Organization :

• It means ‘a group of people working together to

achieve a common goal’.
• A common goal in contractors organization is to
complete the work as per tender documents as early
as possible & to achieve maximum profit.
• A common goal in a factory may be to have maximum
production.
• Organization arranges the functions which is necessary
for achievement of objectives. It indicates the
authority & responsibility given to persons, who are
responsible for execution & respective functions.
• In an organization, people work together & effectively
to reach objectives.
• The work is distributed among the people, a practical
shape is given to the objectives.
• The main problem of an organization is to select the
right people with required skills to achieve the desired
results.
There are three fundamentals of an organization :-
1. People
2. Work
3. An organizational structure
1. People :-
• People who do the activities of the organization must
be well qualified & trained.
• They must perform the work given to them.
• They must be selected on the basis of their ability &
skill.
2. Work :-
• Earlier one man was doing all the work such bas
purchasing of goods, selling etc.
• Now, the work is divided into several departments e.g.
– purchasing, production, quality control, sales etc.
3. Organization Structure :- There are four considerations
• Span of supervision
• Provision for making changes (flexibility)
• Balancing between the different departments
• Integrating work with other phase of management
The aim of forming organization/elements of
organization :-
Well organized & combined effort of people
Ordered way of working
Clear & well defined policies & procedures
Effective communication system
Characteristics of organization :-
Division of work & responsibilities
Proper division of authority & responsibility
Organization ensures achievement of established goals
Organization controls the efforts of the group
 Steps in forming the organization

Objectives/aims/goals are determined

Formulating supportive policies & plans

Identifying & classifying necessary activities

Grouping these activities in the best way

Assignment of duties & fillings of vacancies by recruiting

suitable people

Horizontal & vertical relationships of authority & responsibility

 Principles of Organization :-
1. Principle of Authority & responsibility :-
• A person can not be held responsible for duties if he
does not have the power to do.
• The authority flows downward in the line. Every
individual is given authority to get the work done.
Though power can be assigned but responsibility lies
with the man who has been given the work.
• The responsibility can not be assigned under any
circumstances.
2. Principle of Balance :-
• It means work should be divided in such a way that
everybody should be able to give his maximum.
• In an organization, some person is over worked & the
other is under worked, then the work will suffer in
both the situations.
3. Principle of flexibility :-
• An organization should not resist to changes those are
necessary due to technological changes, economic
changes, personal changes etc.
4. Principle of Simplicity :-
• The organizational structure should be simple so that it
is easily understood by each & every person.
• The authority , responsibility & position of every person
should be made clear so that there is no confusion
about these things.
• A complex organizational structure will create doubts &
conflicts among persons.
5. Principle of Efficiency :-
• The organization should be able to achieve objectives
at a minimum cost.
• The standards of costs & revenue are predetermined
& performance should be according to these goals.
• The organization should also enable the attainment of
job satisfaction to employees.
6. Principle of Continuity :-
• The organization should be able to accept change
according to the changing situations.
• Everyday there are changes in methods of production &
marketing systems.
• The organization should be dynamic & not static.
• There should always be a possibility of making
necessary adjustments.
 Types of Organization :-
• An Organization is classified into following types :-
Line Organization
Line & Staff Organization
Functional Organization
Project Organization
1. Line Organization :-
It is also called as scalar organization
It is the oldest & simplest form of organization
It is a vertical type of organization
It is also called as military type organization, because
military follows similar form of organizational
structure.
Advantages :
It is simple in form & easy to establish.
Clear & simple level of authority
Decisions & actions are quick
Discipline is easily maintained
Confusion is less
Disadvantages :-
Authorities at top becomes dictators
It is rigid & inflexible
Lack of expert advise & services, because organization
focuses on ability & strength of a few able man.
Only one way of communication i.e. from top to bottom
These organizations does not have a scientific principle
 Application :-
This type of organization is applicable to the following
organizations :-
Small organization having few employees
Military type organizations
Mechanical organizations
Continuous production, simple & established organization
2. Functional(Staff) Organization :-
[Link] introduced the functional organization
structure because it was difficult to find a person
who is qualified to work at the middle level of
management in line organization.
Specialization of function is the characteristics of
this type 0f organization.
Each group performs a special task. E.g.- Sales
department only performs sales operation, because
they are specialized in it.
It is also called as horizontal organization.
• Advantage of Functional Organizational :-
Quality of work is improved
Efficient utilization of employees
Because of specialization, responsibilities are fixed
No need of all-rounder people
Due to expert’s advice, there is reduction in the number
of accidents & wastages of materials, men & machine
hours.
Disadvantages of Functional Organization :-
Lack of discipline
Coordinating is difficult as many people are
working at the same level
Discussions are slow
Functional organization is costly as more
specialists are required to be appointed
It is mostly applicable in medium size industries
like cement industries, dairy industry etc.
3. Line & staff Organization :-
When organization becomes large & complex, the
managers find it difficult to manage the whole work by
themselves. So they take help of men who have special
knowledge & skill.
It is combination of line & functional organization
It is both horizontal & vertical in structure.
Organization will be successful only when there is joint
work of managers & executives.
This form of organization shows characteristics of line
type at certain places & also shows characteristics of
functional types at required places.
Advantages :-
Expert advice is available at all levels
The operations are efficient & hence economical
The staff at site is competent to take decisions
It also offers better facilities for expansion of business
units
Team work is effective & systematic
Disadvantages
Cost of operation increases due to good salaries to
employees
There may be confusion about the relation of staff &
line employees.
Discipline is poor
Communication may be poor if not not done properly
• Application :-
In large scale companies/industries
In large scale manufacturing & automobile industry
4. Project Organization :-
When an existing organization is unable to handle
situation due to launch of new products/projects, then
companies create a separate team or group for
individual project called project organization.
These are temporary organization formd for specific
project for a specific period of time. Once the goal is
achieved , these are dismantled.
Project manager is responsible for the coordination of
the entire team working for the project.
Advantages :-
Scope of work is limited, so more efficiency.
Team has full control over resources
Organization is highly responsive to customers

Disadvantages :-
Temporary nature of organization
Loose bonding in groups (professional rivalry)
Difficult to meet time limit
 Role of various personnel in Construction industry :-
For execution of work following persons are required at
site :-
• Site Engineer
• Supervisors
• Mistries
• Operators
• Labour
1. Site Engineer:-
He is the overall in charge of the execution of work at
site.
His decision is final in the execution of work.
He has to explain designs & other instructions at the
site.
He has to employ the required staff.
He has to see the purchase of materials, equipments &
machinery at the site & he also decides the use of
equipments & machinery.
He has to co-ordinates the various agencies required for
the work.
He is fully responsible for the satisfactory completion of
the work.
[Link] :-
Junior engineers, overseers, mistries are the persons
appointed for the supervision of the work.
Their job requirements are :-
(i) To supervise the work done by the skilled & unskilled
labourers & to guide them whenever necessary.
(ii) To prepare the schedule of work :- daily work
programmes under the direction of site engineer &
to arrange accordingly the men, material, equipment
for the execution of work.
2. Supervisor :-
Junior engineers, overseers, Mistries are the persons
appointed for the supervision of the work.
Their job requirements are :-
(1) To supervise the work carried out by the skilled &
unskilled labourers & to guide them whenever
necessary.
(2) To prepare the schedule of work :- Daily work
programmes under the direction of the site engineer
& to arrange accordingly the men, materials ,
equipment for the execution of work.
(iii) To check & see that, work is being done as per the
drawing & specifications.
(iv) To take the measurement of work done, record it, &
prepare the payment bill.
(v) To pass the instruction to lower level, which are
received from top.
(vi)To ensure safety & security at the work site.
 Labour :-
There are following types of labour are generally
found in construction industry :-
Unskilled labour
Semi-skilled labour
Skilled labour
1. Unskilled labour :- These labours do
simple manual work such as cleaning,
sweeping, digging, concrete mixing,
ramming, curing, material handling etc.
2. Semi-skilled labour :- These labours do
works that do not require high skill &
training. They can operate simple
machinery.
Such labour is produced from an unskilled
labour who has been doing a particular
type of work over long period.
No formal training is given to such labour.
They have some skill by their own
experience of work.
3. Skilled labour :-
These labour do works which need special
skill.
Such labour needs to take specialized
training.
Such labour is produced after training
program in training institutes.
Some persons acquire the skill by family
traditions or by self-experience.
Ex:- Mason, painter, fitter, bar-bender, tiler,
plumber, welder, electrician, etc.
Agencies associated with construction work
:-
Owner
Promoter
Builder
Designer
Architects
Consulting Engineers
Owner :-
This is the person who decides to start the work or
any project.
Promoter :-
A person/firm, who starts civil engineering work is
called promoter.
Promoter may be a single individual, co-operative
society, private firms, public company, government or
semi-government agencies.
Promoter initiate the work, order the start of work &
get the work done through various agencies.
He hires the consulting engineer to help him
understand & handle the process of construction.
• Functions of Promoters :-
To give full details & requirements in the
beginning to the architect & consulting
engineer to complete the work in time & in
given budget.
To appoint suitable agencies for planning &
execution of work.
To arrange the required finance
To make payments to various agencies
To get the work done through various agencies
as per drawing details.
Builder :-
Contractors/builders are the persons who actually
do the construction work according to the plan,
design & specifications.
It do the work as per terms & conditions of the
contract.
They have to do the work as per the direction of
architect /consulting engineers.
• Functions of builder :-
To maintain a suitable organization required
for carrying out the work.
To arrange necessary tools, plants, equipments,
& machinery required for the work.
To arrange necessary labour required for work.
To take the full responsibility of the work till its
completion.
To arrange the schedule of the work in
consultation with the site engineer & carry out
work as per agreement.
 Designer :-
These persons are specialist in designing components of a
project.
Ex- R.C.C. designers, waste disposal experts, water filter
designer etc.
• Functions :-
To provide complete design, drawings & specifications etc.
To check the work for proper implementation of design to make
sure the standard work.
To help & guide the site engineer for correct, speedy &
economical execution of works as per design.
To conduct tests after completion of the components to ensure
about implementation of the design.
 Architects :-
• An Architect is a professional who turns building
design into reality.
• They develop concepts for structures and then
work with engineers to bring these designs into
reality.
• They deal with sketching, thinking, planning,
designing buildings or other structures.
Consulting Engineer :-
Consulting engineer is the mediator b/w the
promoter & the contractor.
He does advisory job in civil engineering project.
He prepares detailed drawings, estimate,
specifications & designs etc.
He supervises the work, guide the contractor &
his workers.
• Role of Consultant for various activities :-
Monitoring of progress & quality :-
Consultants play an important role in organizing
project activities from the start to the maintenance
stage.
They guide the contractor in preparing the project,
organizing and monitoring the project's progress.
They maintain a good coordination between teams in
executing the project using their vast experience.
They guide in estimating the project budget and
helps in smooth release of funds as per the schedule.
• They have the experience and resources to manage
the quality of the materials and structures during
construction
• They suggest steps and methods that ensure the
overall quality.
• They have methods to ensure the quality of various
works such as finishing, concreting, installation and
fabrication etc.
• They prepare structural elements according to
standard codes. Testing of materials in the laboratory
is done with the help of suitable processes.
• They develop strategies to eliminate defects, purchase
materials of suitable quality, and check the
dimensions of the structure after construction.
Settlement of disputes:-
Disputes are damaging, expensive, and time
consuming. They affect individuals, organizations,
government, and the economy.
Preventing disputes, and resolving disputes
earlier and more effectively, benefits everyone.
Consultants act as an arbitrator to settle the
disputes on the mutual agreement of both
parties, owner & contractor.
Consultants suggest ways & methods to settle the
dispute b/w parties.
Site Layout or Job Layout at building site :-
Site layout is the plan of the construction site.
It shows the area and the exact location for
placing the resources required in the work.
It also indicates the place for offices, godowns,
workshops, accommodation etc.
Besides this, it shows the existing relationship of
the site with its surrounding in respect of
communication, approaches and existing
facilities.
 A systematic and scientifically prepared site
layout is necessary to :-
1. Get a continuous supply of materials in sufficient
amount.
2. Have an easy access to material
3. Easy to check material’s wastage
4. Decrease the number of plants and reduce the
movement of heavy equipment.
5. Avoid confusion and reduce accidents.
6. Have a clean outlook to facilitate the inspection of
the materials
 The site layout depends on the following
factors:-
1. Location of the site.
2. Availability of space.
3. Access to the site.
4. Material bulk.
5. Type of equipment to be used.
6. Ground conditions.
 Principles Of Job Layout:
• The following are the principles of job layout. They
promote economy, efficiency, tidiness and safety.
1. The site should have preferably two openings, one for
entry and the other for exist. It promotes flow of traffic.
If there is only one gate then it is preferable to provide a
cross-over near the gate.
2. The general office should be located near the main gate.
This avoids confusion at construction site.
3. The godown should be located just behind the general
office. So that it allows a closer supervision of the stores.
4. Temporary roads may be constructed around the
operation area. It promotes the flow of material and
movement of equipment.
5. The workshops for joiner, fitter, electrician etc should be
decided and located at suitable location for easy and
short routes.
6. Staff housing should be away from noise. It should be
concentrated in one area to promote communication
and reduce the cost of facilities and services.
7. The existing services should be used to the maximum
extent.
Preparation of Plan for job Layout
Before starting the construction work, a layout plan is prepared.
The plan gives proper location for machines, proper & safe storage for
materials & workers to facilitate the work as per schedule.
Materials are required to store near the work to reduce the cost of
transportation & easy handling of material.
Machines are placed in the most advantageous position.
For administrative control, office location should be at proper place.
Proper connectivity to vehicles coming at site for various reasons.
Sufficient place for movement should be available near the work for
easy movement of labour & machinery.
The layout should be planned in such a way that it gives maximum
efficiency in minimum movement, to save time & money.
Fencing & hording at site is required for safety & identification of
project.
❖ Project
➢It is defined as the combination of interrelated
activities. These activities must be executed in a
certain order before the entire task is completed.
❖ CPM (Critical Path Method)
➢ It uses activity oriented network which consists of
a no. of well defined tasks or activities.
➢Each activity is represented by an arrow & the
activities are joined together by events.
➢ CPM is generally used for simple, repetitive type of projects
for which activity times & costs are certainly & correctly
known.
➢It is a deterministic model.
➢E.g.- construction of bridge, road, building etc.

❖ PERT (Programme Evaluation & Review Technique)

➢ It uses event oriented network in which successive events
are joined by arrows.
➢It is preferred for projects that are non-repetitive & in which
time for various activities cannot be precisely determined.
➢It is a probabilistic model.
➢ There are three time estimates associated with
each & every activity :-
a. Optimistic time
b. Pessimistic time
c. The most likely time
e.g. launching of a satellite, R&D of new product etc.
❖ Activity
➢ It is the task that requires time & resources for its execution.
➢ An activity is represented by an arrow. The tail represents the
start & the head represents the finish of the activity.
➢ The length, shape, direction of arrows has np relation to the size
of activity.
❖ Events or nodes
➢ It is the beginning & end points of an activity.
➢ It is a point in time.
➢ It does not consume any resource.
➢ It is represented by a circle.
➢The events are numbered in their sequential order on the
network.
➢ Tail event – ith event
➢ Head event – jth event
( j > i)
❖ Path
➢It is an unbroken chain of activity arrows connecting the
initial events to some other events.
❖ Network
➢ It is a graphic representation of the entire project . It is
represented in terms of activities through the use of arrows
& nodes showing their inter-relationship.
❖ Activity Duration (T)
➢ It is the expected time required to complete the given
activity.
❖ Dummy Activity
➢It is an imaginary activity with zero duration & no cost.
➢It only determines the dependency of one activity on
other.
➢It is used to maintain sequential order of the activities in
the network.
➢It is shown by dotted line.
➢If required, any no. of dummy can be used.
❖ Network Construction
• Firstly split the project into activities
• Start & finish events of projects are then decided.
• After deciding the precedence order, the activities are put in a logical
sequence by using graphical notations.
• While constructing any network, following points must be followed :-
1. What activities must be completed before a particular activity starts.
2. What activity follow this?
➢ Predecessor activities :- Activities which must be completed before a
particular activity starts.
➢ Successor activities :- Activities which must follow a particular activity.
❖ Following points should be kept in mind while drawing any network
diagram
1. Each activity is represented by only one arrow
2. Arrow flows from left to right
3. Each activity must have a tail & a head event.( No two or more activities
may have the same tail & head events).
4. Arrows should not cross each other.(Bridging should be done where
crossing can not be avoided).
❖Numbering the Events ( Fulkerson’s Rule)
➢Fulkerson's rule helps to number the events
scientifically. It is used to maintain logical sequence.
• Every activity in a network is given a name or symbol.
• The events are represented by a circle at the beginning
and at the end of an activity and are given proper
numbers.
• Numbering of events helps in drawing the network
correctly.
• Numbers should be given in such a way to the events
that they reflect the logical sequence of events in the
network.
❖ Critical activity: The activities lying on the critical path
are called critical activities. It has a zero float.
❖ Critical path: The path joining critical events is called
the critical path of the network. The path given by
critical activities is the critical path of the network.
❖ Critical events: The events which have no float are the
critical events. i.e. if TE=TL, then event is critical.
❖ Earliest Starting Time (EST): It is the earliest time by
which an activity can start.
❖ Earliest Finishing Time (EFT): It is the earliest time by
which an activity can be completed.
EFT =EST+T
❖ Latest Starting Time (LST): It is the latest time by which
an activity must start so that the project is not delayed.
❖ Latest Finishing Time (LFT): It is the latest time by
which an activity must be completed so that the project
is not delayed.
❖Earliest Event Occurrence Time (TE): It is the earliest
time that the event can occur.
❖ Latest Allowable Event Occurrence Time (TL): It is the
latest time by which the event can occur.
❖Total Float (S): It is the difference between the maximum time
allowed for an activity and its estimated duration. It is the amount
of time by which the activity can be started late without delaying
the project. It is also called total activity slack.
S= LST-EST = LFT-EFT= TL = EFT
❖ Free Float (FF): The free float of an activity is the amount of time
by which the activity completion time can be delayed without
interfering with the start of succeeding activities. Its use will not
delay the completion of the project. SE = TE = EFT
❖ Interfering Float: It is the difference between the total float and
free float. The use of it will delay the succeeding activity.
❖Independent Float :- It is the difference b/w the total float & free
float. The use of it will delay the succeeding activity.
❖ Crashing of Network
• Crashing of networks is the phenomenon of reducing the overall
duration of the project. The crashing of networks is carried out by
deploying more resources to one or more activities. Deploying
more resources is based on the cost slope of a particular activity in
the project network.
• By crashing of networks, the indirect cost of some activity gets
reduced and the direct cost for the same activity will increase.
• Crashing of activity refers to allocating more resources so that
completion time for that activity and overall project time also
reduce. You may change activity completion times by allocating
more resources to it.
❖ Purpose of crashing Network
➢ To reduce the total time required to construct a project
➢ To select the activities which can save the time at minimum increase in
cost
➢ To get the lowest cost solution by compressing the activity, having lowest
cost slope.
➢ To get optimum project duration
❖ Important terms in Crashing
1. Normal duration or Time :- It is the duration of an activity or a project
under normal conditions.
2. Normal Cost :- It is the cost of an activity or a project under normal
conditions.
3. Crash duration or Time :- It is the duration of an activity or a project
after crashing.
4. Crash Cost :- It is the cost of an activity or a project after crashing.
5. Direct Cost :- It is the cost of materials, labour & equipment used in the
project.
6. Indirect Cost :- It is the expenditure incurred on administration, interest
on loans, supervision etc. for project.
7. Total Cost :- It is the sum total of the direct cost & indirect cost.
8. cost/Time slope :- It is defined as “ crashing cost per unit of time”.
9. Optimum Cost :- It shows the variation of total cost of project with
project duration.
• This curve will have point where the tangent would be horizontal.
• At this point, the cost of the project may be minimum.
• This minimum cost is called as optimum cost of the project.
10. Optimum duration :- The optimum duration of the project means
the time corresponding to optimum cost.
• It is shown by the point do in the above figure. It is necessary to
achieve the optimum duration while decreasing the time of the
project.
 Construction Contract :-
A construction contract is an agreement between
two or more parties for carrying out the
construction works as per certain terms and
conditions.
As per The Indian contract act 1872, a contract is
an agreement which is enforced by law.
A contract comes into existence only when both
party/person agree.
 Objectives of contract:-
To complete the work on time &
according to specifications
Contract eliminates dispute b/w two
parties (contractor & owner).
Contractor is paid on the basis of his work
& time & owner gets quality work as per
specifications.
 Types of Construction Contracts
• There are many types of contracts used in
construction. Each type has its advantages and
disadvantages regarding the owner and the contractor.
• They are categorized into two major groups as per the
method of payment to the contractor. The following
are the types of construction contracts generally used
in construction projects:
Lump-sum contract
Unit price contract
Cost-plus contract
Target cost contract
Labour Contract
 Price-based Construction Contracts
1. Lump-Sum Construction Contract
• In this type, the contractor bids a single fixed price for overall activities in
the project. The contractor estimates the project cost from drawings &
information supplied by owner. Then he adds overhead and his profit to
determine the value of the project.
• All risks are taken by the contractor, and there isn't any risk carried by the
owner. The contractor has an incentive in this contract as he is rewarded
for an early finish, and there is a penalty for a late finish.
• This contract is ideal when the project scope is well defined at the design
stage, because there is limited flexibility for modifying the design during
the construction period.
• In lump-sum contract, construction is carried out as per plan &
specification by the contractor for definite money of money.
Advantages:-
Total cost of construction is known before starting of the
work
Early completion of work
Low cost of construction for owner due to high
competition among contractor
Owner’s risk is low
Disadvantages
It is difficult to adjust extra work during construction
Dispute may occurs b/w contractor & owner because both
of them works towards their own interest
Higher risk for the contractor
Quality of work can not be guranted
2. Unit Price/ Item rate Construction Contract
• In this contract, the contractor gives his rate per
unit of work/item. Total cost of the project is
based on the price of each item's unit.
• The risk is shared with the contractor and the
owner. This type of contract has more flexibility for
design changes than the lump sum contract.
• The construction of the project can be started
before finishing the designs.
• This form of contract is very use full for quality
work & when total quantity of work is not known.
• The rate quoted by contractor include materials,
labour, tools, plants & contractor’s profit etc.
Advantages
Payment is made on the basis of actual work hence this
method is economical.
It allows extra item of construction
Contractor tries to complete work as early as possible
Modification is possible during construction

Disadvantages
Both contractor & owner has to hire a staff for taking
measurements
Exact cost of construction is not known at the start of
the project
 Cost-based Construction Contracts
3. Percentage rate Construction Contract
• The contractor is paid based on the actual cost of the
project, including direct and indirect costs, plus a specific
fee. This fee could be a fixed fee or percentage of costs.
• All risks are associated with the owner, and he gets involved
with the contractor in the management of the project. The
contractor has no risk in case of increasing the cost of the
project; also, there isn't any incentive for an early finish.
• This type of contract is ideal when the project scope is
uncertain in the early stages of the project. The contractor
can start the execution of the project before finishing the
design. It is impossible to estimate the cost of the project
before the construction has been completed.
• This type of contract is classified as follows
:-
Cost plus percentage rate contract
Cost plus fixed fee contract
Cost plus variable percentage contract
Cost plus variable fee contract
1. Cost plus percentage rate contract
In this contract, owner agrees to pay to the
contractor the actual cost of the work plus an
agreed percentage of cost as his profit.
2. Cost plus fixed fee contract
In this contract, owner agrees to the contractor the
actual cost of work plus certain fixed amount as his
fees.
3. Cost plus variable percentage contract
In this contract, payment to the contractor is made on
varying percentage basis. i.e. contractor’s percentage is
linked with the cost of construction, % profit increases with
decreasing cost of construction & % profit decreases with
increasing cost & time of construction.
Contractor gets more profit if he bring down the estimated
cost of construction.
A variable scale of % profit, related to the cost of
construction is already prepared.
4 Cost Plus variable contract:-
This type of contract is similar to cost plus fixed fee
contract, but fee of contract varies with respect to the
cost of construction.
Fee to be paid to contractor is not fixed but it
increases or decreases with respect to actual cost of
construction.
Higher the actual cost of work, lower is the fee & vice
versa.
4. Target Cost Construction Contract
• Target cost contract has common features of the lump
sum and cost-plus contracts. The contractor is paid
based on the actual costs plus a certain fee either
fixed or percentage of total cost in case of the cost of
the project doesn't exceed certain target cost
mentioned by the owner.
• There is a risk carried by the contractor in case of an
increase in the cost of construction projects. The
contractor is also rewarded a percentage of any
savings between target and actual cost.
 Labour Contract
• In this contract, owner & contractor enters into
agreement only for supply of labour.
• Material used in the project is supplied by owner &
labour ( & required machinery) is supplied by contractor.
• Quality of work in this contract is good because material
is supplied by the owner.
Advantages
Quality of work is superior
Extra work can be added
Disadvantages
Wastage of materials is common
Shortage of material may delay in construction
work
Fee Contract
In this contract, owner agrees to pay the
contractor an amount as fee for his technical
skills & knowledge.
Cost of materials, labour, & other expenses are
covered by owner separately.
Negotiated Contract
When the contract is given simply by the negotiation
between the parties without invitation of tender is called
as negotiated contract.
In this contract, there is no open competition & owner
negotiates with selected contractors.
Generally it is not used for public works or by
government dept./companies. Private companies often
uses this system of contract.
 Contract Document
• A construction contract document is a valid document
that can be enforced by law.
• At the early stages of any construction project, the
owner with his engineer or consultant prepares
necessary documents for the tender process, which
will be included in the contract. These documents are
called contract documents.
• These are the reference documents that describe the
details of work to be performed.
• These are a legal part of the contract which describes
the work such as supplying labor, equipments,
technical expertise and materials for the construction.
 Types of Documents in a Construction
Contract
The different types of documents in a
construction contract are as follows :-
• Contract Agreement
• Scope of work definition
• General conditions
• Special conditions
• Drawings and specifications
• B.O.Q (bill of quantity)
• Letter of acceptance
• Work Schedule
1. Contract Agreement
• A contract agreement defines the agreement
between the client. In this document parties are
specified and their responsibilities are defined in
the construction process.
• It is the important document to which other
contract documents attach or reference.
2. Scope of work definition
• Scope of work should describe the project, the
project deliverables, and details of work. It must
specify all tasks, duties, and limitations to get
desired results.
3. General Conditions of Contract
• General conditions define all general terms and items such as
utilities, vehicles, organizational structure, mobilization etc. But
these items are not directly related to the construction
activities. Obligations of both parties, general conditions,
overhead costs, bonuses, and some other conditions are
included in this portion.
• General conditions set the framework of the contract that
establishes all the rights and obligations of the parties involved.
• It generally includes:
• Definition of the project
• Contract components
• Rights and responsibilities for the owner and the contractor
• Project schedule
• Payment method
• Warranty and delay penalty
4. Special Conditions of Contract
• Special conditions describe specific requirements
and instructions for the work. Mostly these are
additional to the general conditions. Special
conditions include details and conditions
regarding the individual tasks or the whole
project.
5. Drawings & Specifications :-
• All contracts should involve drawings that contains
detail of the work to be done. Drawings have the
details like quantities, locations, dimensions, sizes,
shapes, and forms of the elements. These drawings
can be architectural, electrical, mechanical,
landscape & structural.
• Construction drawings include elevations, sections,
and profiles for the building to be constructed.
• Technical Specifications explain the materials,
workmanship, and equipments required for a work.
Client should describe the specifications clearly
before the tendering stage. Every little work should
be specified and deviation limits should be
determined in technical specifications.
6. Bill of quantity
• A bill of quantities is a document used
in tendering, which contain details of materials,
works, and labor (and their costs) etc. It also
details the terms and conditions of the
construction work. BOQ helps a contractor to
price the work for which he or she is bidding.
7. Letter of acceptance
• A letter of acceptance is a document sent and
signed by the employer, which says that the offer
submitted by the contractor has been fully
accepted and that the contractor may begin to
work.
8. Work Schedule
• Work schedule is very important for both parties.
Because a project cannot be performed without a
proper plan. A work schedule shows site delivery date,
start and finish milestones, project duration, and other
useful information.
• Different types of works are mentioned in the work
schedule, works of similar nature are grouped &
termed as civil, electrical, and mechanical works etc.
 Contract Management
• Contract management or contract lifecycle
management (CLM) is the process of managing
contracts, from the initial stage to execution.
• It also manages termination or renewal of the contract.
• Key activities involved in contract management are
contract drafting and clause negotiation, performance
analysis to maximize operational and financial
performance and risk mitigation.
• Business relationships get damaged by defaulting on
contract terms.
• Contracts are the foundation of business relationships.
They describe every details of a business deal or
supplier relationship from start to finish.
• All contracts need to be managed for their entire
lifecycle, managing negotiated clauses, monitored for
compliance, and then reviewed again for renewal or
amendments.
• A single contract needs people from finance, legal and
procurement. These peoples should have great skill &
knowledge.
• This is a manual, time-consuming and costly process.
But it needs to be done for proper functioning of
business & have healthy relationship b/w parties
involved in the business.
• Without proper contract management, companies open
themselves to several risks, financial penalties etc.
• A small technical mistake or wording issue can cost
lakhs of rupees in the long run.
 MODES OF SETTLEMENT OF DISPUTES
1. Capitulation- weaker party give in to retain
goodwill/ long term business relationship with
stronger party
2. Negotiation--Both parties sink differences and try to
reach amicable settlement
3. Arbitration- Disinterested/impartial third party
appointed to pass judgment
4. Litigation- Disputes taken to court resulting in
abnormal delay and heavy expenditure
5. Dispute Resolution Board- Board constituted on
award of contract to resolve disputes as and
when they arise
 ARBITRATION
• It is the settlement of a dispute between parties to a contract by a
neutral third party without turn to court action.
• The neutral third party is called as the Arbitrator.
• Arbitration is usually voluntary but sometimes it is required by
law . If both sides agree to follow the arbitrator's decision,
'award' becomes a binding arbitration.
• Exact procedure to be followed is according to country's
arbitration laws or by arbitration rules prescribed by International
Chamber Of Commerce (ICC).
• Arbitration is the most popular method of disputes settlement in
building and construction disputes.
 ARBITRATION-OBJECTIVES
• Make provision for arbitral procedure which is fair,
efficient, capable of meeting needs of specific
arbitration
• To minimize supervisory role of Courts
• Arbitral tribunal to give reasons for the award
• To ensure Arbitral tribunal remains within its
jurisdiction
• Permit Arbitral tribunal to use:- mediation,
conciliation or other procedures to settle disputes
• To make decisions of Tribunal enforceable as a decree
of court
 DEFINITIONS
• Arbitrator- A person appointed to settle disputes
• Arbitration Agreement- A written agreement between client
and contractor to settle future disputes
• Order of reference- Order containing names of the arbitrator,
specific dispute, nature, time limit for award
• Presiding arbitrator-An umpire when each party's arbitrator or
both parties arbitrator choose one presiding arbitrator
• Award-Written decision of the arbitrator on completion of the
proceedings
• Arbitral tribunals :- It refer to panels of one or more arbitrators
responsible for passing judgment regarding disputes between
parties
 PROCEDURE FOR ARBITRATION
• Specific clause to be introduced in contract for dispute
settlement by arbitration
• Unhappy party to approach the designated authority to
appoint arbitrator with list of disputes and amount
involved for dispute
• Arbitrator is then appointed & referred with the papers
submitted
• Few contracts provide for direct resolution of disputes
by parties- failure to do so can lead to appointment of
an Arbitrator
• Arbitration is conducted under the provisions of
Arbitration and Conciliation Act, 1996.
• Parties are to be treated equal and is given full
opportunity to present their case
• Parties are free to agree on the procedure for Arbitral Tribunal, place &
language for arbitration.
• Arbitration proceedings start from the date of receipt of request for
arbitration
• Claimant to state facts supporting the claim, issues involved and
remedy sought
• Respondent to give defence against these claims
• Tribunal to decide on oral/documentary evidence
• Experts appointed by Tribunal in case of specific technical issues
• Assistance of court may be sought for taking evidence
• Decision of the Tribunal is taken by majority. Award is given in writing
and signed by all members.
• Award amount, if not paid, to carry interest @18% per annum from
date of award to date of payment
• Award to be final and binding & Enforced as - decree of the Civil Court.
 Safety in civil engineering
Safety is a term used for all the efforts given by the
management to prevent accidents.
Safety in construction is considered important for the
following reasons :-
(Importance of safety) :-
(i) Human life is considered invaluable
(ii) Direct cost of accidents :-
• Medical care & compensation to the injured
• Expenditure on insurance premium
• Cost of legal work
• Damage to the property
• Delay to the project
(iii) Indirect cost :-
• Investigation into cause of accidents
• Loss of skilled workers
• Loss of equipments.

Safety involves mainly three requirements

(i) Freedom from danger or risk
(ii) Freedom from injury
(iii) Harmlessness (state of being without hurt, loss
or liablity)
 In construction work, it is necessary that all care
is taken to ensure safety of workers. Preventive
steps should be taken to end or minimize
accidents.
Accidents is defined as :- “ An unintentional or
unexpected happening except in the case of acts
of Nature & God”. Accidents are caused by
negligence.
 Common causes of accidents on
construction sites & precautions to be taken
to avoid accidents
IMPORTANT ACTS AND LAWS
The condition of the labour working in construction industry is
very poor. The number of workers working in construction
industry is nearly four crores. They are mostly unskilled or
semiskilled workers.
In construction industry, the contractor dominates the terms of
service conditions. They are paid very poor wages. They have
very little or practically no bargaining power. It leads to their
exploitation.
They migrate from one place to another for getting work. They
remain illiterate . Under these conditions labour force in
construction industry cannot get organized as in the case of
other factory workers.
Due to poor working conditions, their efficiency also remains
low. The Government has, from time to time, brought out laws
to improve the conditions of the labour operation.
 Types of Construction Labour
The labour in construction industry can be classified
as:
(a) Casual labour and
(b) Labour on regular establishment.
The casual labour is recruited according to the needs
of construction industry. They are paid as per daily
wages and payment is made at every week end or
daily. Such labourers are not allowed any paid
holiday or any other benefits.
The labour on regular establishments are employed
for longer periods. They are skilled workers and paid
on monthly basis. They are entitled to holidays, leave
and such other benefits.
 Necessity of Labour Acts
1. To improve relations between the employees and the employer.
2. To help pay fair wages to workers.
3. To give compensation to workers, victims of accidents.
4. To reduce conflicts, strikes etc.
5. To provide job security for the workers.
7. To promote healthy environmental conditions in the industry or
organization
8. To fix hours of working, rest, pauses etc
 Workman’s Compensation Act
• Employees are the backbone of any organisation. It is the duty
of any employer to take care of their employees, especially
when employees face death or disability during their duty.
• The Workmen Compensation Act 1923 was formed to provide
compensation to workers who faced accidental death or
injuries during time of employment.
• The Workmen’s Compensation Act 1923 makes the employers
liable to pay compensation to employees who gets injured,
which results in their disablement or death during period of
employment.
• The Workman’s Compensation Act came into force on 1st July
1924, and it applies across India. However, the Workmen’s
Compensation Act 1923 does not apply to employees covered
under Employees State Insurance Act, 1948.
 The Minimum wages Act
• The Minimum wages Act 1948 discuss laborers of India.
• Under this act, a minimum amount of wage is fixed. This
wage is to be paid by employers on a mandatory basis.
• The constitution of India has defined a minimum salary as
the income of a worker to live a good life maintaining
health, education, shelter, and comfort.
• The Minimum Wages Act 1948, gives both the Central and
State government jurisdiction in fixing wages.
• As per the act, wage rates differ in various states, regions,
skills, sectors, and occupation. Thus, there is no unified
wage across the country but the minimum amount is fixed.
India's minimum wage as per the act is INR 178/- per day for
an eight hours shift.
 Factory Act
• The Factory Act 1948 came into existence on 28 August 1948
for the welfare and safety of factory workers.
• Before the 1948 factory Act, the 1934 Factory Act existed but
it had gaps and weaknesses which made the act less effective.
• It mainly takes care of safety, health care, wages, and the
overall welfare of workers.
• The objective of Factories Act 1948:
Health: As per the Factory Act 1948, workers must get the
good environment, safety precautions, light, air, and other
basic facilities that affect health.
Safety: Proper Safety systems should be there, because in
factories there are different types of machinery and
hazardous equipment.
• There must be proper fencing and no manholes to protect
workers.
 Working Hours: There should be fixed time for working hours
every day which should not exceed the limit of 48 hours in a
week.
• Penalties: In case any of the rules under the Factory Act 1948
are not followed, it is treated as an offense and penalties will
be imposed which include imprisonment, fine, or both.
Welfare: Apart from basic facilities, for the welfare of factory
workers, there must be facilities for washing and drying of
clothes, first aid, restrooms, shelters, lunch areas, etc.
Building & other Construction workers act 1996
There are more than 3 crores skilled and unskilled workers work
in the construction sector in India. The sectors is labour-
intensive and most of the labourers are unskilled, unorganized
and works in inhuman and poor conditions.
To remove such inhuman working conditions, poor health and
safety standards in the real estate industry, the Government of
India passed the Building and Other Constructions Workers Act,
1996.
BOCW Act is a social welfare act that aims to benefit workers
engaged in building and construction activities across the
country.
The building & other construction workers Act are also known as
“regulation of employment & conditions of service Act, 1996.
 Aim and Objectives
• The objective of this Act is to regulate the employment
and conditions of service of BOCW Workers.
To regulate the employment and conditions of Service.
To provide for Safety, Health and Welfare measures
To give the Building and Construction workers Social
Security