Civil Engineer- ing at Oklahoma State University. He received his Ph.D. in civil engineering from the University of Texas at Arlington. Dr. Oberlender has conducted research and presented seminars on a variety of topics related to construction engineering and project management. A civil engineer with more than thirty-five years of experi- ence, he has been a consultant to numerous companies in the design and construc- tion of projects. He is also co-author with Robert L. Peurifoy of Estimating Construction Costs, fourth edition, and Formwork for Concrete Structures, third edition. Dr. Oberlender is a registered professional engineer in several states and a - fellow in the American Society of Civil Engineers. In addition, he is an active mem- ber and has held offices in the National Society of Professional Engineers. He is a member of the American Society of Engineering Education and the Project Man- agement Institute. PREFACE This book presents the principles and techniques of managing engineering and con- struction projects from the conceptual phase, through design and construction, to completion. It emphasizes project management during the early stages of project de- velopment because the ability to influence the quality, cost, and schedule of a proj- ect can best be achieved during the early stages of development. Most books discuss project management during construction, after the scope of work is fully defined, the budget is fixed, and the completion date is firm. It is then too late to make any significant adjustments to the project to improve quality, cost, or schedule to bene- fit the owner. Although each project is unique, there is certain information that must be identi- fied and organized at the beginning of a project, before any work is started. Numer- ous tables and graphs are presented and discussed throughout this book to provide guidelines for management of the three basic components of a project: scope, budget, and schedule. Throughout this book, achieving project quality to meet the owner's satisfaction is emphasized as an integral part of project management. This second edition of the book has three new chapters: Working with Project Teams, Early Estimates, and Design Proposals. The topics in these chapters are ex- tremely important to achieving a successful project. These topics are covered from the perspective of the engineer who is employed with either the owner's organiza- tion or the design firm. The intended audience of this book is students of university programs in engi- neering and construction. It is also intended for persons in industry who aid the owner in the feasibility study, coordinate the design effort, and witness construction in the field. A common example is used throughout this book to illustrate project management of the design and construction process. This book is based on the author's experience in working with hundreds of proj- ect managers in the engineering and construction industry. Much of the information in this book is based on formal and informal discussions with these project man- agers, who are actively involved in the practice of project management. Although vii viii PREFACE the author has observed that no two project managers operate exactly the same, there are common elements that apply to all projects and all project managers. The author presents these common elements of effective project management that have been successfully applied in practice. McGraw-Hill and the author would like to thank Martin Fischer of Stanford Uni- versity and C. William Ibbs of the University of California at Berkeley for their many comments and suggestions. The author would also like to thank the many project managers in industry who have shared their successes, and problems, and who have influenced the author's thoughts in the development of this book. Finally, the author greatly appreciates the patience and tolerance of his wife, Jana, and three sons, Dan, Tim, and Ron, for their support and encouragement during the writing and editing phases in producing this finished book. Garold D. Oberlender CONTENTS 1 INTRODUCTION Purpose of this Book Arrangement of this Book Definition of a Project Responsibilities of Parties Who Does the Project Manager Work For? Purpose of Project Management Types of Management Functions of Management Key Concepts of Project Management Role of the Project Manager Professional and Technical Organizations Questions for Chapter 1-Introduction References 2 WORKING WITH PROJECT TEAMS Project Teams Teamwork Teams for Small Projects Working with Multiple Teams Design Teams Construction Teams Team Management Teams and the Project Manager's Responsibilities Key Factors in Team Leadership Team Building Motivating Teams Conflict Management X CONTENTS Developing a Consensus Team Conduct Questions for Chapter 2-Working with Project Teams References 3 PROJECT INITIATION Design and Construction Process Advances in the Engineering and Construction Process Private versus Public Projects Contractual Arrangements Phases of a Project Owner's Study Owner's Needs and Project Objectives Project Scope Definition Project Strategy Selection of Design Firms and Construction Contractors Partnering Questions for Chapter 3-Project Initiation References 4 EARLY ESTIMATES Importance of Early Estimates Classification of Early Estimates Estimating Work Process Importance of Team Alignment in Preparing Early Estimates Scope Definition and Early Estimates Preparing Early Estimates Organizing to Prepare Estimates Establishing an Estimate Work Plan Methods and Techniques Cost-Capacity Curves Capacity Ratios Raised to an Exponent Plant Cost per Unit of Production Equipment Factored Estimates Computer-Generated Estimates Estimate Check Lists Estimate Documentation Estimate Reviews Risk Assessment Risk Analysis Contingency Traditional Methods of Assigning Contingency Percentage of Base Estimate Expected Net Risk