CMPM CHAPTER 3.

Construction Pre- Planning

3.1 Planning
Planning is an art, and the art of planning exist only among human beings. This power to
be able to plan distinguishes man from the other members of the animal kingdom.
The environmental development through planning is a natural field for Architects as they
are in a better position because of their training and experience. However, for a good planning,
intelligence and experience are necessary. And for a plan to be successful, it must be prepared by
those were trained and qualified.
The pre-planning stage, establishes and determine the direction and success of any
construction project. Unfortunately, it seems that some engineers and constructors have not given
the pre-planning special emphasis despite their one direction of going there.
Past experience has proven that there is no short cuts to sound construction pre-planning.
There is no new procedure to replace the following four basic rules for any job.
1. The construction superintendent should be included in the consultation at the very
start of the planning stage. Do not just present him later the finished plan and say:
"here is the plan for you to implement.
2. Make a job breakdown into components. This will simplify the whole program.
3. Prepare a construction plan that will be consulted constantly. Do not just file it in a
drawer only to accumulate dust.
4. Take advantage of new tools, which have demonstrated in saving time, money or
confusion. For instance, a computer can be used to layout on one sheet a detailed
schedule according to number of days, crafts, man-hours, costs,procurement and
completion of a process.
For Whom and What are We Planning for?
1. We are planning for the owners of the company when we plan to achieve a profit by
operating at the minimum capacity, utilizing the available resources.
2. We are planning for the employees when we plan to create or maintain jobs.
Planning Functions has Four Different Dimensions, namely:
1. Planning is a philosophy
2. Planning is integration
3. Planning is a process
4. Planning is a collection of procedures.
 Planning is a philosophy. Looking ahead is a way of thinking, a concern about the future
effects of today's action. Planning involves a state of the mind that recognizes the need for
orderliness and the value of direction.
Individual planners may sway between optimism and pessimism, but they dare not stray
too far from reality
Planning is integration. Both long- and short-range plans provides a unified structure to
give purpose to the organizational units involved. Broader plans consider the client, the supplier
and other peripheral contact of the company.
Planning is a process. Goals and objectives are the most obvious consequence of the
planning process. A loose objective of survival or of making profit is a poor guideline clearly
inadequate for steering an enterprise. A winning plan includes:
1. The strategy that defines how much has to be done to achieve the objectives.
2. The sequence of events that satisfies those strategies and
3. The assignment that lead to the accomplishment of the events.
Planning is a collection of procedures. All companies make plans ahead to some extent
and apply their own methods of doing so. In small company, one person may do it all, but larger
companies have standard procedures for formulating and carrying out plans.
3-2 The Project Manager
The central figure in a project is the project manager. He bears the ultimate responsibility
for the success or failure of the project. His role in the construction is one of an organizers, a
person who is capable of working through others to accomplish
The objectives of the project. The job of project manager can be both difficult and
rewarding. However, the reward of the job of project manager comes
from:

1. The benefits of being associated with a successful project.

2. The personal satisfaction of seeing it through to its conclusion
3. The challenge of the job, and working with other people.

Project construction management differs much from management of more traditional

activities. It is a unique one-time operation with one major objective - to accomplish a specified
task in a limited time framework. The main feature in project construction is the Project Manager
who oversee a variety of operations that involves repetitive activities, and other various works.
 Project Manager must often function in an environment that is beset with uncertainties.
He has to coordinate and motivate people who sometimes owe their allegiance to other managers
in their functional areas.
There are people who work on a project that possesses specialized knowledge and skills that the
project manager does not have. Nevertheless, the project manager is expected to guide and
evaluate their respective works. He may not have the authority he needs to accomplish all the
objectives of the project, but instead, he relies on persuasion and cooperation of others to realize
the project goals.
Generally, construction projects have some elements in common. The problems of
planning and coordinating project activities can be quite formidable for large projects, which
typically have hundreds or even thousands of activities, that must be carefully planned and
monitored if the project is to proceed according to the following schedule at a reasonable cost.

1. Project goals must be established and priorities are set.

2. Different works must be identified and time estimate must be determined.
3. Resource requirement must be projected, and budget must be prepared.
4.Once underway, progress must be monitored to assure achievement of the goal.

The project manager's mission is to plan, coordinate, control and accomplish. His
achievement can probably be traced to his success in managing people. Similarly, people at
every tier of corporate hierarchy, exercise essentially the same management principles to lead
other people towards the accomplishment of organizational objectives.
Managerial competence is a function of a manager's character, knowledge, and
experience. These three ingredients interact to mold a particular style of management. Styles
may be altered or fashioned by education gained from formal training and work seasoning. An
advantage of studying management techniques is the opportunity it allows to explore and
develop managerial skills without suffering the consequences of trial and error learning.
3-3 The Worksheet
The initial move to get the project under way is for the Project Manager to convene a
preliminary discussion on the documents, and to gather more information as may be available at
the early stage. There should be additional and pre-planning information available such as, the
client's required operational date.
What the Project Manager needs to now are:
1. The logical construction sequence that must be followed.
2. The quantity and the delivery dates of various materials to be used.
3. How much and what kind of manpower will be needed.
4. When to start and complete the job on time.

The first step in construction pre-planning is to prepare a graph and plotting the
anticipated date of delivery of all major equipment at the site. The optimum time for each
construction activities could be analyzed. Severe craft peaks and uneconomical use of equipment
will appear on the projected graph, which could then be adjusted to prevent future conflicts in the
field.
By working backward from the expected completion date, the experienced project
manager can predict the latest possible starting date for any of the activities that make up the
whole construction project. The worksheet represents a plan of action presented graphically by a
critical sequence of functions of subsidiary activities contained within a compact period of time.
3-4 Timetable
The project manager should conduct one or more informal sessions with key personnel
assigned to the project such as:
1. The construction superintendent
2. Job buyer
3. Drafting room coordinator
4. Job expediter.
During the session, the preliminary construction program or work sheet is reviewed to
determine whether engineering work and procurement of materials can be accomplished at the
rate and in the sequence as programmed in the schedule.
The sequence of construction activities, which are related to optional early and late starts,
will serve as a running list of individual job components, with notations to work activities with
greater importance and priority over the others.
Specifications for equipment and materials, which are in the development, should be
processed according to their importance or urgency in the overall project. The design and
drafting effort can be organized, to produce those drawings that are necessary at the early stage
of the construction program for field installation or to complement an urgent purchase of
materials.
 At this early stage of construction development, it is essential and timely for the
procurement committee to place orders for long term delivery of items at an early phase of the
project. The relative urgency of the onsite receipt as scheduled, may be used in establishing a
shop fabrication schedule with the supplier.
One important function of the construction planner is the preparation of an accurate
manpower estimates assigned to each function This can be done on the basis of manpower
category of the works like: working on foundations and underground facilities or by craft such as
carpenters. tinsmith. plumber, electrician. laborers or by group methods, The manpower
distribution and classifications can be done in two ways: by manual or by the use of computer.
By manual method, it takes more time but results in a more accurate and realistic summary as an
anticipation of the need without reverting to an average manpower distribution.
On the other hand, manpower distribution by computer, lessen the engineers time but the
result is less realistic because it is applied on the average manpower loadings to the computer.
The manpower summary result will be lower than might be realistically anticipated. Where time
is available, the manual method prepared by an experienced engineer is preferred

In either case, what is needed is the rate of anticipated manpower expenditure on the
basis of work category or classification or on the basis of crafts. In addition, it is a worthwhile
instrument in establishing the limit extremes of manpower application to summarize the
manpower loading in two ways:

1. With all functions performed in their earliest position on the timetable.

2. With all functions performed in their latest starting position.

3-5 Project Engineer's Review

The Project Engineer must
1. Review the timetable thoroughly
2. Raise questions on its overall logic and workability
3. Offer constructive criticism on detailed work functions and interrelated
activities.
Invariably, this review will result in a minor revision of the schedule. After gathering
most of the detailed information and made part of the timetable, the entire program is broken
down into several component parts.
After the projects have been delineated on the timetable as a separate job with minor
qualifications, it can be considered as a project itself. As the project becomes an active
construction program in the field, its progress, man-hour utilization. Field labor expenditures,
quality and quantity of suspension, and major material status are all monitored and recorded at
the field and home office.

The manpower assignment for each activity on the timetable is then translated into a graphical
presentation, showing the anticipated manpower expenditures and the target progress of the work
in percentages
1.By graphical reporting, manpower and percentage accomplishment is easier to evaluate
showing the general direction and condition of the job.
2. Data are received by way of one-page weekly progress report and a weekly field
payroll report.
3. A field man-hour report is submitted every month

By close control and evaluation of field cost and man-hour expenditures it can easily detect the
following:
1. Possible budget man-hour overruns
2. Craft peaks
3. Weakness in supervision coverage
4. Inadequacy of tools and equipment

The manpower and "Percentage Complete" graph will indicate the possibility of
sustaining a successful rescue operation by keeping a constant watch and taking possible action
as soon as the program begins to lose ground. The graph indicates the necessity of having pre-
planned schedule to provide a basis for monitoring, assisting, controlling and adjusting a
program when it deviates from the prescribed path.
A daily look at the graph, alerts the Project Manager and his home office to the possible
need for a radical action such as:
1. Manpower reallocation for elaborate re-scheduling or
2. For a speedy economic analysis of the whole project to determine whether extra
manpower or two shift operation may be necessary.
A periodic visit to the construction site is necessary for the various members of the
central construction department staff to audit the program so that:
 1. A first-hand review of the progress is made and the general status of the work is
compared with the timetable and discussed with the key field supervisory staff.
2. Home office assistance is offered to the field superintendent in pushing particular
phases of the project that may be held up in such areas as drafting of procurement.
3. Suggestions are made and discussed with the field organizations as to how its
progress can be improved.

Discussions and review of construction problems at the site assures a clearer

understanding of the work status for the following actions
1. Alternate solutions may be reviewed
2. Exchanging ideas for a better solution
3. To implement results as agreed in the meeting
The site review, gives everyone an opportunity for a general discussion of ideas and
techniques on concurrent construction work. The best pre-planning approach requires a constant
attention to a construction project. Above all pre-planning should be flexible enough to give it a
chance to adjust quickly and radically at any time when it be necessary.
3-6 Preliminaries and Site Management
After a contract is awarded, the contractor has to:
I. Determine the key personnel to supervise the work
2. Make provisions for the equipment to be used.
3.Determine the location and methods of erecting temporary structures such as:
a. Job offices
b. Storage sheds
c. Workshops
d. Roadway, etc
e. Bank house for workers and facilities.

The layout of these structures should be planned carefully, in anticipation of its removal during
the excavation of the permanent works more particularly, the storage and its contents, which
might cause disorganization and delays.
The job should be adequate, but not excessively staffed, to ensure efficient execution of
the work. Large construction work needs competent foremen. The contractor must be selective in
sending men of proven ability and qualification to start the work even if they are replaced later
by selected personnel engaged locally
The construction site should be maintained in strict tidiness and in an orderly routine
because it has a psychological effect on the staff and workers, which promote conscientious
service. Remember that the owner would like to see the actual work getting under way in its
fullest operation and orderliness in carrying out the construction work, idle time and unnecessary
cost should be avoided. Time saving devices such as telephone, loudspeakers, signal posts,
traffic control, sign board location and other economy measures should be installed immediately
upon commencement of the work. Before the work get started, it should be first established from
which the buildings may be demarcated on the ground.
The excavator with his equipment should start cleaning, stripping and digging operations.
Material deliveries should also start as soon as possible and a labor force started the excavation
for the foundation work, etc. If all these operations get under way without undue delay, the job
will have a healthy aspect, high morale and satisfaction of all concerned from the owner to the
contractor and down to the lowly laborers.
The contractor should procure sufficient copies of the plan and specification to distribute
among his supervisory staff. This will thoroughly acquaint them with the details of the job.
Likewise, the sub-contractors and consultant should be furnished with the plans and
specifications so that, there is no excuse for mistake and delay on this account.

Preliminaries in Organizing a Construction Job

Project undergoes series of stages which includes:
I. Planning
2. Execution of major activities
3. Project phase out

Project construction life cycle requires various requirements such as:

1. The site must be found and boundaries relocated
2. Plan must be drawn.
3. Plan must be approved by the owner
4. Building permit must be secured
5. Succession of personnel follows
 Succession of personnel is the rotation of personnel who will be doing different kinds of
job according to their specialties.
For instance:
1. Those doing the site relocation and preparation, and laying of foundation.
2. Erecting the foundation and column, floor and roof framework.
3. Constructing walls and partitions
4. Plumbing and water supply connections including drainage system.
5. Mechanical equipment
6. Electrical and communication wiring system
7. Installation of kitchen, bathroom fixtures and appliances.
8 Interior finishing work
9. Doors and windows
10. Fainting and varnishing, and other finishing works.

The main objectives in the preliminaries of organizing a construction job are:

1. To secure the necessary licenses and building permits
2. Prepare a time and progress chart.
3. Have an access to the site or a temporary roadway.
4. Construction of boarding, fences, and temporary shed.
5. Construction of temporary field offices for the staff.
6. Arrangement for canteen facilities.
7. Cleaning and leveling the site,
8. Demolition of existing structures
9. Disposal of materials obtain from the demolition
10. Shoring to adjoining structures
11. Arrangement for temporary water and electric supply
12. Allotment and preparation of storage space for use of contractor and sub-contractors
13. Allotment of space for borrows pits or other sources of fill to be brought in.
14. Provision for drains and soak-ways.
15. General site problems including any special features.

Organization of the Work

Organization of the work, consist of making proper assignments and sequence of the
works in a systematic order aimed at making the best use of labor, materials and time. The
organization of the work is the responsibility of the contractor under the direction of the
supervising Architect or Engineer.

There are two independent but related spheres of control and responsibility that exist in
the project construction, namely
1. The owner is represented by his Architect or Engineer
2. The contractor
Each has their own duties to perform in the interest of their employer - the owner. Most
of their respective duties and responsibilities were stipulated and defined in the contract, and all
will be better exercised if each one appreciates the duty and responsibility of the other. The
contractor is generally responsible to the owner for the following duties;
1. Providing and making access roads with due regards to the convenience of construction.
2. Erection of site office in a central position to facilitate checking of all site activities.
3. Erection of store shed of adequate capacity to ensure;

a. Protection of materials against damage

b. Protection of materials against deterioration
C. Prevent materials from wastage and pilfering
4. Construction of temporary quarters and ancillaries for labor with due regard to site of works,
amenities and hygienic conditions.
3. Appointment of supervisory staff possessing technical
knowledge and capable of controlling the work and labor
6. Early arrangement for construction equipment
a. Scaffolding d. Ladders
b. Formwork e. Tools
C. Instruments and machinery with necessary screw. fuel and parts etc.

The Engineer or Architect on behalf of the owner is also responsible for the following duties.
1. As representative of the owner
a Act as interpreter of the plan
b as guardian and arbiter between the owner and contractor
2. Maintain site records and documents like:
a. Layout plans
b. Contract documents
c. Time and progress chart
d. Work diary
e. Contractor's order book
f. Records of tests
g Progress report
h Measurement book, etc.

3-7 Planning Program and Progress Chart

The most important part of the works organization are:
1. The preparation of a comprehensive time and progress chart for the execution of the work.
2. The periodic revision of the chart as circumstances demand, and the regular comparison of
progress chart made with the program.
The project manager is required to prepare an approved time and progress chart. which is
generally part of the main contract documents.
1. The time and progress char must show an analysis of the chief elements and types of
construction involved in the project.
2. The scheduled dates of commencement and completion of every stage of the main contract
and of sub-contracts.
Without proper program, the construction work can be disorderly managed, the time and
progress charts serve as the coordination and control of all the work under the different sub-
divisions of the contract. With this time and progress chart it is easy to pinpoint where the delay
has occurred, and who is responsible for the delay.
Likewise, because of a clear definition of the dates, all parties concerned have to assume
their tasks making much easier for the contractor to finish the job on time Besides of being the
standard requirement, the chart, automatically shows and offer the following information:
1. The sequence of operations
2. " The target time and date for their completion
3. The rate of which they must be carried out
4 The owner's staff and the contractor's staff should be familiar with the information
given in the chart and should constantly strive to carry out the work according to the
projected rate of accomplishment.
5. If some operations are to be done by sub-contractors, they should be notified in
advance and given a clear understanding of what exactly is expected from them.
6. The chart also tends to prevent changes in design and layout with consequent delays
and increased in cost. It also provides essential information regarding labor, materials
and plant requirements.
From this program, the owner can be furnished with particulars of the likely financial
requirements during the period of construction, and will be able to coordinate his program for
ringing the scheme into use.

3-8 Maintaining Time and Progress Chart

The making of time and progress chart is a matter of trial and error. It requires
consideration of alternative methods and the effect of each event, resulting in an orderly
arrangement of event and an ultimate savings of time and cost.
The chart should be flexible so as to permit modifications to meet unknown
contingencies that may arise. It will enable those in-charge of the work to see the effect of the
contingency. It will be on subsequent operations and to make the necessary adjustments to bring
the program back into line.
The chart is divided into many horizontal spaces as are required for the major operations
of the job. The vertical columns provide space for:
1. A description of the items
2, The target date for letting the sub-contract or purchase order.
3. Anticipated starting date, the expected completion date and sufficient number of monthly
columns to cover the total time for completion.
4. One or two extra columns for the possible over-run.
After the form is drawn up, the next step is to complete the description column in
approximately the same order as the operations will take place on the site, except that operations
belonging to the same trade or classification of work which should be grouped together
regardless of the time when they will be executed, and the mechanical trades are entered last.
The target dates for buying materials should be worked back from the starting date and
time allowance for the operations requiring shop drawings and fabrication. The progress is
shown in green color for on time, and red for behind schedule.
The ideal chart shows the progress line green throughout the contract period, On large
project, a separate chart is provided showing a date of delivery and a date of using up of all
principal materials and laborers of each category employed on the main contract and of the sub-
contracts.
The time and progress charts is kept up to date so that when the Owner or the Engineer
visit the site, they could see a true comparison between the actual progress against the scheduled
program. Within the first week of each month, the contractor shall forward to the engineer or
architect a progress report showing particulars of the work done in workshop and on the site, also
giving the present position, the rate of progress, estimated time of completion and hold-ups for
the delay if any.
3-9 Planning and Scheduling with Gantt Chart
The Gantt chart is a tool used for planning and scheduling simple projects. With the
chart, the project engineer can initially schedule project activities, and to monitor progress over
time by comparing planned progress to actual progress.
To prepare the chart, the project manager has to identify the major activities that would
be required. Estimates for each activity are made and the sequence was determined. Once
completed the chart indicates which activities were to occur including their planned duration, and
when they were to occur.
As the project progresses, the project manager would be able to see which activities were
ahead of schedule and which activities were delaying the project. This will enable the project
manager to direct attention where it was needed most to speed up the project to catch up with the
schedule.
 The advantage of the Gantt chart is its simplicity, making it very popular. Gantt chart
however, fails to reveal certain relationships among activities that can be crucial to effective
project management. For instance, if one of the early activities would have to be delayed, it is
because they could not start until that activity was completed. Conversely, some activities may
be delayed without affecting the overall project schedule.
A Gantt chart does not directly reveal this information. Gantt charts are useful for simple
projects where activities are simultaneous or where a string of sequential activities are involved.
On a more complex projects, Gantt chart can be useful for initial project planning, which then
gives way to the use of networks called PERT and CPM which will be discussed in Chapter 4 to
Chapter 8.
3-10 Material Supply
The buying of materials is an important activity in all construction works. The contractor has to
determine his material requirements and scheduled the sequence of its deliveries. There are items
which requires time for the preparation of shop drawings and fabrication before installation.
Hence, the list of material requirements from the bill of quantities should be made without delay.
 The contractor should refer the material quotations received at the time of preparing his
bid for the job which can be used as the basis of negotiations with the suppliers. A large number
of quotations may be obtained from the suppliers, and to facilitate their analysis, a comparative
statement should be made for each classification of the quotations received, listing along with the
price any conditions by which may be qualified.
A purchasing program for construction materials should be prepared according to its
priority. In the absence of this purchasing program, the materials are likely to arrival at the site
either, too soon with consequence of prolonged storage and possible deterioration or too late
deliveries which will cause undue delay of the work
Confusion usually results from delay and shortage of materials of day-to-day
requirements if they are ordered at the eleventh hour. The purchasing program will facilitate the
withdrawal of materials and ensure prompt delivery by the supplier because of the planned
schedule of deliveries. Purchase orders are prepared In triplicate, with original going to the job
site. A purchase or- der form should contain all the information such as:
1. Description of the materials
2. Quantities required
3. Time and place of delivery
4. Unit price
5. Amount
The purchasing clerk of the contractor must have experience in identifying the variety of
materials and supplies in general demand for construction work including the trade names, the
quality and local practices that govern the prices.
He must work in close liaison with the contractor's staff who prepare the details of
requirements to meet the work program. He should work in conjunction with the storekeeper at
the site regarding the chasing of deliveries where suppliers fail to comply with their
commitment.

3-11 Financial and Budgeting

Money is a universal lubricant, which keeps a business enterprise dynamic. Without
sufficient financing, a business cannot get started. And without adequate budgeting, a business
once started cannot reach its full potential.
The business must have sufficient capital structure to sustain. its growth. It also needs a
sound profit plan or budget to support and control its day-to-day operations. Thus, a healthy
construction company is one, which has sufficient resources and the capability of controlling its
cash flow.
 Construction business requires sufficient funds to cover its operation to maintain
equipment, purchase of materials and sup lies, to pay salaries and wages, to cover storage fees,
transportation and reserve for other services including SOP. These are current operations where
the funds to cover them are called working capital.
Profit Motive. In a competitive construction business, the profit motive is a predominant
factor of considerations for upon it may rest the justification for and in fact the very survival of
the company. No one feels secure about investing in or doing business within a venture that
appears to be skidding downward
The Budget. The budget is the long-term responsibility of management to use investment
that will yield the largest possible profit and it is the function of budgeting to plan that profit
profile.
A budget is a means toward an end, not an end within itself. Budget was made to serve a
purpose. They established goals wherein each department and its workers must contribute their
designed share in accordance with the unified plan. The budget must lead to precision and
confidence among the employees under the following principles:
1. A department head knows what was laid out for his department to accomplish.
2. He knows what is expected of him.
3. He knows when he has done a good job or when and where he is falling behind. With
this, much of the worry of uncertainty is eliminated.

Budget should be a conservative aid to all departments within the organization toward
their common goals. Unfortunately, this purpose is frequently misunderstood, giving an early
impression and meaning to the budget as:
1. A control of expenditures established in the minds of the subordinates. An attitude that
budget is only a negative control for which belief has led to the "padding" of department
budget.
2. The idea therefore in each department is to propose as large an allotment of expenditures
as possible that when all budgets were assembled and that reduction is necessary, each
department felt that it was the subject of discrimination. Thus, the budget has become a
"sore spot" and a factor of disintegration among the personnel.
A budget properly planned and operated, may have a constructive influence on the
personnel of an organization. It must serve as a means of bringing understanding of the common
goals of all who belong to the organization, and all who serve it. In this capacity, the budget will
serve as a coordinating and unifying influence to all concerned.
Types of budget. There are two principal types of budget.

1. The static or fixed budget

2. The variable or flexible budget

Static Budget. This type of budget depends upon the ability to predict income with at least a
reasonable degree of accuracy. A fixed sum of money is allocated for expenditures with a fixed
budget of operations for a specified period.
Variable Budget. This type of budget, recognizes the unreliability of income prediction and
make provisions in advance for variations in construction expenditures in accordance with
variation in income. Variable budget is constructed in anticipation of variables income. It
provides advance for orderly change in the volume of construction and expenditures.
Fixed Cost is one that is constant in total amount for a given period. For example: the salaries of
major executives, capital tax, depreciation and the like, remain fixed regardless of the volume of
construction activities.
Variable Cost increases or decreases in proportion with the volume of production or
construction activities. Other items such as direct labor and direct material cost vary in
proportion with the amount of contract which are called variable costs.
In general, simplicity in budgeting should be held as a primary virtue. Detailed clerical
work in the preparation and operation of a budget should be held to a minimum. These principles
not only eliminate unnecessary costs in budgeting but in general, promotes clearer interpretation
and control of the budget
There are two types of variable budget:
1. Step budget
2. Variable rate of cost per unit of work

Step budget is a series of budget set up at different level of construction volume or

contract. This is anticipated on variations in volume where changes in cost will occur such as
additional shifts, building and supervisory personnel
Variable rate cost is calculated as an average rate between two points of minimum and
maximum construction operations.
3-12 Budget Preparation
The preparation of budget estimate in each department is a committee proposition. This is
under the principle of participation as a means toward cooperation. Participation in the
preparation of a budget serves to familiarize the personnel with the problems involved.
With their knowledge of the problems and the feeling of being part in setting the goal and
limitation of the department, the personnel give more effective consideration and cooperation on
the budget preparation.
The head of the department may act as the chairman of the details for the within his own
department for the preparation of the budget that company as a whole. department committee,
but in no case of a large department, He should delegate responsibility for the gathering follows
the general patterns of the budget organization for the committee. In other words, he should have
an organization within his own department for the preparation of the budget that follows the
general patterns of the budget organization for the company as whole
This organization will not only lead to a better budget preparation but will also serve as a
mechanism for budget control.
The Financial Budget
Financial budget represents a summary of the anticipated income and disbursement for
the budget period. The purpose is to plan for the allocations of working capital as presented by
the current assets of the company. Data for financial budget are derived from the budget as
prepared by the different department. The financial budget must anticipate the cash receipt by
months, quarter or other designated period and make allowance for the raising of additional fund
if needed to meet the current expenses. This means that income from accounts receivables, notes
receivables, cash transaction and others, must be budget as accurately as possible.
Expenditures may be planned in consideration of the following:
1. The absolute necessities of the budget of various department such as weekly or monthly
requirements of materials for construction, payroll etc.
2. Limitation of available cash.
It is not considered a good management to have large amount of cash lying idle to meet
unusually large expenditures.
The interest being paid for such idle money has to be considered. There are many
problems arising out of attempted control of working capital, but these problems must be
anticipated and alternatives are selected to meet them. Short-term loan is availed of whenever
there is large construction contract. Financial budget acts as a negative control over other
department, especially when capital is limited but urgently needed in time of rapid construction
where additional capital and equipment is necessary. In most instances, financial budget provides
a systematic and positive approach towards the attainment of the coordinated plans and divisions.
3-13 Procurement Processes
In project construction, the importance of the procurement liability for getting the right materials
delivered from the suppliers to the site on time, cannot be taken for granted. A minor item or low
value material not available when needed can stop the construction activities, put people out of
work and delay of completion. For instance, in the absence of a common wire nails carpentry
work activities could be paralyzed. In general, the purchasing agent is made responsible for
maintaining the following major procurement factors:
1. Quality of the materials
2. Quantity of the materials
3. Time of delivery
4. Price of the materials

The procurement department and his agent are expected to:

1. Know and maintain records showing the materials and their possible substitute, sources
of supply, prices and quantities available.
2. Review specifications for possible simplifications and standardization of materials as for
unreasonable requirements.
3. Negotiate with suppliers for possible extension of credit.
4. Gather and analyze price quotations and fluctuations.
5. Place orders with suppliers
6. Follow up purchase orders for delivery as specified
7. Audit invoices to check compliance with agreed terms and conditions
8. Maintain records of all purchases
9. Coordinate with other departments on all matters pertaining to procurement.
The prerequisite of any purchasing contract is meeting of the minds as to the exact nature
of the materials required and to be furnished. Material standard which defines the major
requirements such as; size, color, forms, composition, performance of the materials and also the
state acceptance terms and shipping conditions requires purchase specifications. There are
materials which are purchased by catalogue number, description or by its name. This practice is
practically simple but because of specifications of branded catalogue items are often subject to
change
Purchase order usually starts from a purchase requisition, It specifics the kind, quantity
and when is to be delivered. Purchase requisitions are serially numbered as an aid in filing and
follow up. For items ordered regularly, a traveling requisition 's used. This is a card carrying the
usual information on the purchase requisition but with space for the word "repeat order. This is
used over and over again without the retrying data. This procedure, eliminate clerical works and
the need for a separate purchase history record.
 Materials bought under continuing contract or those purchased repeatedly do not require
quotations from the supplier since all the necessary information is already available to both
parties. In case of repeat order, the purchase order form might include the phrase "as previously
furnished on our PO No_____. The unit price and discount expected will likewise be shown as
with the purchase order number and that of the original requisition
3-14 Inventory Control
Effective inventory control is aimed at providing an adequate but not excessive supply of
materials at hand at all times to meet operating requirements, However, for most companies
inventories perform two functions:
1. They act as safety stock of materials or in effect, short term insurance against fluctuations
in supply.
2. Inventories permit a company to operate with disconnected processes in the construction
and disbursement cycle

3-15 Site Management of the Work

Safety in the project construction must be given primary considered from the mechanical
side to the legal angles of workmen's compensation or even as a matter of training and
motivation toward safe work practices for workers.
The immediate supervisor's responsibility is to see to it that the working place is properly
arranged and maintained wherein the equipment, scaffoldings and the like are all in safe
operating conditions. He should strictly see to it, that all workers do follow the safe working
habits.
Regardless of the exact percentage relationship, influencing human motivation to work
safely is an important responsibility of the foreman and supervisors. Safety must begin from the
drawing board. In the original design of the layout of work place or tools, accident hazards may
be built in or eliminated. A safety minded project engineer will make adequate provisions for
safety measures to:
1. Minimize manual handling hazards of materials.
2. Will locate control and fuse panels where they can be reached safely.
3. Will install strong and rigid forms and scaffoldings
4. Will insulate all live wires and screen high pressure areas
5. Will adequately guard belting and line shafting even if it is normally accessible
The safety minded engineer is one representative of management whose interest is
primarily on safety. In addition to accident prevention, a complete safety program has to do with
promotion of workers health, with prevention of such occupational diseases and fire prevention.
Fire protection as safety function, is highly important for some of the materials being used might
be flammable.

3-16 Planned Maintenance

Effective maintenance of the plant and construction equipment is a prerequisite to
efficient operation and uninterrupted construction activities. While deterioration of building
cannot be stopped, it can be retarded by maintenance.
Machine and equipment likewise, are subject to wear and tear from use. Machine tend to
get out of adjustment not only as the result of use, but also because of temperature changes,
vibration, seasoning of machine parts and a host of other causes.
Time is likewise a factor as corrosion forms in bodies and on various vital parts of the
machine. Dirt gradually finds its way into many types of equipment. Moisture seeps into
electrical windings and breaks down insulation. To counteract the effect of all these inherent
diseases, in equipment, the only wonder drug that could be prescribed is proper periodic
maintenance.
Planned maintenance is an organized attempt to prevent sudden breakdown in equipment
and periodic shutdown for repairs. It is accomplished under the program of preventive
maintenance, a definite program of periodic cleaning, servicing, inspection and replacement of
worn parts.
Preventive maintenance has long been an economic necessity for construction equipment which
must operate on a continuous process. When failure does occur, investigation is made to know
the cause, and statistical records are kept to indicate whether or not the preventive maintenance
program is effective and working. Maintenance for the machine and equipment is very costly.
Continuity of operations demand that the following general procedures should be carried out:

1. Down time of each equipment for servicing is planned in advance.

2. Important items of equipment that requires regular cleaning and maintenance or liable to
sudden failure should be ready at hand for substitution at any time of failure or signs of
approaching failure.
3. Records should be maintained and analysis made of repetitive failure.
4. Regular and prescribed inspections should be made for signs of impending failure,
 A number of engineers feel that in the long run, the cost of regular inspections of
equipment exceeds the cost of failures that are hereby prevented. They pointed out, that many
break downs occur suddenly and without warning. Hence, predicting the approach of such
failures is statistical improbable.
How does one foresee a fractured drive shaft, a sticky hydraulic valve, a limit switch that
suddenly fails to operate a transformer that blows up? These are only few of equipment
breakdown headache which are difficult if not impossible to cure by the inspection medicine.
Thus, every case of preventive maintenance inspection must be weighed on the balance scale of
cost. The question is: does an ounce of prevention really affect a pound of cure, or does a pound
of prevention result in only an ounce of cure?
Where machine and equipment have been in operation for a considerable period of time,
records of the timing and extent of failures are available. Knowing the probability of breakdowns
and their associated costs, the expected expenses of different maintenance policies are calculated.
Preventive maintenance program is indicative of the value of calculation, which revealed the
interval between overhauls that minimizes. maintenance costs. Economic reasoning frequently
must bow to other considerations. On some items of equipment, failure is prohibitive from the
standpoint both of property damage and of employee safety. The frequency of inspections will
depend upon the nature of the facility or item being checked, its importance to the continuity of
operations or to the safety of the plant and workers and the time interval from the first indication
of trouble to the actual failure. General inspection of machinery can be scheduled at intervals of
perhaps 3 to 4 months depending upon the volume of service or operations.
Equipment Rental
The trend in construction business is to have equipment rented. In very recent years, there has
been a significant swing toward the rental of equipment as opposed to outright purchase. This
trend has found particular favor in rental plans for construction equipment, delivery trucks,
materials handling trucks and office equipment.
Renting equipment offers the advantages of no capital out-lay, no maintenance or
servicing worries for the user, and rental cost filly deductible on income tax classified as current
business expense. Whether the long-range cost of such rentals compared with ownership is lower
is a debatable point which each company must decide on the merits of its own case.