1.1 Project and Contract
The promoter of a capital
project invests money in the realization of that project in order to either
provide a service or to product goods. The project is conceived and developed to meet a predicted demand of the service or goods.
Return obtained:
-benefit to the users.(hospital,motorway)
-profit to the investors
-provide statutory service and make a small profit.(power station)
The promoter will
employ specialists to design and manage the development of the project.
Architects,land agents, and engineers are but three of the disciplines involved.
The promoter may also
enter into a legal agreement or contract with a contractor, or a number of contract, for the construction of the project.
The promoter may also, therefore,
be called the client or employer.
He is concerned with the
flow of money to and from the project-the project cash flow-throughout the life of the project from its conception to the end of some defined period of operation, a period that may extend over many years.
1.2 The stages of a project
The three distinct stages of a project :
1. Appraisal
2. Engineering
3. Operation
Appraisal. Demand for a service or product must be explored, the location and size of the plant or building defined, and the cash flow predicted. A large number of variable factors need to be considered. (multitude of political and environmental aspects).
Throughout the appraisal stage the promoter is not commited and can abandon the project at any time having incurred relatively modest expenditure. This situation changes at sanction, when a scheme evolved from all appraisal studies is approved.
Engineering. The whole of the engineering phase is governed by the decision made by the promoter when sanctioning the project. Design will normally be undertaken by the promoter or his consulting engineeer in an office remote from the construction site. A substantial amount of information, in the form of specification and drawings relating to the work to be completed in each contract, must be generated by the designers and included in the documents issued to tendering contractors so that they may compile and submit a realistic price for work.
1.3 Organization of the construction industry
The construction industry is involved in 3 basic types of work, each with diffrent and distinct charateristics and,consequently, with substantial differences in the organization of work and in contractual relationships.
Building work is frequently repetitive and generally above ground level with structural safety and aesthetic considerations tending to dominate the design process.
Civil engineering is mainly concerned with roadbridges, railways, tunnels, marine structure, and water works. Each project is normally a unique design, and the emphasis on control of water and on working below ground level implies that there may be a great element of risk and uncertainty. The promoter will normally engage a consulting engineer who is expert in the particular type of construction. It is normal for this engineer to undertake all design work, to supervise the working of the contractor(s), and to manage the realization of the project. The contractor is then employed (as in building) only to construct the works.
Process plant erection is the third branch of the construction industry. Here the promoter will normally be expert in the design and operation of the plant and will frequently undertake both the basic design and management of the project. The contractor will then be responsible for detailed design, manufacture, site fabrication, and erection of the plant units. The contract may require that the plant offered and erected by the contractor shall achieve a specified operating performance. Much of the site work is repetitive,e.g.,erection and lagging of pipework, and is labour-intensive.