What is project management in the construction industry?

Introduction

Table of Contents

• What is Project Management in the Construction Industry?
• What is the Difference Between Construction Management and Construction Project Management?
• What are Other Procurement Routes?
• Why Do We Have Procurement Routes?
• What is Construction Management?
• How is Risk Allocated in Construction Management?
• Financial Risk
• Time Risk
• Quality Risk
• Construction Management as a Procurement Route
• Advanced Technologies Enhancing Construction Management
• Embracing Sustainability in Construction Projects
• Innovative Risk Management Strategies
• Improving Stakeholder Engagement and Communication
• Case Studies: Real-world Applications of Modern Construction Management
• Data-Driven Insights and Industry Research
• Future Trends and Innovations in Construction Management
• The Role of Construction Project Management Software
• Construction Project Management Team
• Phases of Construction Project Management
• Project Delivery Methods
• Construction Estimating and Bidding Process
• Managing Risks in Construction Projects
• Embracing Technology in Construction Management
• Ensuring Quality and Compliance
• Construction Project Management and Career Opportunities
• Conclusion

What is Project management in the construction industry?

Project management in the construction industry involves the planning, coordination, and execution of construction projects from inception to completion. It encompasses a range of responsibilities aimed at ensuring that the project is completed on time, within budget, and to the required quality standards. Key aspects of project management in construction include:

1. Project Planning: Defining the project scope, objectives, and deliverables. This involves creating a detailed project plan that outlines the tasks, timelines, resources, and milestones.
2. Budget Management: Developing and managing the project budget, including cost estimation, allocation of funds, and monitoring expenditures to ensure the project remains financially viable.
3. Scheduling: Creating a detailed project schedule that outlines all the tasks, their durations, dependencies, and critical paths. This includes setting realistic deadlines and adjusting schedules as necessary to accommodate changes or delays.
4. Resource Management: Allocating and managing resources, including labor, materials, and equipment. This involves ensuring that the right resources are available at the right time and are used efficiently.
5. Risk Management: Identifying potential risks and developing strategies to mitigate them. This includes conducting risk assessments, creating contingency plans, and monitoring risks throughout the project.
6. Quality Control: Ensuring that the project meets the required quality standards. This involves setting quality benchmarks, conducting inspections, and implementing quality assurance processes.
7. Communication: Facilitating effective communication among all stakeholders, including clients, contractors, suppliers, and team members. This includes regular progress updates, meetings, and ensuring that everyone is informed about project status and changes.
8. Contract Management: Overseeing the contractual aspects of the project, including negotiating terms, managing contracts, and ensuring compliance with contractual obligations.
9. Safety Management: Ensuring that the project adheres to health and safety regulations. This includes creating and enforcing safety protocols, conducting safety training, and monitoring the site for potential hazards.
10. Project Closure: Completing the project by ensuring all tasks are finished, conducting a final inspection, resolving any remaining issues, and officially handing over the completed project to the client. This also includes documenting the project and conducting a post-project evaluation to identify lessons learned.

Effective project management in construction requires a combination of technical knowledge, leadership skills, and the ability to manage complex projects with multiple moving parts. It aims to deliver projects that meet or exceed stakeholder expectations while adhering to predefined constraints and standards.

What is the difference between construction management and construction project management?

What are other procurement routes?

As we know, construction is a sector with multiple professional roles and hundreds of specialist sub-skills contributing to the process. Regardless of their individual complexity, any reasonably sized construction project involves a high level of organizational intricacy that is not present in most other sectors. There are many risks with project delivery, and construction projects are no different, perhaps the riskiest of all types of projects. The Royal Institute of Chartered Surveyors defines risk as: “An uncertain event or circumstance that, if it occurs, will affect the outcome of a program. Risk management is now widely recognized as being concerned with both threat and opportunity.” The Association for Project Management Body of Knowledge defines risk as: “An uncertain event or set of circumstances that should they occur would affect the achievement of one or more project objectives.”

With that level of complexity comes the ability to manage things in many different ways. You will recognize that there are many other procurement methods to allocate risk on projects, with the primary routes being Traditional Contracting, Design and Build Contracting, Management Contracting, and Construction Management. Understanding what project management is in the construction industry helps in comprehending these routes.

Why do we have procurement routes?

There are many risks with project delivery, and construction projects are no different, perhaps the riskiest of all types of projects. Risk is an uncertain event or circumstance that, if it occurs, will affect the outcome of a programme. Risk management is now widely recognized as being concerned with both threat and opportunity. It’s also known to be a set of circumstances that should they occur would affect the achievement of one or more project objectives.

Whichever way you define risk, there is absolutely no doubt that in the management of projects, risk management is of paramount importance. Construction is no different, so we have different procurement routes, each allocating risk differently.

Comprehending the sector’s fragmentation is vital to understanding risk management best. If we consider there to be four primary stakeholders in a construction project, this helps us better appreciate the roles each play: contractors, subcontractors, designers, and clients. Risk management is concerned with identifying the salient risks, assessing their likelihood of occurring, and deciding how best to manage the project efficiently in light of this information. In entering into a contract, the four stakeholders above should clearly understand the primary risks, and the client should be allocated risk with whom the risk best sits.

This is a fundamental part of the procurement process, which I believe is often missed. The client should, at the outset, identify the salient risks and their likelihood of happening and then select a procurement route best suited to managing those risks. Often, particularly in the SME world, this does not occur.

This can be for a variety of reasons. Often the funder of the project will arbitrarily state that the only procurement route they accept is Design and Build, or perhaps, the client doesn’t even consider the project in terms of its own specific merits and risks, instead electing to do what it has always done.

Either way, the management of risk is often not best managed.

We have talked in previous articles about Design and Build, Traditional Contracting, and Management Contracting. However, this article focuses on Construction Management as a procurement route, illustrating what is project management in the construction industry through this method.

What is Construction Management?

With Construction Management, the client does not employ a single Main Contractor. They directly use multiple subcontractors, called “Trade Contractors,” while also hiring a specialist “Construction Manager” to coordinate the contracts and contractors and generally manage the construction.

This philosophy for managing construction projects in this way was founded in America and came to the UK late in the 20th century and was the cornerstone of successful businesses such as Mace, who started as “Construction Managers.”

The single most important differentiating aspect of Construction Management and the one which distinguishes it most clearly from its closest counterpart, Management Contracting, is that the client places these contracts directly with multiple specialist contractors. As a result of this, you have a flat organizational structure below the client, as seen in the following diagram:

The Construction Manager has no contractual responsibility or even liability for the performance of the Trade Contractors (Subcontractors). If they do, this is actually more like Management Contracting.

A simple way to understand the role of the Construction Manager is that they are a construction consultant in the same way the Architect is a design consultant. For Construction Management to work correctly, the client must take an active role in managing the process, similarly to the design phase.

If the Architect leads the design process during the design phase of a project but cannot ascertain clarity and decisions from the client, the design stage can be more challenging and elongated. The same is the case with construction when it comes to Construction Management: the client needs to be an active participant to deliver at pace. As a procurement route, Construction Management is intended to be speedier than other routes, and decision-making needs to be swift to reduce costs.

How is risk allocated in Construction Management?

Financial Risk

Construction Management is different for the client because it only understands its final fixed price after placing each Trade Contract package, which often takes much longer than placing a single Main Contract as with the traditional approach to contracting.

What they do benefit from, however, is the ability to remove the Main Contractor’s overheads and profit when procuring subcontractors. Furthermore, in engaging with the specialist directly, the client will benefit from value engineering of both the programme and the price directly with the specialist: a benefit typically taken by the Main Contractor.

Time Risk

Regarding the programme, Construction Management has been proven to be one of the quickest routes to practical completion. The Construction Manager will define the programme; from there, the client will allocate the risk of delays against this programme with each of its individual Trade Contractors.

One point of reference here is that individual Trade (Sub) Contractors are often smaller entities than a typical Main Contractor. Therefore, their ability to take on significant liability for LADs may be less than with the Main Contractor and accordingly, how these damages are dealt with is essential; otherwise, the client may be left holding a significant liability.

Quality Risk

As with other routes, the client needs to focus heavily on the adequacy of the architectural design during the design stages. With Construction Management, the design team must define the architectural intent and specification of the works to ensure this can be appropriately included in the contract documents for each Trade Contractor. Once defined, Construction Management contracts are no different to traditional Main Contracts in how they ensure the delivery of those specifications.

Construction Management as a procurement route

Construction Management as a procurement route is not the most common route. In fact, it involves a philosophy quite different from other routes but does come with significant advantages if used well. Construction Management can deliver a quicker build programme and reduced overall construction costs.

In the SME space, Construction Management has been growing in popularity. In another article, we described how many developers deliver their schemes on a quasi-construction management basis employing a project management team and acting as the Construction Manager themselves, directly engaging subcontractors.

With the increasing cost of construction materials, the financial risk to projects is front and focus. With SME clients continuing to look for cost-effective ways to manage their construction projects, Construction Management is an alternative worth considering.

Advanced Technologies Enhancing Construction Management

The transformative influence of digital tools, especially Building Information Modeling (BIM), has reshaped construction management. BIM extends beyond traditional blueprints by providing a 3D digital representation of the construction project, enhancing collaboration and improving decision-making across all construction stages.

Embracing Sustainability in Construction Projects

Modern construction management places a strong emphasis on sustainability, focusing on reducing waste, utilizing sustainable materials, and optimizing resource use. These sustainable practices ensure construction projects meet environmental standards and appeal to eco-conscious clients and investors.

Innovative Risk Management Strategies

Advanced analytical techniques like Monte Carlo simulations have revolutionized risk management in construction by providing a probabilistic assessment of potential impacts. These techniques, supported by real-time risk monitoring through sensors, enhance the ability to manage unforeseen issues effectively. For a deeper understanding, the Journal of Risk Management in Construction offers extensive resources.

Improving Stakeholder Engagement and Communication

The success of a construction project heavily depends on effective stakeholder engagement, facilitated by tools that provide real-time updates and feedback. These project management tools ensure all parties are well-informed and can make timely decisions that align with the construction project goals.

Case Studies: Real-world Applications of Modern Construction Management

Practical insights from real-world applications, like projects that successfully utilized BIM, highlight the strategic solutions that led to their success. Such case studies serve as powerful examples of modern construction management in action.

Data-Driven Insights and Industry Research

Incorporating the latest data and research findings is crucial for an authoritative article. The Construction Management Association of America (CMAA) provides empirical evidence that supports current practices and trends in construction management.

Future Trends and Innovations in Construction Management

The future of construction management looks to the integration of technologies like artificial intelligence (AI) and machine learning, which play a crucial role in predictive analytics. These innovations forecast construction project outcomes and help in building resilience into planning processes.

The Role of Construction Project Management Software

Construction project management software organizes planning, scheduling, building, resources, and reporting associated with construction projects. These tools streamline the process, improve productivity, and help in delivering projects on time and under budget. They are essential in managing the entire project lifecycle, from initiation to project closure.

Construction Project Management Team

A construction project requires a diverse team of professionals, including project owners, construction project managers, general contractors, construction estimators, and subcontractors. The project owner commissions and finances the project, supervises the overall progress, and makes critical decisions. The construction project manager is responsible for planning, coordinating, budgeting, and supervising the project, ensuring that all phases are executed effectively. General contractors oversee daily operations, hire subcontractors, and manage site safety and waste disposal.

Phases of Construction Project Management

Just what is project management in the construction industry & what are its steps? Well, the construction project management process involves distinct phases: project initiation, project planning, project execution, and project closure. Each phase requires detailed planning and coordination. The initiation phase includes feasibility studies and risk assessments. The planning phase involves creating a comprehensive project plan, detailing the project scope, cost estimates, project timeline, and risk management plan. During execution, resources are managed, and work progresses according to the project schedule. The closure phase includes final inspections, clean-up, and documentation.

Project Delivery Methods

Different project delivery methods define interactions among project owners, contractors, and designers. Common methods include design-bid-build, design-build, and construction management at risk (CM at risk). Each method has unique advantages and challenges, influencing project outcomes and stakeholder engagement.

Construction Estimating and Bidding Process

Accurate cost estimation is critical for construction project success. The bidding process involves project owners receiving bids from general contractors. Bids include statements of work, payment terms, and cost estimates. Selection methods like low-bid, best-value, and qualifications-based selection help project owners choose the best contractors. Properly managed bids and contracts ensure effective project management and cost control.

Managing Risks in Construction Projects

Effective risk management is essential in construction project management. Identifying potential risks, assessing their likelihood, and developing a risk management plan are crucial. Advanced analytical techniques, such as Monte Carlo simulations, provide probabilistic assessments of risks, enhancing decision-making and project resilience.

Embracing Technology in Construction Management

Modern project management tools, including Building Information Modeling (BIM) and construction project management software, enhance efficiency and collaboration. These tools offer a single source of truth for all project data, facilitating effective communications and resource allocation. They also support lean construction management practices, improving project outcomes and sustainability.

Ensuring Quality and Compliance

Quality management is integral to construction projects. Ensuring compliance with building codes and quality standards throughout the construction stages is vital. A strong focus on quality assurance and quality control helps meet project requirements and stakeholder expectations.

Construction Project Management and Career Opportunities

A career in construction management not only offers involvement in complex construction projects but also enhances employability skills crucial for advancement within the construction industry. The role of construction managers is crucial as they ensure that construction projects are completed to the highest standards and within budget constraints. For those interested in pursuing this career path, undergraduate courses in construction management or civil engineering can provide the necessary foundation for understanding what project management is in the construction industry.

Conclusion

Construction Management serves as a dynamic and challenging procurement route that requires a deep understanding of various aspects of project management, from technical skills to financial management. Understanding what project management is in the construction industry as well as construction management will help construction managers and project managers streamline their projects. As the construction industry continues to evolve, the role of the construction manager will become more integral to the successful delivery of projects. Whether it’s managing construction contracts, engaging with construction teams, or ensuring sustainable practices, it offers a rewarding and impactful career path.

About Paul Heming

Paul was a Quantity Surveyor who gained 10 years experience of managing £200 million worth of flagship UK projects, including 20 Fenchurch Street and Battersea Power Station. In 2015, Paul founded C-Link with the intention of sharing his expertise of managing major projects with the SME market.