ARE 459

CONTRACTS & SPECIFICATION

CLASS -2
By By
Zulfikar Zulfikar Aliyu Aliyu Adamu Adamu
LECTURER LECTURER
ARE ARE DEPT DEPT
INTRODUCTION TO
INTRODUCTION TO
CONSTRUCTION INDUSTRY
Presentation Outline
Presentation Outline
Introduction to Construction Industry
Nature and general characteristics
Difference between Construction & Manufacturing Industry
Size of Construction Market
Construction Industry in Saudi Arabia
Present & Future
Size of Construction Market in Saudi Arabia
Example: Major Projects ( attached in Handout)
Construction Team: Principal Parties
The Owner
The Design professional
The Contractor
Construction Project Life Cycle
Objectives of Class :
Objectives of Class :
To provide an overview of construction Industry, including
Its characteristics and Size
To understand the difference between construction & other
industries
To present the trends of the construction industry in Saudi
Arabia
To identify key players in construction industry
Construction Industry Overview
Construction covers a wide range of products, services and
activities.
The Construction industry is an important part of the nations
economy.
The U.S. Construction industry statistics,
Source: CSI
Too Many Participants
Construction Industry involves many people, organization, agencies,
ministries, designers, contractors, project managers, equipment suppliers,
material suppliers, testing Laboratories.)
Construction Industry: Nature & Characteristics
Contractor
Contractor
Architect
Architect
Owner
Owner
Engineer
Engineer
Suppliers
Suppliers
Subs
Subs
Vendors
Vendors
Public
Public
Too Many Participants
Job
Supervisors
Owners
Corporate
Managemen
t
Field Labor
Design
Center
Sales &
Marketing
Accountin
g
Scheduling
Purchasin
Estimating
Local
Municipalitie
s
Banks &
Mortgage
Lendors
Manufacturer
s
Suppliers
RE Agents
Subs
Construction projects are Unique, complex, large
Low tech
Construction Industry best described as fragmented industry.
Various types of construction
Risk dominated Industry
Temporary
Construction Industry: Nature & Characteristics (Contd)
Construction Industry Versus Manufacturing Industry
What differentiates the construction industry from other industr
What differentiates the construction industry from other industr
ies is
ies is
that its projects are large, built on
that its projects are large, built on
-
-
site (the factory is brought to the job
site (the factory is brought to the job
site), and generally unique.
site), and generally unique.
Organizations change from Project to Project
On-site work stations are not permanent
Operations are conducted outside and thus subject to weather
Construction can involve large-scale heavy assemblies that can be
difficult to handle and fasten
The owner is usually highly involved in the construction process
while the purchaser of manufactured goods is not
Construction versus Manufacturing
Construction versus Manufacturing

Construction
Construction

focuses on the production of a

focuses on the production of a
single unique
single unique
end product
end product

Ex: Nuclear Power Plant, Hospital, Dams, etc

Ex: Nuclear Power Plant, Hospital, Dams, etc

Manufacturing
Manufacturing

products either
products either
mass produced
mass produced
or batch produced
or batch produced

Construction Variables: SIZE &COMPLEXITY
Construction Variables: SIZE &COMPLEXITY

Project format
Project format

the production of single unique

the production of single unique
units
units
Construction versus Manufacturing
Construction versus Manufacturing
Size of Construction Industry
Construction activity is tracked by a number of organizations:
Engineering News Record (ENR), a US magazine
which produces annual tables of performance and
construction activity.
The Monthly Construction Contracts Awards Index
(MCCAI), prepared by NCBs Economics
Department, gives an estimate on the future
direction of construction activity in the Kingdom.
The Central Department of Statistics (CDS)
Tables show big contractors and consultantsand turnover
Size of Construction Industry
Tables shows Top 20 Designers and turnover
Size of Construction Industry
Size of Construction Industry
Construction activity is tracked by a number of organizations:
Engineering News Record (ENR), a US magazine
which produces annual tables of performance and
construction activity
Construction Industry in Saudi Arabia:
Present & Future
The construction industry is the largest non The construction industry is the largest non- -oil economic sector in the oil economic sector in the
Kingdom of Saudi Arabia. Kingdom of Saudi Arabia.
The construction sector also employs over 14 per cent of the tot The construction sector also employs over 14 per cent of the total workforce in al workforce in
the Kingdom. the Kingdom.
Construction activities in Kingdom have a direct correlation wit Construction activities in Kingdom have a direct correlation with oil prices. h oil prices.
If the Price of BRENT CRUDE $ / BARREL Increases, the Kingdom If the Price of BRENT CRUDE $ / BARREL Increases, the Kingdom s total s total
revenues grow and subsequently there is an increase in total val revenues grow and subsequently there is an increase in total value of publicly ue of publicly
announced construction contracts. announced construction contracts.
During the last 5 During the last 5- -yearperiod, average construction investment in Saudi Arabia yearperiod, average construction investment in Saudi Arabia
is estimated at SR73 billion per year, is estimated at SR73 billion per year,
The privatization drive, which is currently underway in Saudi Ar The privatization drive, which is currently underway in Saudi Arabia, will have a abia, will have a
significant impact on the construction industry significant impact on the construction industry
The Construction Team
The principal participants/key players in any construction
project include:
The Owner
The Design Professional (Architect & Engineers)
The Contractor
The Construction Team
ARCHITECT
CONTRACTOR
CONTRACT
CONTRACT
Owner
Contractor
Designer
OWNER
A
/
E
C
O
N
T
R
A
C
T
O
R
The Parties in Construction
The Parties in Construction
Contractual Relationship
No Contractual Relationship
The Owner
The owner, (also called the client)
The owner is responsible for:
Fundingand paying bills for the construction of project.
Determining what the project will include (also called
the scope of the project), when the project can begin
and must end (the schedule),
Receive the ultimate benefits of the finished project.
The Owner ( Contd..)
Owner organizations can be broken into two major
categories, public and private.
A public agency exists for the ultimate benefit of the
citizens, the general public. Examples of public
projects:, an highway, or an University.
A private organization can be described as any
individual, partnership, corporation, or institution that
builds a project for its own use or for resale.
The owner enters into separate contract with Architect and
contractor.
The Design Professional
The major role of the design professional:
Is to interpret or assist the owner in developing the project's scope, budget,
and schedule and to prepare construction documents that will be used by the
construction contractor to build the project.
The architect typically sub-contracts portions of work to other design
professionals such as structural engineers, landscape architects, electrical &
mechanical engineers
In almost all cases the design professional is a licensed, registered professional
who is responsible for the physical integrity of the project.
In the United States each state licenses architects and engineers who are allowed
to practice within that state.
Engineering Committee in Saudi Arabia grants licenses to architects and
engineers.
The Contractor
The contractor is entity that enters into a contract with the owner to construct
the project
The Contractor is responsible :
for the interpretation of the contract documents and the physical
construction of the project rests with the construction contractor
In a traditional arrangement where the owner, design professional, and
contractor are separate companies, the contractor is termed a prime
contractor and is contractually responsible for delivering a completed project
in accordance with the contract documents.
In most cases the prime contractor divides the work among many specialty
contractors called subcontractors. On a large project these subcontractors may
also divide up the work into even smaller work packages
CONSTRUCTION INDUSTRY
Major Project Phases
The major phases in the project cycle that are common to most design and
construction projects are :
Project Planning
Design
Schematic Design
Design Development
Contract Documents
Construction Procurement (Bidding Phase)
Construction
Occupancy
CONCLUSION
The construction industry is an important part of the nations economy as
major contributor to economy and major employer
Construction activity is tracked by a number of organizations: Engineering News
Record (ENR), a US magazine produces annual tables of performance and
construction activity
The principal participants/ key players in any construction project include:
The Owner/The Design Professional and The Contractor.
Construction activities in Kingdom have a direct correlation with oil prices.