Summary ENGINEERING MANAGMENT 1-notes of Department of civil and construction Engineering

University of Nairobi
Department of Civil and Construction Engineering



FCE 372
ENGINEERING MANAGEMENT 1
LECTURE NOTES


DR. NYAMBANE OSANO


2013

,FCE 372 – ENGINEERING MANAGEMENT I OSN - Lecture Notes




TABLE OF CONTENTS


1 OVERVIEW ....................................................................................... 1

1.1 COURSE DESCRIPTION 1
1.2 PREREQUISITE 1
1.3 IMPORTANCE OF THE COURSE 1
1.4 IMPORTANCE OF THE COURSE 1
1.5 TEACHING METHODOLOGY AND TECHNIQUES 1
1.6 REQUIRED TEXT BOOKS 1


2 PRINCIPLES OF MANAGEMENT PRACTICE ....................................... 2

2.1 ENGINEERING 2
2.2 MANAGEMENT 2
2.3 ENGINEERING MANAGEMENT 3
2.4 EVOLUTION OF MANAGEMENT THOUGHT 3
2.4.1 APPROACHES TO MANAGEMENT 3
2.4.2 MAJOR CLASSIFICATION OF MANAGEMENT APPROACHES AND THEIR CONTRIBUTORS 4
2.5 HENRY FAYOL’S PRINCIPLES OF MANAGEMENT 5
2.6 MODERN MANAGEMENT THEORY 6
2.6.1 SYSTEM APPROACH 7
2.6.2 CONTINGENCY THEORY 8


3 MANAGEMENT FUNCTIONS .............................................................. 9

3.1 INTRODUCTION 9
3.2 THE FUNCTIONS OF MANAGEMENT 9
3.2.1 PLANNING 9
3.2.2 ORGANIZING 9
3.2.3 STAFFING 9
3.2.4 DIRECTING 10
3.2.5 CONTROLLING 10


4 STRUCTURES OF CONSTRUCTION BUSINESS................................. 11

4.1 TYPES OF CONSTRUCTION PROJECTS 11
4.1.1 BUILDING CONSTRUCTION 11
4.1.2 HEAVY / CIVIL CONSTRUCTION 12
4.1.3 INDUSTRIAL CONSTRUCTION 12
4.2 CONSTRUCTION PROCESSES 12


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,FCE 372 – ENGINEERING MANAGEMENT I OSN - Lecture Notes



4.2.1 DESIGN AND CONSTRUCTION TEAM 12
4.2.2 FINANCIAL ADVISORS 12
4.2.3 LEGAL CONSIDERATION 13
4.2.4 INTERACTION OF EXPERTISE 13
4.3 PROCUREMENT MODELS 13
4.3.1 TRADITIONAL 14
4.3.2 DESIGN AND BUILD 14
4.3.3 MANAGEMENT PROCUREMENT SYSTEMS 15
4.4 CONSTRUCTION CAREERS 15
4.5 CONTRACTOR BUSINESS STRUCTURES 16
4.5.1 SOLE PROPRIETORSHIP 16
4.5.2 PARTNERSHIP 16
4.5.3 CORPORATION 16
4.5.4 LIMITED LIABILITY COMPANY (LLC) 16


5 CONSTRUCTION ACCOUNTING METHODS ..................................... 17

5.1 ACCOUNTING METHODS 17
5.1.1 COMPLETED CONTRACT METHOD 17
5.1.2 PERCENTAGE COMPLETION METHOD 17
5.2 MISCONCEPTIONS 18
5.3 FINANCIAL STATEMENTS AND THEIR USERS 18
5.3.1 QUALITATIVE CHARACTERISTICS 18
5.3.2 FINANCIAL INFORMATION 18
5.3.3 INTERNAL USERS 19
5.3.4 EXTERNAL USERS 19
5.3.5 OTHER EXTERNAL USERS 19
5.4 CONCLUSION 20
5.5 AUDIT, REVIEW AND COMPILATION ENGAGEMENT 20
5.5.1 AUDIT ENGAGEMENT 20
5.5.2 REVIEW ENGAGEMENTS 21
5.5.3 COMPILATION ENGAGEMENTS 21
5.6 LINES OF CREDIT, BANK LOANS AND LONG TERM DEBT 21
5.7 BOOK-KEEPING 22
5.7.1 WHAT IS BOOK-KEEPING? 22
5.7.2 TYPES OF BOOK-KEEPING SYSTEMS 22
5.7.3 BASIC ELEMENTS OF BOOK-KEEPING 22
5.7.4 THE BOOK-KEEPING EQUATION 23
5.7.5 TYPES OF BUSINESS TRANSACTIONS 23


6 FEASIBILITY STUDIES OF CIVIL ENGINEERING PROJECTS ........... 25

6.1 DEFINITION 25
6.2 TYPES OF FEASIBILITY STUDIES 25



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, FCE 372 – ENGINEERING MANAGEMENT I OSN - Lecture Notes



6.2.1 TECHNICAL FEASIBILITY 25
6.2.2 ECONOMIC FEASIBILITY 25
6.2.3 OPERATIONAL FEASIBILITY 25
6.2.4 LEGAL FEASIBILITY 25
6.3 COST-BENEFIT ANALYSIS 26
6.3.1 OVERVIEW 26
6.3.2 THE PURPOSE OF THE TECHNIQUE 26
6.3.3 IDENTIFYING COSTS 26
6.3.4 IDENTIFYING BENEFITS 27
6.4 SELECT EVALUATION METHOD 27
6.4.1 DISCOUNTED CASH FLOW ANALYSIS (DCF) 27
A. PRESENT VALUE ANALYSIS: 27
B. NET PRESENT VALUE (NPV) 28


7 ECONOMICS OF DIRECT LABOUR CONSTRUCTION ........................ 33


8 CIVIL ENGINEERING CONTRACTS ................................................. 34

8.1 DEFINITION 34
8.2 ELEMENTS OF A CONTRACT 34
8.3 FORMATION OF A CONTRACT 35
8.4 TYPES OF CIVIL ENGINEERING CONTRACTS 35
8.4.1 ITEM RATE CONTRACT 36
8.4.2 PERCENTAGE RATE CONTRACT 36
8.4.3 LUMP SUM CONTRACT 36
8.4.4 LABOUR CONTRACT 36
8.4.5 MATERIAL SUPPLY CONTRACT 36
8.4.6 PIECE-WORK CONTRACT 36
8.4.7 COST PLUS PERCENTAGE RATE CONTRACT 36
8.4.8 COST PLUS FIXED RATE CONTRACT 36
8.4.9 COST PLUS FLUCTUATING FEE CONTRACT 36
8.4.10 TARGET CONTRACT 36


9 CONTRACT DOCUMENTS ................................................................ 37


10 TENDERING PROCEDURE ............................................................... 38

10.1 OVERVIEW 38
10.2 BREAKDOWN OF FIDIC TENDERING PROCEDURE 39


11 CIVIL ENGINEERING ETHICS ......................................................... 40

11.1 INTRODUCTION 40



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