The acquisition of a constructed facility usually represents a major capital investment, whether its owner happens to be an individual, a private corporation or a public agency. Since the commitment of resources for such an investment is motivated by market demands or perceived needs, the facility is expected to satisfy certain objectives within the constraints specified by the owner and relevant regulations. With the exception of the speculative housing market, where the residential units may be sold as built by the real estate developer, most constructed facilities are custom made in consultation with the owners. A real estate developer may be regarded as the sponsor of building projects, as much as a government agency may be the sponsor of a public project and turns it over to another government unit upon its completion. From the viewpoint of project management, the terms "owner" and "sponsor" are synonymous because both have the ultimate authority to make all important decisions. Since an owner is essentially acquiring a facility on a promise in some form of agreement, it will be wise for any owner to have a clear understanding of the acquisition process in order to maintain firm control of the quality, timeliness and cost of the completed facility.
From the perspective of an owner, the project life cycle for a constructed facility may be illustrated schematically in Figure 1-1. Essentially, a project is conceived to meet market demands or needs in a timely fashion. Various possibilities may be considered in the conceptual planning stage, and the technological and economic feasibility of each alternative will be assessed and compared in order to select the best possible project. The financing schemes for the proposed alternatives must also be examined, and the project will be programmed with respect to the timing for its completion and for available cash flows. After the scope of the project is clearly defined, detailed engineering design will provide the blueprint for construction, and the definitive cost estimate will serve as the baseline for cost control. In the procurement and construction stage, the delivery of materials and the erection of the project on site must be carefully planned and controlled. After the construction is completed, there is usually a brief period of start-up or shake-down of the constructed facility when it is first occupied. Finally, the management of the facility is turned over to the owner for full occupancy until the facility lives out its useful life and is designated for demolition or conversion.
In the United States, for example, the U.S. Army Corps of Engineers has in-house capabilities to deal with planning, budgeting, design, construction and operation of waterway and flood control structures. Other public agencies, such as state transportation departments, are also deeply involved in all phases of a construction project. In the private sector, many large firms such as DuPont, Exxon, and IBM are adequately staffed to carry out most activities for plant expansion. All these owners, both public and private, use outside agents to a greater or lesser degree when it becomes more advantageous to do so.
The project life cycle may be viewed as a process through which a project is implemented from cradle to grave. This process is often very complex; however, it can be decomposed into several stages as indicated by the general outline in Figure 1-1. The solutions at various stages are then integrated to obtain the final outcome. Although each stage requires different expertise, it usually includes both technical and managerial activities in the knowledge domain of the specialist. The owner may choose to decompose the entire process into more or less stages based on the size and nature of the project, and thus obtain the most efficient result in implementation. Very often, the owner retains direct control of work in the planning and programming stages, but increasingly outside planners and financial experts are used as consultants because of the complexities of projects. Since operation and maintenance of a facility will go on long after the completion and acceptance of a project, it is usually treated as a separate problem except in the consideration of the life cycle cost of a facility. All stages from conceptual planning and feasibility studies to the acceptance of a facility for occupancy may be broadly lumped together and referred to as the Design/Construct process, while the procurement and construction alone are traditionally regarded as the province of the construction industry.
Owners must recognize that there is no single best approach in organizing project management throughout a project's life cycle. All organizational approaches have advantages and disadvantages, depending on the knowledge of the owner in construction management as well as the type, size and location of the project. It is important for the owner to be aware of the approach which is most appropriate and beneficial for a particular project. In making choices, owners should be concerned with the life cycle costs of constructed facilities rather than simply the initial construction costs. Saving small amounts of money during construction may not be worthwhile if the result is much larger operating costs or not meeting the functional requirements for the new facility satisfactorily. Thus, owners must be very concerned with the quality of the finished product as well as the cost of construction itself. Since facility operation and maintenance is a part of the project life cycle, the owners' expectation to satisfy investment objectives during the project life cycle will require consideration of the cost of operation and maintenance. Therefore, the facility's operating management should also be considered as early as possible, just as the construction process should be kept in mind at the early stages of planning and programming.
by Chris Hendrickson, Department of Civil and Environmental Engineering, Carnegie Mellon University, Pittsburgh, PA l52l3 Copyright C. Hendrickson 1998
First Edition originally printed by Prentice Hall, ISBN 0-13-731266-0, 1989 with co-author Tung Au.
Second Edition prepared for world wide web publication in 2000.
Version 2.2 prepared Summer, 2008.
From the perspective of an owner, the project life cycle for a constructed facility may be illustrated schematically in Figure 1-1. Essentially, a project is conceived to meet market demands or needs in a timely fashion. Various possibilities may be considered in the conceptual planning stage, and the technological and economic feasibility of each alternative will be assessed and compared in order to select the best possible project. The financing schemes for the proposed alternatives must also be examined, and the project will be programmed with respect to the timing for its completion and for available cash flows. After the scope of the project is clearly defined, detailed engineering design will provide the blueprint for construction, and the definitive cost estimate will serve as the baseline for cost control. In the procurement and construction stage, the delivery of materials and the erection of the project on site must be carefully planned and controlled. After the construction is completed, there is usually a brief period of start-up or shake-down of the constructed facility when it is first occupied. Finally, the management of the facility is turned over to the owner for full occupancy until the facility lives out its useful life and is designated for demolition or conversion.
In the United States, for example, the U.S. Army Corps of Engineers has in-house capabilities to deal with planning, budgeting, design, construction and operation of waterway and flood control structures. Other public agencies, such as state transportation departments, are also deeply involved in all phases of a construction project. In the private sector, many large firms such as DuPont, Exxon, and IBM are adequately staffed to carry out most activities for plant expansion. All these owners, both public and private, use outside agents to a greater or lesser degree when it becomes more advantageous to do so.
The project life cycle may be viewed as a process through which a project is implemented from cradle to grave. This process is often very complex; however, it can be decomposed into several stages as indicated by the general outline in Figure 1-1. The solutions at various stages are then integrated to obtain the final outcome. Although each stage requires different expertise, it usually includes both technical and managerial activities in the knowledge domain of the specialist. The owner may choose to decompose the entire process into more or less stages based on the size and nature of the project, and thus obtain the most efficient result in implementation. Very often, the owner retains direct control of work in the planning and programming stages, but increasingly outside planners and financial experts are used as consultants because of the complexities of projects. Since operation and maintenance of a facility will go on long after the completion and acceptance of a project, it is usually treated as a separate problem except in the consideration of the life cycle cost of a facility. All stages from conceptual planning and feasibility studies to the acceptance of a facility for occupancy may be broadly lumped together and referred to as the Design/Construct process, while the procurement and construction alone are traditionally regarded as the province of the construction industry.
Owners must recognize that there is no single best approach in organizing project management throughout a project's life cycle. All organizational approaches have advantages and disadvantages, depending on the knowledge of the owner in construction management as well as the type, size and location of the project. It is important for the owner to be aware of the approach which is most appropriate and beneficial for a particular project. In making choices, owners should be concerned with the life cycle costs of constructed facilities rather than simply the initial construction costs. Saving small amounts of money during construction may not be worthwhile if the result is much larger operating costs or not meeting the functional requirements for the new facility satisfactorily. Thus, owners must be very concerned with the quality of the finished product as well as the cost of construction itself. Since facility operation and maintenance is a part of the project life cycle, the owners' expectation to satisfy investment objectives during the project life cycle will require consideration of the cost of operation and maintenance. Therefore, the facility's operating management should also be considered as early as possible, just as the construction process should be kept in mind at the early stages of planning and programming.
by Chris Hendrickson, Department of Civil and Environmental Engineering, Carnegie Mellon University, Pittsburgh, PA l52l3 Copyright C. Hendrickson 1998
First Edition originally printed by Prentice Hall, ISBN 0-13-731266-0, 1989 with co-author Tung Au.
Second Edition prepared for world wide web publication in 2000.
Version 2.2 prepared Summer, 2008.
