Professional Documents
Culture Documents
Chris Project
Chris Project
1.0 INTRODUCTION
concept of overseeing and strategically managing every physical asset, from consumables
to tools to equipment in every company department, for the advancement of the company.
consumables, and other materials throughout the whole company and on each project. By
putting critical information into the hands of employees who need it, these systems give
contractors a leg up in efficiency. These systems store information about every critical
item in inventory, from how much it costs to reorder out-of-stock items to how particular
projects should be billed for their tools use. And unlike tool tracking methods of years
throughout an entire organization, allowing each employee access to just the information
management system is as easy as ever because they can seamlessly integrate into an
organization's existing software. The proven result is that contractors are maximizing
priced bill of quantities for the contract and at times this wastage are so much that they
tend to encroach into the profit margin of the construction company handling the building
contract.
Hence the need to properly address this problem of resource management on construction
site, because this is where real practical management of resources is being carried out on
any building building Project irrespective of whatever planning and techniques that has
This resources include materials, labor (skilled and unskilled), direct labor or Sublette
labor, cash at hand used for payment of other operations, plant and machinery, whether
owned by the construction company or hired for a building project with respect to the
cost, duration and usage of the plant on site in relation to the programming chart being
employed for the project. Some of the problems being encountered on site like the delay
in the supply of materials which could be caused by many factors e.g. traffic jam,
affect the labor employed because of the idle period that they have to wait for the
material to arrive. This also has a negative effect on the programmed chart. The
the blocks are substandard or are it a deliberate or careless act on the part of the laborer
handling the blocks. The type of timber formwork or steel formwork to be used and their
aftercare on completion of the project, the cutting of reinforcement and the mode of
delivery on site, whether bent or left straight in its full length. The wrong arrangement or
site organization. The waste that occur during concreting using the concrete mixer. The
storage of cement either in silo, or in bags and how to prevent them from water and
moisture, first in first out (F. I. F. O) or last in last out (L. I. F. O) in the case of other
The other part of resource which is labor. The laborer is expected to put in shows per day,
the time spent waiting for materials to arrive, their break period, the number of hours
spent on the break period, the location of the canteen or food vendor, whether on site or
laborer have to go or long distance to eat, couple with the effect of the sunlight and
fatigue.
Lackadaisical attitude of laborers on site, their attitude towards one another either
The kind of motivation given to them in the form of cash or buying of beer or palm wine.
The attitude of the supervisor to the laborer whether authoritative or diplomatic and his
The misappropriation of funds meant for a particular project by the project manager or
supervisor either used for what was not budgeted for in the stage to be carried out, or
used for the purchase of materials meant for another construction site. As normal human
beings, the use of the money given to him for his personal problem with the hope of
All theses resources go along way in affecting the cost of construction, the duration of the
the increase and duration of the project due to low level of management and resources on
The significance of this research cannot be over emphasized. The fact remains that for a
building to be cost effective both in the construction method adopted and the
management of resources; there is every need to minimize waste to maximize profit for
1.3 OBJECTIVES
management.
management.
The scope of this research is going to cover only the Lagos state residential areas under
development. Construction sites at Yaba College of technology and its environment, Ikeja
This research constrained by lack of fund to effectively carry out the research work which
is a very broad topic and the time factor due to other pressing needs to be addressed in the
academic environments
1.7 METHODOLOGY
The method to be employed includes visit to construction sites, interviews with the
labourers, project manager, site manager and supervisors on site, questionnaire, use of
relevant textbook from the library and thesis from the library, construction journals, the
internet etc.
CHAPTER TWO
2.1 FINANCE/MONEY
Money can be defined as anything that has value and can be used as a means of
exchange. There are some qualities which money must possess, such as it must be
Money as a resource according to Austen and Weales (1986) “From contractors point of
view said that money is the most important resources of all. Without it he cannot acquire
the other resources he needs. That many contractors under estimate their need for this
resource is demonstrated by the fact that in most developing countries they lead the
What follows is not about profit, but about the working capital to run a contract. Before
iv. Materials
v. Hire of transport.
Many suppliers regard contractors as poor rise and are willing to accept orders only
value of work has been completed by a certain date does not mean that payment will be
maid soon-after. On government projects bureaucratic procedure may delay payment for
period of 3months or more. The contractor should be aware of this when preparing his
tender. This invariable means that he must have enough capital to continue paying wages
purchasing material and hiring plant during the gap between a valuation of the work and
actual payment. This is an addition to the 10% retention fee from the client on the sum of
the projects placed in a special find as an insurance that maintenance will be properly
done.
It is the usual practice for the contractor to be responsible for maintenance of his work for
a fixed period six months after it has been completed. To insure himself against failure,
to do so, the client retains 10% of each interim payment up to a fixed amount. During the
maintenance period, the contractor must remedy all defects which implies that he may
have expenditure but no income. This should also be foreseen in his tender price.
The final certificate normally being prepared by the project manager to certify that the
work has been satisfactorily completed in accordance with the contract. Sometimes on
According to farkas (1970) when a contract covers a number of assets, the construction of
b. Each asset has been subject to separate negotiation and the contractor and customer
have been able to accept or reject that part of the contract relating to each asset.
A group of contracts whether with a single customer or with several customers, shall be
• The contracts are so closely interrelated that they are, in effect, part of a single project
A contract may provide for the construction of an additional asset at the option of the
when:
a. The asset differs significantly in design, technology or function from the asset or assets
b. The price of the asset is negotiated without regard to the original contract price.
J.S & J.G (1993) Contract Revenue is measured at a fair value of the consideration
Contract Cost 6 include site labor costs inclusive of supervision costs, cost of material
used in contract, depreciation of plant & equipment used on the contract, cost of moving
plant, equipment and material to and from the contract site, cost of hiring plant &
equipment, cost of design and technical assistance, estimated cost of rectification and
claims from third party. Contract cost however can be reduced by the incidental income.
Attributable costs may include insurance, cost of design and technical assistance and
construction overheads. Non attributable costs are general admin costs for which
reimbursement is not specified in the contract or selling costs. When the outcome of the
construction contract can be estimated reliably, contract revenue and contract costs
associated with the construction contract shall be recognized as revenue and expenses
respectively by the reference to the stage of completion of the contract activity at the
Balance Sheet.
Burbidge (1977) has described the circulating capital as a capital of a business equal. It’s
total capital less any capital tie-up in any project. The term “circulating capital applies
because such capital is in effect used continuously over and over again and because it
tend s to follow a circular path being used repeatedly for the purpose in the same
sequence”. It starts as a find of money or cash; as orders are placed and materials
delivered, and work is done by the labourers or tradesmens, the company accumulates
debts to its suppliers and to it’s employees. Eventually these debts are paid and the capital
is then said to be “tied-up” in the form of stocks. As the project are completed and the
construction company becomes a creditor and is owned money by the client and finally
when the debts are paid, the cash goes back into the fund together with any increase due
contractor’s job cost system that can have a substantial impact on the contractor’s balance
sheet and income statement. The most dangerous type of cost shifting involves moving or
misdirecting job costs from an unprofitable job to a profitable job. Cash and accounts
payable balances are unaffected. Accounts receivable and expense account balances are
also unaffected. In many cases, however, cost shifting can have a balance sheet and
income statement impact larger than the amount of the costs that have been shifted there
It is now a day in routine to find out many corporations improperly booking assets related
auditor could simply overlook the improper capitalization of significant assets. However,
traditional audit procedures designed without construction accounting in mind can fail to
financial statement and leave the contractor and the auditor open to serious charges.
2.1.3.1 What is the Effect of Cost Shifting?
O'Connor, J.T. and Tucker, R.L. (1986).At first glance, the movement of costs from one
contract to another would seem to have little or no overall financial statement impact. It
seems improbable that a substantial misstatement of profits could occur without affecting
any expense accounts. It also seems improbable that profits could swing without booking
any additional billings. However, many contractors and their auditors have discovered the
dramatic impact that cost shifting can have on a company’s financial statement. The
example below shows the substantial gross profit impact of a #20,000,000 cost shifting
entry:
Contract A Contract B
Completed Uncompleted
Contract Contract
In this example, Completed Contract A improves by #20,000,000 due to the costs shifted
off the job. However, Uncompleted Contract B also improves because the contract is now
50% complete rather than 33% complete. Because Contract B is incomplete, gross profit
50% of the estimated gross profit for the entire job (#15,000,000) rather than 33% of the
gross profit for the entire job (#10,000,000). The #20,000,000 cost shifting entry
Uncompleted Contract B received #20,000,000 of costs which did not belong to that job.
When Contract B is completed, it will either finish #20,000,000 over budget or another
Tucker, R.L. (1986).The only way the contractor’s balance sheet changes when cost
shifting occurs is that under billings (an asset) increase and over billings (a liability)
decrease. Under billings should be rare, especially in contracts over 50% complete.
Auditors and other users of contractors’ financial statements should look at under billings
skeptically and investigate each under billing carefully. Many users of contractors’
financial statements prepare fade schedules. A fade schedule measures a contractor’s job
profit forecasts versus the final profit on a job. At a minimum, significant contract fades
can indicate poor job profitability forecasting. At worst, contract fades can indicate cost
Traditional audit procedures designed for non-contractors will not detect cost shifting.
expenses will only reflect that all costs have been reported in the proper period. Tests
designed to find improperly booked billings or receivables will find no exceptions. Audit
test work for cost shifting must focus on the accuracy of job costing procedures.
O'Brien, J.J. (1976).This can be described as the moment invested into a project in form
of material, labour sand plant for the execution of a project after which the contractor is
reimbursed.
The common system is that contractor is paid periodically, usually monthly in a way
related to the value of the work completed. The contractor submits an application for
payment on a particular date each month. This is then checked and the project manager
approves an amount which the client has to pay within a specified period.
The major objectives of cash advances at the bank handling procedure are to ensure that
the project is funded by the responsible party as per the contract. A cash-flow forecast of
a reimbursable type contact is usually prepared for a one to two months period and then
Any amount by which the advance payment to contractor for such one month period
exceeds or is less than the amount of actual lost; incurred for that one month period shall
be taken into account in ascertaining the advance payment for the next following one
month period.
Labour can be defined as the man hour input of an individual in carrying out building
operations. These could be direct labour that is labour used by the project manager or
supervisors of the client or sublet labour. We also have skilled labour and unskilled
labour.
Skilled labors are that persons who are trained on a particular job of specialty. Unskilled
labour is that which the individual is not a specialist in any field task.
Labour is the manpower input into a job. There are different types of labour. We have the
skilled and the unskilled labour. In the skilled labour, the personnel have undergone some
training in his area of specialty and is well endowed with the knowledge and technique of
the field task. The unskilled labour is the opposite of skilled labour. The personnel
involved in unskilled labour do not have the required training and they are most times
On construction projects, there are various ways of employing labour for construction
works. We have the direct labour, sub-contractor labour. In the direct labour employed,
the contractor or client with the help of his project manager employs labourer which they
bargain terms of work with, job classification, overtime etc. without the interference of
labour unions leaders or group. At the end of the whole operation, the labour are paid off
reached amongst the main contractor, the sub-contractor and the labourers. In most cases,
the terms of employment is discussed with the sub-contractor who now in turn bills or
estimate the cost of the labour employed to the main contractor. When all conditions of
the general foreman, the site agent, the contract manager, the secretaries, drivers etc. but
we are going to confine ourselves to those people who work on construction sites
technically qualified man, who is responsible for directing and managing large
ii. The site agent organizes the construction work on one or more sites, controls them
iii. The general foreman is the senior executive person on the site. He reports to the
iv. The foremen are the last in line of the site management team and are the head of a
The tender prepared by the contractor should be abed on his estimate of the work-hour of
labour required. To execute the project. This estimate is built up from estimates of the
require number of carpenters, mason, labourers and so on. If he is to make a profit, the
contractor must ensure that the productivity of this tradesmen and labourer is high
enough to enable the work to be completed within the estimated working hours. This can
be done by measuring the work-hours for each activity or group of activities and
comparing them with the estimated amount. If they exceed the amount, it is appropriate
to investigate the causes and take correction actions. However, if they are fewer, he must
check that the cost of these hours is not more than his estimate.
Bent and thuman (1989) used a curve to illustrate their labour estimate with respect to the
This rate represent total labour cost divided by total direct man hours.
Significant deviation of actual versus planned values can indicate potential over run. Rate
over runs can occur because of different craft mixes, union contract charges, premium
Donald and Boyd (1984) said “that the basic approach is to divide labour cost into two
ii. Productivity.
The first is the money or prices associated with hourly wages, fringe benefits, payrolls,
insurance and taxes, and wage premium. Though calculation of the money component
can be complex, most of the parameter can atleast be readily and accurately quantified.
The second factor is productivity, the amount of work that a worker or crew can
accomplish in a defined period of time. Of the two main factors, productivity is by far the
harder to determine. While wage and other money component may stay essentially
constant over the duration of an operation, productivity can fluctuate wildly. To estimate
and control productivity, one not only needs accurate, consistent and up to date records
= p / q = (#/unit).
A.E. Kerridge and C. H. Vervalin (1986) In a big construction project where time is the
essence of the contract, foremost among the concerns of the site supervisor is the hours
within the contract time. A labourer or tradesmen is expected to put in 8 hours per day for
which he is paid for. In a situation where they have to work day and night, the shift
method can be incorporated that the labourer works for 8 hours irrespective of when he
starts his job and when the next person takes over from him.
The time span for each shift should be set so that it has an overlap with preceding and
succeeding shifts, thus permitting the men to discuss the work which must be continued
or finished by the next shift. For example, if the day shift works from 7:30 am to 4:30 pm
including an hour lunch, the second shift should work from 3:30 pm to 12:30 am while
the third shift works from 11;30 pm to 8:30 am. The one hour overlap for each shift
The hours of each shift should be defined and man assigned a definite shift. In some
cases, this creates problems, since certain workers may have objection to a specific shift.
To solve this problem, men are sometimes allowed to exchange shift, provided other men
in the team are not affected. It is good practice to rotate labourers or tradesmen on a
regular basis, perhaps every month or every three months, so that any one man does not
Productivity in construction is often broadly defined as output per labor hour. Since labor
constitutes a large part of the construction cost and the quantity of labor hours in
than are materials or capital, this productivity measure is often referred to as labor
convert labor efforts into useful output, and is not a measure of the capabilities of labor
alone. For example, by investing in a piece of new equipment to perform certain tasks in
construction, output may be increased for the same number of labor hours, thus resulting
the former case, labor productivity is associated with units of product per labor hour, such
as cubic yards of concrete placed per hour or miles of highway paved per hour. In the
latter case, labor productivity is identified with value of construction (in constant dollars)
per labor hour. The value of construction in this regard is not measured by the benefit of
constructed facilities, but by construction cost. Labor productivity measured in this way
requires considerable care in interpretation. For example, wage rates in construction have
been declining in the US during the period 1970 to 1990, and since wages are an
important component in construction costs, the value of construction put in place per hour
Contractors and owners are often concerned with the labor activity at job sites. For this
purpose, it is convenient to express labor productivity as functional units per labor hour
for each type of construction task. However, even for such specific purposes, different
levels of measure may be used. For example, cubic yards of concrete placed per hour is a
lower level of measure than miles of highway paved per hour. Lower-level measures are
more useful for monitoring individual activities, while higher-level measures may be
While each contractor or owner is free to use its own system to measure labor
productivity at a site, it is a good practice to set up a system which can be used to track
productivity trends over time and in varied locations. Considerable efforts are required to
results. The productivity indices compiled from statistical data should include parameters
such as the performance of major crafts, effects of project size, type and location, and
agreement on the measures to be useful for compiling data. Then, the job site productivity
data collected by various contractors and owners can be correlated and analyzed to
develop certain measures for each of the major segment of the construction industry.
Thus, a contractor or owner can compare its performance with that of the industry
average.
Julian E. and Daniel Quinn Mills (1979) Because of the diversity of the construction
industry, a single index for the entire industry is neither meaningful nor reliable.
Productivity indices may be developed for major segments of the construction industry
nationwide if reliable statistical data can be obtained for separate industrial segments. For
productivity as constant dollars per labor hours since dollar values are more easily
aggregated from a large amount of data collected from different sources. The use of
from one year to another when price deflators are applied to current dollars to obtain the
deflators are obtained from a combination of price indices for material and labor inputs,
they reflect only the change of price levels and do not capture any savings arising from
costs over a long period of time, and consequently understate the physical volume or
value of construction work in years subsequent to the base year for the indices.
2.2.4 Factors Affecting Job-Site Productivity
Simon and Schuster (1977) Job-site productivity is influenced by many factors which can
• Labor availability.
• Equipment utilization.
• Contractual agreements.
• Local climate.
The non-productive activities associated with a project may or may not be paid by the
owner, but they nevertheless take up potential labor resources which can otherwise be
directed to the project. The non-productive activities include among other factors:
• Non-working holidays
• Strikes
Each category of factors affects the productive labor available to a project as well as the
J.E. Lang and D.Q. Mills (1992) Performance analysis is a common tool for assessing
and skills involved in doing the job and in applying these to increase productivity.
• Related Work Knowledge - knowledge of effects of work upon other areas and
• Resource Utilization - ability to delineate project needs and locate, plan and
obligations.
• Analytical Ability - effectiveness in thinking through a problem and reaching
sound conclusions.
manner to others.
• Ability to Work Under Pressure - ability to meet tight deadlines and adapt to
changes.
• Profit and Cost Sensitivity - ability to seek out, generate and implement profit-
making ideas.
• Development People - ability to select, train and appraise personnel, set standards
These different factors could each be assessed on a three point scale: (1) recognized
strength, (2) meets expectations, (3) area needing improvement. Examples of work
B.C. Paulson, W.T. Chan, and C.C. Koo (1987) Job-site labor productivity can be
estimated either for each craft (carpenter, bricklayer, etc.) or each type of construction
(residential housing, processing plant, etc.) under a specific set of work conditions. A
base labor productivity may be defined for a set of work conditions specified by the
owner or contractor who wishes to observe and measure the labor performance over a
period of time under such conditions. A labor productivity index may then be defined as
the ratio of the job-site labor productivity under a different set of work conditions to the
base labor productivity, and is a measure of the relative labor efficiency of a project under
The effects of various factors related to work conditions on a new project can be
estimated in advance, some more accurately than others. For example, for very large
construction projects, the labor productivity index tends to decrease as the project size
and/or complexity increase because of logistic problems and the "learning" that the work
force must undergo before adjusting to the new environment. Job-site accessibility often
may reduce the labor productivity index if the workers must perform their jobs in round
about ways, such as avoiding traffic in repaving the highway surface or maintaining the
operation of a plant during renovation. Labor availability in the local market is another
factor. Shortage of local labor will force the contractor to bring in non-local labor or
schedule overtime work or both. In either case, the labor efficiency will be reduced in
mechanization of a construction project clearly will have direct bearing on job-site labor
productivity. The contractual agreements play an important role in the utilization of union
or non-union labor, the use of subcontractors and the degree of field supervision, all of
which will impact job-site labor productivity. Since on-site construction essentially
involves outdoor activities, the local climate will influence the efficiency of workers
directly. In foreign operations, the cultural characteristics of the host country should be
According to Benneth (1985) “Large and complex construction projects are necessarily
arranged in hierarchies because of practical limits or the size and capacity of teams. There
is much evidence which is consistent that teams of between 2 and 15 people are the most
effective. Also there is much evidence that effective teams or rather their managers tend
to plan their mark in terms of a relatively small member of subtask large and complex
corsfunction projects will require the work of many hundreds of teams if each is to be
relatively small. Since such members are beyond the capacity of effective managers there
is no choice but to see projects as hierarchies which means that the strategy for a total
project will divide it into fairly small member of sub-projects. As far as the top level of
departing or the size and complexity of the total project. The process of sub-dividing
continues through as many levels of hierarchy as are needed to arrive at defined roles
small enough to be carried out by teams of between 2 and 15 peoples. The figure below
shans the essential features of a project hierarchy in teams of the information system. It
illustrate an important principle this is that each of the major component of the project
and similarly it heads to be connected to those in their sub-project. This is to ensure that
first of all, the lower level teams are fully informed of what they are to do and secondly
that the higher level teams are provided with feedback we can see from the illustration
that in large and complexity projects, the tactical phase. This is time right down to the
work of individual teams for example, Peter Sammies and his team won the contract for
the block work of a project. They had to decide exactly what work was to be done, how it
was strategic issues. Once these matters were settled, they could get or with the direct
construction work.
The essential difference between work at the top of the hierarchy and at the bottom, lie in
the discretion exercised in the strategic phase. Peter is employed in the project to carry
blocks rather than to do any other kind of work. An architect employed on the same
project may do a number of very different things and to a large extent, it may well be for
the architect to decide whether he makes a model, produces a drawing, builds or writes a
specification etc.
2.2.8 Labour supervision
Labour supervision is concerned with the day-to-day running of the group or gang and
their operations on site which entails a certain amount of attention to detail depending
upon the size of the labour and the operation or task. If the labour is large, the supervisor
will need to master the art of delegation assign on the minor task to his colleagues or
subordinates on site, thus providing more own time to plan and control the work
effectively.
CHAPTER THREE
3.0 METHODOLOGY
3.1 PREAMBLE
This project is a study of the problems associated with financial and labour in
construction. The study will be carried out in Lagos metropolis. The choice of Lagos is
based on its representative nature. A lot of public and private building projects are
The various sequential steps adopted in order to do a proper, precise and detail research
on this study are the use of population sample method, instrument for data collection and
data analysis.
3.2 POPULATION
The populations for this study are managers such as the site managers, site engineers, site
supervisors, project managers and the operatives such as carpenters, brick layers will be
A total number of ten sites will be visited both the indigenous construction firms and
expatriate firms. Random sampling technique will be used to select the managers and the
operatives in each site visited. Purposive sampling technique will be used to select the
construction site.
The methods for data collection adopted in this research work are the presentation of
questionnaire.
A total of twenty copies of questionnaire will be administrated to both the managers and
the operatives on site. Two questionnaires to each site. The data collected from the
Each questionnaire consist of two sections, that is section A and section B. for section A
of the questionnaire, the use of table and percentages were used based on the total
While for section B of the questionnaire, the data collected was ranked one to four. T- test
IN CONSTRUCTION
It is designed to assist in working the final year dissertation for the award of HND in
building technology. I therefore desire maximum co-operation from you, and I assure you
Yours faithfully,
Aigbe Christopher
SECTION A
(f) Operative
(a) None
(f) PGD
(g) MSC
(h) PhD
(a) 1-5
(b) 6-10
(c) 11-15
(d) 16-20
(e) Over 20
8. How many building project have you supervised or have you involved in?
(a) 1-5
(b) 6-10
(c) 11-15
(d) 16-20
(e) Over 20
SECTION B
(a) High
(c) Low
(a) High
(c) Low
11. Manpower and finance/money as major resources on construction site, when any of
this resource is delayed what is the level at which it affect the duration of the project?
(a) High
(c) Low
12.