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Introduction
1–1THECONSTRUCTIONINDUSTRY
Theconstructionindustry(includingdesign,newandrenovationconstruction,andtheman-
ufactureandsupplyofbuildingmaterialsandequipment)isoneofthelargestindustriesin
theUnitedStates,historicallyaccountingforabout10%ofthenation’sgrossnationalprod-
uctandemployingsome10millionworkers(references2and3).AnnualU.S.newcon-
structionvolumehasexceeded$800billioninrecentyears.Becauseconstructionisan
exciting,dynamicprocesswhichoftenprovideshighincomeforworkersandcontractors,it
isanappealingcareeropportunity.However,theseasonalandsporadicnatureofconstruc-
tionworkoftenservestosignificantlyreducetheannualincomeofmanyworkers.Inaddi-
tion,constructioncontractingisaverycompetitivebusinesswithahighrateofbankruptcy.
Itiswidelyrecognizedthatconstructionasadisciplineisacombinationofartand
science.Whileunderstandingthetechnicalaspectsofconstructionisextremelyimportant,
itisalsoessentialthatconstructionprofessionalshaveknowledgeofthebusinessandman-
agementaspectsoftheprofession.Closeobservationandparticipationinactualconstruc-
tionprojectsisveryvaluableinobtaininganunderstandingoftheconstructionprocessas
well.Thus,theauthorencouragesthosewhoarestudyingconstructioninanacademicen-
vironmenttotakeeveryopportunitytoobserveandparticipateinactualconstructionac-
tivities.Anunderstandingofthetopicspresentedinthefollowingchapterswillprovidea
foundationinthemethodsandmanagementofconstruction.
Whileconstructionhastraditionallybeenaveryconservativeindustry,theincreasing
rateoftechnologicaldevelopmentandgrowinginternationalcompetitionintheindustryare
servingtoacceleratethedevelopmentofnewconstructionmethods,equipment,materials,
andmanagementtechniques.Asaresult,comingyearswillseeanincreasingneedforin-
novativeandprofessionallycompetentconstructionprofessionals.
ConstructionContractors
Companiesandindividualsengagedinthebusinessofconstructionarecommonlyreferredto
as constructioncontractors (orsimply contractors )becausetheyoperateunderacontract
arrangementwiththeowner.Constructioncontractorsmaybeclassifiedasgeneralcontractors
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CHAPTER1
Figure1–1 ConstructionofSt.LouisGatewayArch. ( CourtesyofAmerican
InstituteofSteelConstruction)
orspecialtycontractors. Generalcontractors engageinawiderangeofconstructionactivities
andexecutemostmajorconstructionprojects.Whentheyenterintoacontractwithanownerto
providecompleteconstructionservices,theyarecalled primecontractors.Specialtycontrac-
tors limittheiractivitiestooneormoreconstructionspecialties,suchaselectricalwork,plumb-
ing,heatingandventilating,orearthmoving.Specialtycontractorsareoftenemployedbya
primecontractortoaccomplishsomespecificphaseofaconstructionproject.Sincethespe-
cialtycontractorsareoperatingundersubcontractsbetweenthemselvesandtheprimecontrac-
tor,thespecialtycontractorsarereferredtoas subcontractors. Thus,theterms“subcontractor”
and“primecontractor”aredefinedbythecontractarrangementinvolved,notbytheworkclas-
sificationofthecontractorsthemselves.Thus,aspecialtycontractoremployedbyanownerto
carryoutaparticularprojectmightemployageneralcontractortoexecutesomephaseofthe
project.Inthissituation,thespecialtycontractorbecomestheprimecontractorfortheproject
andthegeneralcontractorbecomesasubcontractor.
WhilethenumberofconstructioncontractorsintheUnitedStateshasbeenestimatedto
exceed800,000,some60%ofthesefirmsemploythreeorfewerworkers.Contractorsem-
ploying100ormoreworkersmakeuplessthan1%ofthenation’sconstructionfirmsbutac-
countforabout30%ofthevalueofworkperformed.Thetrendinrecentyearshasbeenforthe
largeconstructionfirmstocaptureanincreasingshareofthetotalU.S.constructionmarket.
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INTRODUCTION
ConstructionIndustryDivisions
Themajordivisionsoftheconstructionindustryconsistofbuildingconstruction(alsocalled
“verticalconstruction”)andheavyconstruction(alsocalled“horizontalconstruction”).
ThedistributionoftotalU.S.constructionvolumeforarepresentativeyearisillustratedin
Figure1–2. Buildingconstruction (Figure1–3),asthenameimplies,involvestheconstruc-
tionofbuildings.Thiscategorymaybesubdividedintopublicandprivate,residentialand
nonresidentialbuildingconstruction.Whilebuildingconstructionaccountsforamajorityof
thetotalU.S.newconstructionmarket(seeFigure1–2),manyofthelargestandmostspec-
tacularprojectsfallintheheavyconstructionarea. Heavyconstruction (Figure1–4)includes
highways,airports,railroads,bridges,canals,harbors,dams,andothermajorpublicworks.
Otherspecialtydivisionsoftheconstructionindustrysometimesusedincludeindustrial
construction,processplantconstruction,marineconstruction,andutilityconstruction.
1–2THECONSTRUCTIONPROCESS
ProjectDevelopmentandContractProcedures
Themajorstepsintheconstructioncontractingprocessincludebidsolicitation,bidprepa-
ration,bidsubmission,contractaward,andcontractadministration.Theseactivitiesarede-
scribedinChapter18.However,beforethebiddingprocesscantakeplace,theownermust
determinetherequirementsfortheprojectandhavethenecessaryplans,specifications,
andotherdocumentsprepared.Theseactivitiesmakeuptheprojectdevelopmentphaseof
construction.Formajorprojects,stepsintheprojectdevelopmentprocessinclude:
•Recognizingtheneedfortheproject.
•Determiningthetechnicalandfinancialfeasibilityoftheproject.
•Preparingdetailedplans,specifications,andcostestimatesfortheproject.
•Obtainingapprovalfromregulatoryagencies.Thisinvolvesascertainingcompliance
withzoningregulations,buildingcodes,andenvironmentalandotherregulations.
Forsmallprojects,manyofthesestepsmaybeaccomplishedonaveryinformalbasis.
However,forlargeorcomplexprojectsthisprocessmayrequireyearstocomplete.
HowConstructionIsAccomplished
TheprincipalmethodsbywhichfacilitiesareconstructedareillustratedinFigures1–5to
1–9.Theseinclude:
•Constructionemployinganownerconstructionforce.
•Ownermanagementofconstruction.
•Constructionbyageneralcontractor.
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Figure1–2 DistributionofU.S.
newconstructionvolume. ( Source:
BureauoftheCensus)
Privatebuilding=71%
Publicnonbuilding
=12%
Publicbuilding
=10%
Private
nonbuilding
=7%
Figure1–3 Modernbuildingconstructionproject.
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INTRODUCTION
Figure1–4 Heavyconstructionproject—KennedySpaceCenterlaunch
complex. ( U.S.AirForcephotograph)
•Constructionusingadesign/build(turnkey)contract.
•Constructionutilizingaconstructionmanagementcontract.
Manylargeindustrialorganizations,aswellasanumberofgovernmentalagencies,pos-
sesstheirownconstructionforces.Althoughtheseforcesareutilizedprimarilyforperforming
repair,maintenance,andalterationwork,theyareoftencapableofundertakingnewconstruc-
tionprojects(Figure1–5).Morefrequently,ownersutilizetheirconstructionstaffstomanage
theirnewconstruction(Figure1–6).Theworkmaybecarriedoutbyworkershireddirectlyby
theowner(forceaccount),byspecialtycontractors,orbyacombinationofthesetwomethods.
Constructionbyageneralcontractoroperatingunderaprimecontractisprobablythe
mostcommonmethodofhavingafacilityconstructed(Figure1–7).However,twonewer
methodsofobtainingconstructionservicesarefindingincreasinguse:design/build(or
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