Construction Process [6 Hours]

6.1 Site Surveying and Preparation 20752072

Construction work involves a huge amount of money, different types of human resources and time. Construction work is different from each other because of construction site, even when design and drawings are the same.

Temporary services are necessary to execute construction work: temporary offices, electricity, telecommunication, roadways (access road), drinking water, sanitation system, etc. Spaces should be allocated for heavy and costly equipment for their safety. Disposal of debris should also be considered.

Site Surveying 2075 2072

An inspection of an area where work is to be done to gather information for initiating construction work. It establishes reference points and marks that will guide the construction of structures. It can determine precise location, size and orientation of obstacles.

Equipment used: Levels, Total Station, Theodolites, Electronic Distance Measurement (EDM), GPS with computerization.

Elements of Construction Survey:

• Existing conditions of the site, including topography, existing buildings, and underground infrastructure
• Measuring invert elevations and diameters of sewer/manhole points
• Setout reference points and markers to guide construction of new structures
• Verify location of structures during construction
• As-Built Survey: A survey conducted at the end of the project to verify that work is completed to specifications on plans

Construction Site Preparation 2075 2073 2072

The preliminary works to be done before starting construction. The site needs to be completed properly before the start of the construction process.

Factors to be considered:

• Remove all scrubs or jungle on the site
• Roughly level the whole area
• Cut trees and totally uproot them as directed
• Establish permanent benchmarks at suitable points
• Lay out orientation and trench lines of the building
• Set out locations for storage and stacking of materials
• Fix position of site office, godowns, guard sheds, and parking facilities

6.2 Job Layout 208120802079207820772075207320712069

Facility Layout is simply how a facility is arranged to maximize processes that are not only efficient but effective towards the overall organizational goal. The specific requirements of a construction job — man, material, and machine — must be controlled and placed at a site in such a manner that:

• Machines are placed in the most advantageous position
• Materials are placed/stored near the place of their utilization
• General site circulation to manpower is orderly and their site accommodation is available

Objectives of Layout Decision 2081 2080 2079 2078 2077 2075 2073 2071 2069

Ensure smooth flow of work, material, people, and information. Effective layouts also:

• Minimize material handling costs
• Utilize space efficiently
• Utilize labor efficiently
• Eliminate bottlenecks
• Facilitate communication and interaction between workers and supervisors
• Reduce manufacturing cycle time and customer service time
• Eliminate wasted or redundant movement
• Facilitate entry, exit, and placement of material and products
• Incorporate safety and security measures
• Promote product and service quality
• Encourage proper maintenance activities
• Provide a visual control of operations
• Provide flexibility to adapt to changing conditions

Primary Factors Affecting Job Layout

1. Nature and type of work: Every construction project is unique. Job layout for headworks in hydropower differs from building construction.
2. Access to the site: Facilitates transportation of construction materials and equipment at minimum cost.
3. Nature of ground: Solid ground needed for equipment fixing and movement.
4. Temporary roads: Must be constructed from nearest road head to site before starting construction.
5. Construction methods: Precast/prefab needs extra casting yard; cast-in-situ does not.
6. Construction material: If available naturally near site, no need for extensive storage planning.

Secondary Factors

1. Accommodation for administration and residences
2. Medical facilities
3. Communication facilities
4. Availability of services
5. Opportunity for expansion
6. Other external factors (political, cultural, socio-economic)

Practical Considerations for Job Layout

1. Access to site: Separate entrance and exit. Track within site for easy movement.
2. Storage of material:
   • Cement bags: minimum 15 cm above ground, covered with waterproofing material, 30 cm away from wall, use earliest arrival first
   • Bricks, tiles, concrete blocks: stacked on level ground, height should not exceed 2m
   • Aggregates: stored on hard surface in stacks (dimension ~2m × 2m × 0.5m)
   • Inflammable materials: stacked separately, protected from ignition
   • Explosives: kept in a safe place
   • Re-bars: kept away from moisture to prevent rusting
   • Timbers: stacked in well-ventilated sheds
   • Heavy items: stacked away from trenches
3. Location of machinery:
   • Equipment should be kept near the material and place of use
   • Temporary shed for weather protection of costly equipment
   • Provision for fuel, lubrication, and maintenance
   • Adequate space for erection, removal, and shifting
   • Adequate parking facility
4. Office location: Main office near the entrance.
5. Security checkpoints: Located so materials/equipment cannot leave without proper authorization.
6. Accommodation: For site manager, technical personnel, guards, and laborers.
7. Miscellaneous: Drinking water, telephone, fencing, hoarding board.

For preparing a good job layout, the following records should be studied: site plan, working drawings, specifications.

6.3 Material Handling System 207420732072

Material Handling is concerned with solving the pragmatic problems involving the movement, storage, control and protection of materials, goods and products throughout the processes of cleaning, preparation, manufacturing, distribution, consumption, and disposal.

The focus is on the methods, mechanical equipment, systems and related controls used to achieve these functions.

Key Points of Material Handling 2074 2073 2072

• Materials are of various nature — some need to be stored under roof, some in open area, and some need to be stored very carefully as they are volatile and dangerous
• Materials are stored in such quantity that can run up to the day on which material can be delivered to the site from the date of order
• Indent forms are used to get material at the site. The indent is kept in a book form with page numbers
• The indenting officer fills the indent form and sends it with a blank invoice to the issuing officer (in charge of stock)
• The issuing officer checks quantity available, corrects if needed, and sends corrected invoice to demanding officer
• The receiving officer signs invoices and sends back as acknowledgment of receipt

6.4 Financial Management & Cash Flow 2079207820772075207420732072207120702069

Financial Management 2072 2070

Financial management in construction involves planning, organizing, controlling, and monitoring financial resources to achieve project objectives within the approved budget.

Types of Finance:

• Personal Finance: Individual manages money for himself
• Public Finance: Management of money within government
• Corporate Finance: Money management within a construction business

Financial managers are responsible for acquiring funds needed by a firm and directing those funds into projects that will maximize the value of the firm to its owners. They must determine best sources of financing and allocate resources among competing investment alternatives.

Cash Flow Management 2079 2075 2074 2073 2072 2070

The process of monitoring, analyzing, and adjusting a business's cash flows. It is a key component of a business — planning future cash requirements to avoid a crisis of liquidity.

Cash is the most important current asset for operations of the firm. It is an idle and non-earning asset. Therefore, the firm should keep just sufficient cash, neither more nor less. More cash balances reduce the rate of return on equity and hence reduce efficiency.

Cash Flow Components

Three components in the product lifecycle costing:

1. Initial Investment

The relevant cash outflow or cost of setting up the project.

2. Operating Cash Flows

The relevant cash inflows and outflows resulting from the project's life.

3. Terminal Cash Inflow

The relevant cash inflow occurring at the end of the product lifecycle on account of project liquidation.

Contractor's Construction Budget Breakdown

The project plan in the form of the master budget, which includes the profit and loss statements, balance sheet, and cash flow forecast. Budget shows allocated resources, schedule of work, and capital expenditure.

S-Curve

A graph showing cumulative earned value and cumulative production costs of a project over time. The gross operating profit = revenues - total cost of production. Revenue is the time-related cumulative value of earned production.

Cash Flow Forecasting of Contractor 2077

Even though regular and interim payments are made as per contract, both client and contractor sometimes face liquidity problems. Shortage of funds affects project progress and can lead to work stoppage.

The project funding pattern is determined by making a cash flow forecast that predicts the monthly net effect of cash inflow and outflow.

Cash Flow Diagram of Contractor 2071 2070

The cash flow diagram defines sources from which contractor receives funds and how they are utilized:

Key relationships:

• V - C = Contract margin (difference between earned value and production cost)
• N = R - E = Net cash flow (difference between revenue and expenditure)
• Negative net cash flows represent the capital lock-up

A contractor uses this graph to prepare financial statements periodically. Client cash flow study forecasts the extent of funds required for meeting payment commitments. Contractor's cash flow forecast is more complex, catering to all inflows and outflows including working capital, equipment, material purchase cost, inventory cost, manpower mobilization cost, temporary works, and utility installation.

Effect of Mobilization Advance on Cash Flow 2078

Mobilization advance (typically up to 20% of contract price as per PPA/PPR) significantly impacts the contractor’s cash flow:

• Reduces initial capital lock-up: Without advance, the contractor must fund all initial costs (site mobilization, equipment, materials, labor camps) from own capital or loans. With advance, cash inflow starts before work begins.
• Shifts the Net Cash Flow (N) curve upward: The early cash injection means the Revenue (R) curve starts above zero from the beginning, reducing or eliminating the negative cash flow zone.
• Reduces borrowing costs: The contractor borrows less from banks, saving on interest charges.
• Enables faster mobilization: With funds available upfront, the contractor can procure materials and mobilize equipment quickly, leading to faster project start.
• Recovery mechanism: The advance is deducted proportionally from every running bill (IPC), so the cash flow gradually normalizes as the project progresses. Typically, recovery starts after 20% of work is complete and is fully recovered by 80% completion.

Balance Sheet 2069

A balance sheet is a financial statement that reports an organization’s assets, liabilities, and shareholders’ equity at a specific point in time. It provides a snapshot of the financial position of a business.

Fundamental equation:

Assets = Liabilities + Owner’s Equity

For a construction contractor, the balance sheet helps assess financial health — whether the company has sufficient assets to cover its liabilities, and whether it has adequate working capital (Current Assets − Current Liabilities) to fund ongoing projects.

Important Things to Consider