A Cost Based Approach to Project Management: Planning and Controlling Construction Project Costs

211 Pages·2022·4.745 MB·English

by  Mehmet Nihat Hanioglu

A Cost Based Approach to Project
Management
Planning and Controlling Construction
Project Costs
A Cost Based Approach to Project Management: Planning and Controlling Construction
Project Costs introduces early-career architects, construction managers, civil
engineers, and facility managers to the essentials of delivering projects on-time and
at cost. Drawing on the author’s decades of experience managing marquee building
and infrastructure projects around the world, this primer offers busy professionals a
crash course in budgeting, cost estimating, scheduling, and cost control. Chapters
break down the details of cost elements, structuring project costs, and integrating
budget with schedule, providing novice project managers with the key skills to plan
and execute construction projects with confidence and precision.
Features:
• Illustrates the principles of project management and the essentials of cost
planning and control with easy-to-understand examples from the construction
industry
• Includes step-by-step details of project planning, cost estimating, and
management processes
• Offers clear, cost-based methods for defining scope, preparing bids, and
planning for contingencies, as well as monitoring progress and determining
when to take remedial action
• Contains a user-friendly guide to project management acronyms and terminology
• Provides sample construction schedules, budgets, and progress report forms
An ideal resource for self-study, on-the-job training, or courses in construction,
architecture, or civil engineering project management, A Cost Based Approach to
Project Management makes a worthy addition to the aspiring project manager’s
reference shelf.
Mehmet Nihat Hanioğlu is a civil engineer whose four-decade career portfolio
includes heavy civil construction, residential development, mixed-use hospitality
design/build projects, and claims and project management consulting. He has
overseen major challenging development projects around the world, including the
Hyatt Regency Bishkek, the Wynn Hotel and Resort Macau, and the High Point
Terminal in Riyadh. As an instructor, he has shared his expertise with emerging
project managers at City University of New York–Lehman College, Illinois
Institute of Technology–Chicago, and California State University at Sacramento.

A Cost Based Approach
to Project Management
Planning and Controlling Construction
Project Costs
Mehmet Nihat Hanioğlu
First published 2023
by Routledge
605 Third Avenue, New York, NY 10158
and by Routledge
4 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2023 Mehmet Nihat Hanioğlu
The right of Mehmet Nihat Hanioğlu to be identified as author of this
work has been asserted in accordance with sections 77 and 78 of the
Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
utilised in any form or by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in
any information storage or retrieval system, without permission in writing
from the publishers.
Trademark notice: Product or corporate names may be trademarks or
registered trademarks, and are used only for identification and explanation
without intent to infringe.
Library of Congress Cataloging-in-Publication Data
Names: Hanioğlu, Mehmet Nihat, author.
Title: A cost based approach to project management : planning and
controlling construction project costs / Mehmet Nihat Hanioğlu.
Description: New York, NY : Routledge, 2022. | Includes bibliographical
references and index.
Identifiers: LCCN 2022003654 (print) | LCCN 2022003655 (ebook) |
ISBN 9781032001005 (hbk) | ISBN 9780367776459 (pbk) |
ISBN 9781003172710 (ebk)
Subjects: LCSH: Building—Cost control. | Construction industry—Costs. |
Construction industry—Cost control. | Building superintendence. |
Project management.
Classification: LCC TH438.15 .H36 2022 (print) | LCC TH438.15 (ebook) |
DDC 692/.8—dc23/eng/20220401
LC record available at https://lccn.loc.gov/2022003654
LC ebook record available at https://lccn.loc.gov/2022003655
ISBN: 978-1-032-00100-5 (hbk)
ISBN: 978-0-367-77645-9 (pbk)
ISBN: 978-1-003-17271-0 (ebk)
DOI: 10.1201/9781003172710
Typeset in Goudy
by Apex CoVantage, LLC
Thank you Kathleen;
I could not have done this without your support.

Contents
Abbreviations xiv
Preface xv
1 Defining a Project 1
Introduction 1
Project Definers 2
Triple Constraints 2
Scope 2
Cost 3
Duration 4
Time and Money Complications 5
Do the Triple Constraints Sufficiently Define a Project? 5
Uniqueness 6
One-Time Event 6
Comprised of and Breakable to Tasks 7
Task Interdependence 7
Other Requirements and/or Expectations 7
Can Value Be a Project Definer? 8
What Happens If It Is Not a “Project”? 8
Construction Projects 9
Types of Construction Projects 9
Public and Private Construction Projects 9
Buildings: Residential and Nonresidential Building Projects 11
Heavy and Civil Engineering Construction Projects 11
Stakeholders and Key Participants 11
Stakeholders’ Differing Project Perspectives 12
Basic Functions of the Stakeholders 12
The Operator as the Fourth Stakeholder 13
Project Delivery Systems 14
Most Common Project Delivery Systems 14
Construction Contract Pricing Options 15
viii Contents
Unit Price Contracts 15
Lump Sum Contracts 15
Variations of Cost Plus Fee Contracts 16
In Summary 16
2 Management, Project Management, and Construction Projects 17
Introduction 17
Modern Management 17
Why Study Management? 18
Who Are Managers? 19
Everybody Manages Something 19
What Do Managers Do? 19
Where Do Managers Work? 20
Management Levels and Titles 20
Accountability and Dependency 20
Roots of Modern Management 22
Managerial Roles 26
Interpersonal Roles 26
Informational Roles 26
Decisional Roles 26
Managerial Skills 26
Conceptual Skills 27
Interpersonal (Human) Skills 27
Technical Skills 27
Management Practices 28
Managers Have to Make Decisions 28
Common Decision-Making Mistakes 30
Management Process 30
Planning 30
Organizing 32
Leading 32
Controlling 33
Most Common Managerial Mistakes 33
Project Management 33
Construction Project Management 35
Cost and Time Considerations at Initial Stages of a Construction Project 35
In Summary 36
3 Understanding Cost and Its Elements 38
Introduction 38
Cost Is More Than a Dollar Amount 38
Elements of a Cost 40
Contents ix
Price 42
Unit Cost, Unit Price 42
Assembly Unit Costs 43
Cost Line Items 43
Example for Unit Cost Conversions, Assembly Unit Cost, and Performance Assumptions 43
Unit Cost Conversion for Materials 44
Labor and M/E Unit Costs 44
Labor and M/E Quantities 45
Output Rate 46
Resource (Labor or M/E)- Hours 47
Output Rates, Resource-Hours and Activity Durations 47
Managing a Cost Requires Knowing Both of Its Elements 50
Tax, Price, and Cost 50
Can the Price Be Less Than Its Cost? 51
Defining Value 51
Value, Quality, and Cost 52
Types of Values 53
Value Priorities of Stakeholders and Key Participants 53
Value as a Measure of Project Success 54
Considerations for Setting Value Goals for Projects 54
In Summary 54
4 Cost Types and Components 55
Introduction 55
Types of Costs 55
Direct and Indirect Costs 55
Fixed and Variable Costs 57
Examples 57
Fixed Direct Costs 57
Fixed Indirect Costs 57
Variable Direct Costs 58
Variable Indirect Costs 58
Identifying Cost Types Example 58
Components of a Cost 62
Material Component 62
Labor Component 62
Machinery, Equipment, and Other Direct Costs (M/E) Component 64
Overhead (O/H) Component 64
Depreciation Is Not a Cost 66
What Do Cost Types and Components Indicate? 67
In Summary 67