construction management final

7/30/2019 Construction Management Final

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Construction Management

Dr. G.INDU SIVA RANJANI. Ph.D (IITM)



Definition

Management : Process by which a cooperative

group directs action towards common goals

Construction Management : is the art andscience of mobilising & managing materials,

equipment & money to complete the assigned

project on time within budgeted costs and

specified technical performance standards.



Importance of management

In unpredictable fast changing

environment, to complete the projectwithin time, cost and quality

Basic ingredients in project management



Functions of management

• Decision making

• Organizing

• Staffing• Planning

• Controlling

• Communicating• Directing




Decision-making – action chosen from alternatives

Organizing – establish structural relationship among

functions

divide work into component activities

Define target and responsibilities

Allocate resources

Staffing – process by which managers select,

train, promote and retire subordinates




Planning- involves deciding in advance, what,how and in what order is to be done to achievethe objectives

Planning time

What is to be done?

What are the activities involved?

How it is to be done?When it is to be done?

Where it is to be done?




Planning time

All projects are time bound

It is time factor which determines the project cost

Project work breakdown

Modelling and analyzing networks

Scheduling work programme




WBS

A Complex project is made manageable by breakingdown into individual components in a hierarchical order




WBS




Planning time

Modelling and analyzing networks

Traditional bar charts is inadequate - little information on inter-

relationship of the tasks

Network techniques are CPM, PERT and PNA

Common features

Develop network model for depicting time plan

Apply critical path concept- determine project duration

Employ network analysis for controlling project time




Planning time

Selection of network technique

CPM is suited for package with activities with deterministic

time duration

PERT for projects with uncertainties

Five useful questions to ask when preparing an activity network are:

Is this a Start Activity?

Is this a Finish Activity?

What Activity Precedes this?

What Activity Follows this?

What Activity is Concurrent with this?



Drawing the CPM/PERT Network

Each activity in a PERT/CPM Network is represented

by an arrow symbol.Each activity is preceded and succeeded by an event,

represented as a circle and numbered.


Planning time



Planning time - Network analysis

TOTAL FLOAT is the amount of time by which it can be

delayed without delaying the project completion date.Total Float = Latest Start - Earliest Start

INTERFERING FLOAT Utilization of float of activity affects

the float of other activities in network. That part of total floatwhich causes reduction in float of successor activities is called

as interfering float

Interfering float = LFT of that activity ~ EST of succeeding

activity or zero

FREE FLOAT is the part of float which can be used without

affecting the float of succeeding activities

Free float = EST of following activity – EFT of that activity




INDEPENDENT FLOAT is the amount of float time

which can be used without affecting either the head or

tail events

Independent float = EST of following activity – LFT of

preceding activity-duration of present activity

The longest path in network is the critical path

Critical activities : Float is zero A delay in them will affect the all other activities following




PERT

Three time estimates for an activity

Optimistic time : shortest time (a)

Most likely time : modal time. If the activity repeated

several times under same conditions (m)pessimistic time : longest time (b)

Completion of a activity follows beta distribution

t exp = (a + 4m + b) / 6

Standard deviation which is a good measure of variabilitySD = (b-a) / 6

Variance = SD2



Planning resources

• Resource plan shows when and in what quantity theresources are to be inducted at project site

– Manpower planning

– Materials planning

– Equipment planning

– cost planning

– Budget planning

Planning implementation

Technique to monitor the performance




Controlling- monitor the performance and applycorrective measures in case of deviation fromthe plan

Communicating – ideas are transmitted to others

Directing (leadership)- actual performance of subordinates are directed towards commongoals

Provide effective leadership

Motivate participants behaviour

Communicating instructions and orders



• Types of construction project

• Members of construction team

• Stages of construction project• Relevance to government



Principles of management

• Guiding rules of laws for managerial action

• To improve organizational performance

– Division of work

– Authority and responsibility –hand in hand

– Discipline

– Unity of command

– Unity of direction – one common plan

– Subordination of individual interest to general interest

– Remuneration

– Centralization of authority

– Scalar chain

– Order – a place for everything and everything in its place



Principles of management

• Equity

• Stability

• Initiative• Spirit of loyalty and devotion



Organizational structure

Depends on the nature of project

Each project may be staffed by existing personnel in the functional divisions of

the organization. This arrangement is referred to as the matrix organization as

each project manager must negotiate all resources for the project from the

existing organizational framework.



Organizational structure

Organization may consist of a small central functional staff for

the exclusive purpose of supporting various projects, each of which has its functional divisions as shown. This

decentralized set-up is referred to as the project oriented

organization as each project manager has autonomy in

managing the project.



Problem on CPM

Information on activities required for a project is as follows.

Draw the network and calculate the earliest start (ES),

earliest finish (EF), latest start (LS) and latest finish (LF)

times of each of the activities

Activities A B C D E F G H I J K

Node 1-2 1-3 1-4 2-5 3-5 3-6 3-7 4-6 5-7 6-8 7-8

Duration (days) 2 7 8 3 6 10 4 6 2 5 6

P bl PERT1



Problem on PERT1 Activity predecessor Most

optimistic

time

Most likely

time

Most

pessimisti

c

A - 4 6 8

B A 5 7 15

C A 4 8 12

D B 15 20 25

E B 10 18 26

F C 8 9 16

G E 4 8 12

H D,F 1 2 3

I G,H 6 7 8



• Construct arrow diagram

• Determine critical path and expected project completion

time

• Determine probability of completing project in 55 days



PERT 2

Job a m b

1-2 3 6 15

1-6 2 5 14

2-3 6 12 302-4 2 5 8

3-5 5 11 17

4-5 3 6 15

6-7 3 9 27

5-8 1 4 7

7-8 4 19 28



• Draw project network

• Calculate length & variance of critical path

• Approx probability that jobs on critical path willbe completed by due date of 42 days



PERT3

Activity Preceding

activity

a m b

A None 2 4 12

B None 10 12 26

C A 8 9 10

D A 10 15 20

E A 7 7.5 11

F B,C 9 9 9G D 3 3.5 7

H E,F,G 5 5 5



• Draw project network

• PREPARE ACTIVITY SCHEDULE

• Calculate length & variance of critical path

• Approx probability that jobs on critical path

will be completed by DEAD LINE OF 30

WEEKS



Cost control

Cost accounting different from financial accounting

Cost accounting concerned with the quantity of materials, labour

productivity in addition to money value

Classification of construction costs

Direct costs: cost that can be correlated to a specific activity

Cost of materials, labour and other expenses

Direct material cost covers all cost which becomes a permanent part of the

project

Direct labour cost covers net expenses namely basic wages, overtime andallowances for all category of workers at work site



Cost control

Indirect costs : all costs attributable to a

given project but cannot be identified with

the performance of a specific activityProduction overheads – indirect manpower

(supervisors), indirect materials (consumables)

External support service costs

Administration overheads



Cost control

Indirect cost Can be variable or fixed

Variable cost tend to vary with volume of production

Ex: telephone running expenses, office stationary

Fixed cost do not change appreciably with volume of

production

One time cost like camp construction cost or periodic

costs like supervisor salary



Cost control

Control estimates

During feasibility study – idea on approximate cost of project –preliminary estimate

For cost control- master control estimate required –

prepared during planning stage Cost breakdown similar to work break down

Made up of direct costs, indirect, funds earmarked for contingencies and escalation

During execution stage master control estimate isrevised Production information for 3MS for future estimates

To take corrective measures to minimise cost at any step



Cost control

Budgeting costs

Budget relates the cost with time progress

Budget – expected cost of performance under prevailing

conditionsStandards stands for cost achievable under efficient

operating conditions

Value of work performed implies monetary value of work

completed

Earned value analyses to measure project performance



Cost control

BCWS- time phased schedule of a budget

BCWP- approved cost of work performed on data date

ACWP- Cost incurred on accomplishing work on data date

Cost variance = BCWP – ACWPSchedule variance = BCWP – BCWS

Cost performance index = BCWP/ ACWP

Schedule performance index = BCWP / BCWS



Cost control

Project progress (%) = BCWP/ Budgeted cost

BCWP is sum of approved cost of all completed works

Cost overrun = BCWP- ACWP / BCWP

Time overrun = BCWP – BCWS / BCWP



Cost control by network analysis

The following table shows for each activity needed to

complete the project the notrmal time, the shortest time

in which the activity can be completed of a building

contract and the cost per day for reducing time for eachactivity. The contract includes a penalty clause of Rs 100

per day over 17 days. The overhead cost per day is Rs

160. The cost of completing 8 activities in norma time is

Rs 6500.



Activity Normal time in

days

Shortest time

in days

Cost of

reduction per

day (Rs)

1-2 6 4 80

1-3 8 4 90

1-4 5 3 30

2-4 3 3 -

2-5 5 3 40

3-6 12 8 200

4-6 8 5 50

5-6 6 6 -



• Calculate normal duration, its cost and

critical path

• Ca;lculate plot on graph cost/time function

for project & state

– Lowest cost & associated time

– Shortest time & associated cost



Arbitration

Arbitration is the means by which concerned parties to a

dispute get the same settled through the intervention of a

third person „Arbitrator‟ but without having recourse to a

court of law

To cut down expenses and time involved in a prolonged

trial in a court of law

Arbitrator is chosen by parties to decide between them

Arbitrator hears through the pleadings of both parties

and give decision which is called as “ award” which shall

be binding to both parties



Arbitration

• Regular appointment of arbitrator either through a letter

from competent authority of arbitration agreement or

through a courts order

• Arbitrators live span covers from the date, arbitrator

enters on the reference for the first time and date of

signing and publishing his award

• Award should be published within time frame of 4

months laid down in schedule of arbitration act where nospecified time limit is specified



Arbitration

Subject matter

Matters civil in nature are referred to arbitration

Disputes and questions related to

Ambiguity in specifications

Designs

Drawing & instructions

Quality of workmanship

Quality of materials used



Arbitration

• Fixing dates of hearing

• Arbitrator should give atleast 15 days clear notice for fixing dates of hearing

• Fix the dates after mutual consultation with both parties before him

• Conduct of proceedings by arbitrator

• Arbitrator has legal right to call upon any person connected withdisputes to give evidence before him

• Reasoned award - as per arbitration act, it is not mandatory to give

reasoned award (if total claim is above Rs 75000 and above)

• Court remit award to arbitrators for reconsideration when it isobserved to be indefinite

• Each of the contesting sides may appoint one arbitrator of his choice

• Twin arbitrators appoint an umpire within 1 month as per law



Arbitration

Powers and duties of arbitrator Administer oath to parties and witnesses

Take opinion of court, question witness and parties to

extent to ascertain facts

Make conditional award Award interest upto the date of award

Grant installments and time of payment



UNIT 4

Cash flow control

It is the management of system so that an optimum amount of

cash remains in the project fund so as to continue the project

at planned speed

Inflows to project fundOwners investment

Bank as loan

billings

payables – aggregate summary of cost forecast of

individual items

Fund flow



Fund flow

• Movement of fund in an organisation

• To estimate cash level in short term and plan accordingly

Cash inflows

Sale of goods

Owners equity

Balance cash requirement covered by debt financing



Cost control

Costing

Method of estimation of production cost

Production cost = direct cost + indirect cost

Labour cost = labour effort in man-hours x std labour hourly

rate

Labour hourly std cost =

annual estimated labour cost / annual productive hours

Materials cost = materials consumption quantity x standard

materials unit price



Cost control

Materials std price

Is the estimated all in price of unit quantity of an item

delivered at project site

It is fixed and does not change with market fluctuations

Simplifies estimation, planning, budgeting and control of

material costs

Difference between standard price and actual price isanalyzed at time of accounting costs



Cost control

Equipment utilization cost = equipment utilization hour x std

equipment hourly rate

Equipment hourly std rate =

Owning cost per hour + operating cost per hr

Where owning cost = depreciation

And operating cost = fuel cost + maintenance + major

repair + operator cost + tyre replacement cost



Productivity

Productivity

Labour productivity

Defined as output per labour hour.

measure of overall effectiveness of a construction work

system in utilizing labour, equipment and capital to

convert labour efforts into useful output and is not a

measure of capabilities of labour alone.



Productivity

Site productivity

Work size

Work site accessibility

Labour availability Local climate

Work culture

Contractual agreements



Material management

• Ensures that the quantity and quality required are on job as

per requirement

• Project manager concerned about material handling problems

• Lead times for material delivery are normally included in

project network

• Delay in material procurement creates material shortage

causing idle labour and time loss

• Indent, arrival and inventory of raw materials• Materials classified as bulk, std items and fabricated items



Inventory control

• Inventories consist of raw materials, work-in-progress, spare

parts and finished goods

Types of inventory

Movement inventory –transit inventory

Buffer inventory – safety stock Anticipation – specialized items like crackers, umbrella

Decoupling inventory – disengage different parts of production

system- even if a machine break down, the work on others

would not stopCycle inventory – purchases are made in lots than for exact

amount at a point of time

Inventory control



Inventory control

Inventory decisions

How much to order

When to place order How much safety stock to be kept

Inventory costs

Purchase cost – purchase price for items bought from outside

sources or production cost Ordering / setup cost /procurement cost- cost associated with

processing and chasing of purchase order, transportation,inspection.

Carrying cost – holding/ storage cost – cost associated with

storing an item in inventory Stockout cost- cost associated with not serving customers –

shortages – internal –production loss- external – loss of customer goodwill.

Inventory control



Inventory control

Inventory management systems

Fixed order quantity system – reorder level is determined – when stock reaches this level, a fresh order is made –

size of order is fixed and not the time

Periodic review system – time after which supplies of

orders are made are fixedFixed order quantity system

Classical EOQ Model

Assumptions

Demand for item is certain, constant over a period of time

Lead time is known & fixed

Per unit ordering and holding cost are constant



Inventory control

• Purchase price is constant. No discount available

• Inventory is replenished immediately as stock level reaches exactlyequal to zero.

Inventory cycle : interval between two successive points when orders

are placed

T(Q) = O(Q) + H(Q)

O(Q) = N X A

O(Q) = Total annual ordering cost

N- No of times order is placed per year

A- cost per order

H(Q) – Total annual holding cost

H(Q) = Q/2 * h

h- unit holding cost



Inventory control

Suppose if demand and lead time variable there is need

to provide for safety stock

Demand rate during lead time is in excess of forecasted

Delivery of goods delayed

Reorder level = expected demand during lead time + safety

stock



Financial management

• Knowledge of financial mgt is essential to takeappropriate decisions in construction trade

• Financial aspects• Return & risk of investment

• Choice & limitation of financing• Basic concept of investment is time value of

money

• Investor prefers investment that gives retunsearlier

• Concerns of investor are• Timing

• Quantum of return




Discounted cash flow techniques

– NPV

– IRR

NPV

Positive NPV means profit

IRR

Rate that equates present value of a stream of future cash

flows to cost of initial investment

R is solved by trial and error method

IRR greater than cost of capital, project is acceptable




Diff between NPV & IRR

NPV method discounts all proceeds at firms Cost of

capital

Implicitly assumes that proceeds can be reinvested at

this rate

IRR assumes that cash flows can be reinvested at IRR

Cost of capital is constant over a time period

NPV assumption is better one

IRR is easier to use

Fi i l t




Risk : variability of possible return is known as risk

Depends on competition, market condition, cost of rawmaterials

Cost of capital is the cost of raising capital which isrequired to deploy in the proposed project

How to raise capital?

Borrowing

Cost of debt : interest payment associated with it

Cost of equity capital :all stockholders receive dividendfrom their investment

Defined as the rate of discount that equates presentvalue of all expected future dividends with the marketprice of stock




Cost of retained earning

Cumulative profit that has accrued over time and has not

been distributed to the shareholders by the firm

Working capital management refers to all aspects of

mangement of current assets and liabilities

Management of working capital involves the following

Conversion of fund to inventory

Inventory to accounts receivables

Account receivables to funds




Management of cash

Transaction motive – cash required for daily affairs,

purchase, payment

Precautionary motive – predictability of cash inflow and

outflow. A reserve of cash required for normal flow (eg)delay in bill payment

Speculative motive- firm keeps a fund aside for new

profit making opportunity that may arise




Stochastic model

Assume demand for cash is stochastic i.e randomly

distributed one can set control limits after analysis of

previous demands from accounting records

Miller and orb model

Upper limit of cash –h, lower limit z

When cash touches upper limit h-z amount is transferred

to short term securities to earn interest

When cash balance touches zero, securities amounting

to z encashed to raise cash level to z




Financing working capital

Trade credits – credits advanced by seller to purchaser

Short term bank credits

Bank studies following before advancing loan

Whether nature of project eligible

Whether proposal has acceptable rate of return

Whether securities are available to bank

Whether proposal can be technically carried out




• Loan arrangement

• Overdraft - drawee is authorized to draw cheques to astipulated limit over and above his own credit balance.

• Cash credit arrangement –similar to overdraft. Borrower

draws up to a stipulated amount. In case amount is set

against hypothecation of goods, borrower may not

exceed the value of hypothecation

• Bill purchase arrangement –

• to supply credits to cater to the need for production.

• Borrower submit certified bill to bank andauthorizes bank to collect bill on behalf of borrower




Modes of securing risk Hypothecation – Banks provide credit against security of

movable property. Legal rights to sell the goods remain

with the bank.

Pledge – properties against which credit is secured are

tranferred to bank custody (share certificates, gold etc)

Mortgage – bank advance loan against mortgaging an

immovable property.





Intermediate term financing

large sum of investments that might take several yearsto invest like building a plant.

Investment produces benefits for several years

Debt scheduled for repayment in more than one year butin less than 7 to 10 years.

Term loans and lease financing are common methods to

mobilise capital

Term loans

Banks, state financial corporation, Industrial

development banks




• Bank may evaluate repayment schedule

• Firm evaluates whether PV of net cash flow justifies the

loan

To minimize risk of default , bank impose following

restrictions

o Financial information – to supervise present status and

future plans of company- present and projected balance

sheets

o Additional debt – prohibitions against incurring additional

debts

o Management – any major change in management

requires prior approval from bank

o Financial status - firm may be obligated to maintain the

current ratio during the currency of debt.





Lease financing

A lease is a contract in which the lessee is to make a

series of payments to the lessor for the economic use of

an asset owned by the lessor.

The ownership rights lie with the lessor Financing non profit and public sector project

Financial analysis of Public projects can‟t be compared

with NPV or IRR. Political factors, resources availability

need to be also considered. In private sector, primary purpose to do business –

measured by money. So techniques like NPV can select

desirability of project.




Benefit - cost analysis

Whether policy contributes to well being of society

Cost & time schedule of project is first determined

Returns are quantified – difficult to estimate (eg) benefits

of water supply system construction- reduction of

mortality

Inflows and outflows occur at different time periods,

principle of time value of money is considered

Benefit and cost is only an estimate

Various infrastructure projects can be ranked with benefit

cost analysis



Estimates

Consultant gives owner clear ideas of

• Approx volume of materials required

• Probable cost of complete project

• He need to work out estimates so that owner may get

prepared

Rough cost estimate

Preliminary estimate based on schematic drawings of

project using

Unit rate estimate – product of unit rate and number of

units



Estimates

Plinth area estimate –total space built up against totalcost of project

Rate based on volume of building – includes half thedepth of foundation but parapet is excluded

Detailed estimate Based on actual work drawings

No variation with actual values

Required for technical sanction and approval of project

First find out all rates per unit including profits Cost of each item = unit rate X calculated quantity of

item



Estimates

Revised estimate

This is made when there is a change amounting to more

than 5% of original value due to price hiking or change in

specification

Supplementary estimate

Required when some of items are overlooked during

preparation of original estimateTotal estimate

Complete estimate which furnishes total cost of project

Labour legislation



g

Why labour legislation is necessary?

To fix terms of employment Proper working conditions

Social security

Cordial relation between employers and employees

Labour and industrial laws

Concerning payment to labour Payment of wages act, 1936

Minimum wages act, 1948

Employee state insurance act, 1948

Payment of bonus act, 1965

Employee provident fund, 1952 Payment gratuity act, 1972

Relating to working conditions

Social security and civil rights of labour

Labour legislation



g

Contract labour is the employee of main contractor

Main employer is not responsible for provisions of workers employed

by subcontractor

Worker is entitled to day of rest in each week with full payment

Beyond normal working hours – overtime allowance

Employer should maintain registers and record

Govt should employ inspectors for enforcement of act

Employees can claim when violations against provision occur (within6 months)

Minimum wages act



Minimum wages act

• Prevents exploitation of labour by employers

• Wages includes all remuneration including all allowances,bonus but does not include house rent, water, electricity

charges, medical allowance, pension and gratuity

• Provision for fixation of minimum rate of wages

• Wage is paid as time rate or piece rate basis

• Different minimum rates are fixed as per

– Class of work

– Type of personnel employed

– Location of work



Minimum wages act

• Rates are revised after every 5 year interval• Provision for weekly holiday with pay

• Overtime payment at double the minimum rate

• Employee should maintain register

Payment of wages act

Wages to be paid promptly

If person is terminated his wages to be settled within 2days of termination

Applicable for salary less than Rs 1600 per month



Payment of gratuity

• Gratuity shall be payable to employee on termination of his

employment after his continuous service for not less than 5

years

– On his retirement, resignation or

– On his death or disablement due to accident



Factories act

• Health, safety, welfare, working hours, annual leave,

accidents and penalties are taken care of

• Health – arrangements for proper cleanliness, disposal

of waste, ventilation, comfortable working temperature

• Safety –proper precautions against fire, explosives , first

aid equipment, ambulances

• 8 hrs / day work not more than 48 hrs per week

• Worker engaged on holidays –compensation leave



Workmen‟s compensation act

• To provide social security to workers

• Compensation to be paid to workers in case of accidents

sustained during course of employment

• Amount is decided upon its seriousness

• Financial relief is given for following cases

– In case of death

– Occupational diseases

– permanent / partial disablement• Financial relief not given when

– Disability does not last more than 7 days

– Injury not resulting in death caused due to negligence of



Relation between management and labour

• Critical and important human relation area

• Day to day operations & ultimate success of the project

• Manager has to understand basic labour relations &

labour laws

• High productivity & reduce work stoppages

I d i l h l



Industrial psychology

Objective

Improve production

Keep up the motivation

Application Remove fatigue –limit working hours

Realize the role of project in national development

Relations between employer & employee should becordial- during sickness & death visits essential

Factors influencing selection of equipment and



g q p

machinery

Task considerationsnature of task and specifications

rate of work required

Daily or hourly forecast of planned production

Quantity of work & time allowed for completion

Site constraints

Accessibility to location

Working space restrictions

Altitude and weather conditions

Working season & work hours

Availability of eqpt hiring, repair & maintenance

Availability of fuel, oil & lubricants

Factors influencing selection of equipment




and machinery

Equipment suitability

Type of eqpt considered suitable for task

Production capability, serviceability condition &

delivery time of each equipment availableOperating reliability

Manufacturers reputation

Use of std components

Warranties & guarantees

Safety features




acto s ue c g se ect o o equ p e t

and machinery

Maintainability

Ease of repair & maintenance

Availability of spare parts

Economic considerations

Owning costs

Operating costs

Replacement cost of existing eqpt

Commercial considerations

Buy second hand or new eqpt

Rent eqpt

Purchase on lease

H d f t ti d th i ti



Hazards of construction and their prevention

Causes of accidents

Falls-70-80% of all fatalities & 40% of all injuries

Stepping on or striking against objects-10%

Lifting and carrying – over-exertion-25% workers lose abilityto work

Machinery

Electricity

Transport

Fires & explosions




p

Excavations

Main causes for accidentsCollapse of sides – mechanical failure of soil-vibration of

vehicles- collapse occurs very quickly – rescuing is difficult

Falling of materials & men into trench

Ways to prevent collapse

Timbering – supporting sides- diaphragm wall – deep

bored piles- fence at top

Battering sides to a safe angle –not greater than 45 and

not less than 30

Effective communication between people working in and

out

Check on Dangerous atmospheres

H d f t ti d th i ti




Erection of structural framework

Accidents due to

Erectors falling from heights

People at lower levels struck by objects

Collapse of framework

Prevention

Designer with good knowledge of safe erection procedures –

temporary bracing

Communication between designer & contractor – to put extra

loading

Safe ladders, safety belt, assemble at ground, safety nets

Safe use of cranes



• Hazards

– Structural failure of one of its elements

– Dropping of suspended load

– Trapping of people between moving superstructure of

mobile crane and nearby object

– Incorrect erection procedure

– Electrocution –if jib touches live overhead powerline

• Precautions

– Identify the weight & centre of gravity of load to obtain the

correct position of lifting

– Safe working load to be determined to avoid overloading

– Max lift height for load

– Do not pass under suspended load

Tunnelling



Tunnelling

• HAZARDS & PRECAUTION

– Burial from ground collapse –conventional timbering

– Inundation

• Even trickle of water should be sealed

• Emergency lighting

• Uncluttered walkways –escape route

– Fall from working platform

– Atmospheric pollution –CO fumes from vehicles

– Effective communication

– Safety audits

Unit 5



Procedures adopted in PWDs and CPWD

Organization structure of PWD

Minister (public works)

Secretary (IAS Cadre)

Chief Engineer

SE

EE

AEE

JE

Accounting procedures



Accounting procedures

• Accounts of PWD maintained with certain procedures• To ensure smooth & efficient functioning at all levels

• EE is responsible & he maintains detailed account of allpayments & receipts in his division

• Accounts audited by Accountant General Administrative sanction

Formal acceptance of proposal of work by administrative

dept

Approval is obtained by explaining proposal along with

its preliminary estimate



Technical sanction

Order passed by competant authority by sanctioning

detailed estimate of money for work to be carried out by

PWD

After this sanction only invitation of tenders for execution of work can be done

Types of bills



yp

First and final bill

when only a single payment to be made for a contract on itscompletion

Used for small or petty works

Value of bill does not exceed Rs 500

Running account bill

Also called as Form C in technical terms

For works executed both on piece work system as well as for

supplies received. For medium size works in which part bills in white form and

final bill in yellow forms.

Types of bills



Final bills

payment made on running account to a contractor on

termination of his contract.

Passed by Executive engineer incharge

Based on detailed measurements only.

Maintenance of imprest account

Imprest denotes standing advance of a fixed sum of money

given to a person in order to enable him to make specific

classes of payment which may be entrusted to him.

Amount of imprest should not exceed Rs1000

In order to enable subordinate staff to make petty cash

payments, amount of imprest is sanctioned.

Guidelines regarding maintenance of



imprest cash account

Payments should be entered daily

Should be attached with vouchers and serially

numbered.

One copy of imprest form should be sent to executiveengineer and counter foil should be retained by imprest

holder

Account should be balanced from time to time for convenience of imprest holder

Temporary advance account



Advance money given by executive engineer to his

subordinate officer temporarily to enable him to make

payments on vouchers which have already been passed for

payment

Temporary advances are not recoupable and account should

be closed as soon as possible.

Cash book

Has 2 sides – receipt side and payment side

On receipt side there is a money column –deals with cash

On payment side one more column to deal with cheques

Deals with receipts & payments made through bills and

vouchers

Cash book



All transactions to be recorded at actual occurrence time

Pages are machine numbered and no page or line leftblank

Corrections & overwriting to be avoided

Work register

Contains permanent and cumulative record of

expenditure - month by month during a year – on each

item of work

so that actual expenditure can be compared with

estimates

Kept by EE

Accounting for consumable materials



Accounting for consumable materials

• Materials required for works available from differentsources

– Suppliers

– Other works through Tranfer Entry order (TEO)

– Stock

• All the above constitute receipt column in Materials at

site (MAS)account

• In MAS account, cost of materials used and cost of

balance materials to be accounted at any time

Record for tools and plant



Record for tools and plant

• Whenever tools and plants are received from suppliers,

entries made in registers.

• When tools supplied to contractors, dated

acknowledgement is required• Entries made in T and P register shows the consolidated

account of transactions for one year

MBOOK



MBOOK

• Measurement book is original record – actualmeasurement of work done is legibly written

• Count of all supplies received so that payments can be

made to contractors for work done.

• Solid evidence in court of law

M-book should have following features:

Pages to be machine numbered

Register of all measurement books to be maintained –

date of issue &return

MBOOK



MBOOK

Written legibly – no one to record measurements other

than person authorized

No blanks to be left

Name of contractor, full name of work, date of commencement of work should be given before

measurements are recorded.

Corrections should be attested

Index column

SE can take disciplinary action if book is lost

Nominal muster roll



Attendance record of daily labour employed

Work completed by them and amount payable

Maintained by Junior Engineer

Daily labour report

Submitted by junior engineer to assistant engineer daily

Contains:

Name of work on which they are employed

Number of labourers

Class of labour

Approx value of work done

construction management final

Documents