Construction Project Management – Complete Guide

Welcome to our Ultimate Guide to Construction Project Management! We’ve divided this guide into four distinct sections that will give you a complete overview into the construction project management process and the methodologies that  some of the largest construction contractors and subcontractors in the world are using to manage their projects.

In part one, we give a basic overview of the construction management process, defining construction projects in terms of a three-stage life cycle. In part two, we talk about the responsibilities of project managers during the pre-construction stage.

In part three, we look at the actions and activities that project managers use to keep projects on track during the construction phase. Then, in the final part of this guide, we review the most important activities that are involved in closing-out or finalizing a completed project.

By the end, we hope you’ll understand a lot more about project management in the construction industry.

Part One: Overview of Construction Project Management

Construction project management is a complex profession that requires a unique combination of technical management skills and the ability to coordinate and collaborate effectively with others. Effective project management is a critical aspect of overall project performance, as project managers make hundreds of decisions that directly impact the project schedule and budget. Learn how to become a construction project manager.

Role of the Construction Project Manager

The role of project managers in the construction industry is to bear responsibility for completing each project in accordance with the performance objectives outlined in the construction contract. A project manager employed by a general contractor oversees a construction project throughout its entire life cycle.

Project managers of subcontracting organizations play a similar role, except that they are responsible only for a portion of the project and not for the entire thing. Key management responsibilities include, but are not limited to:

• Planning and scheduling the construction process from start to finish

• Allocating resources effectively throughout the project

• Managing staff and human resources

• Establishing and measuring performance targets

• Managing the project budget

In addition to performing these technical tasks, project managers may act as part of a design team or as a hub of communications for other stakeholders. The best project managers are distinguished by their ability to communicate effectively, motivate team members, and delegate tasks to get more done.

Throughout this guide, you will encounter more information about what tasks project managers are responsible for in each stage of the construction project life cycle.

General Contractors vs Subcontractors in Construction Project Management

In construction, a general contractor and subcontractor have different roles in the project. General contractors are always under direct contract with the project owner, while subcontractors are usually hired by the contractor to deliver on a specified portion of the construction contract. The working relationships between general contractors and subcontractors are determined by the project delivery method that the project owner chooses.

General contractors strive to build a great reputation for delivering quality work, in hopes of attracting more project owners to work with them in the future. In contrast, subcontractors are more concerned with developing beneficial connections with contractors that can lead to future work opportunities. Subcontractors also tend to specialize in certain trades or activities, which makes it easy for them to estimate costs and accurately schedule work.

Despite their differences, contractors and “subs” have a lot of the same motivations and goals when it comes to project planning. Both parties need to deliver on the technical specifications outlined in their contracts and both need to stick to a project schedule and budget to turn a profit. Subcontractors, like general contractors, have a need to schedule work effectively, optimize resource utilization, control costs, and monitor labor productivity on the job site.

Defining the Construction Management Process

In this eBook, we assess the roles and activities of construction project managers during three stages of the construction project: pre-construction, project construction and post-construction. While other models for the project life cycle do exist, we prefer this one because each stage is strongly correlated with the types of activities that construction project managers are responsible for.

During pre-construction, project managers focus on comprehensive planning to ensure that resources are deployed and utilized as efficiently as possible. In the construction phase, project managers focus on monitoring the activities on the job site and checking the performance of the project against its stated objectives. Finally, in the post-construction stage, project managers play an administrative role in finalizing project documentation, performing tasks to close out the project, and finalizing project performance data.

Part Two: Construction Project Management in the Pre-Construction Phase

In the pre-construction phase, the focus of project management is on preparing a project management plan that will define how the project is completed. Before construction begins, project managers spend a lot of time planning and scheduling to ensure that their organizations mobilize capital as efficiently as possible towards the completion of the project. The pre-construction phase begins when a project delivery method is selected by the project owner.

Project Delivery Methods for Construction Project Managers

Completing a construction project requires input and collaboration between several parties. The project is initiated by a project owner. Architects and engineers are needed to manage the aesthetic and technical aspects of building design. A general contractor is hired to perform the work. The general contractor employs a construction project manager who oversees the project schedule and budget. The general contractor may perform some or all of the work required by the contract. They may also hire subcontractors to deliver on portions of the project requirements.

For a given project, the project owner chooses a delivery method that defines the working relationships between the parties involved in the project. Most projects are completed using one of the following four delivery methods:

Design-Bid-Build – In the design-bid-build method, the design and construction processes are entirely separated. The project owner hires an architect to design the project, but does not choose a contractor until the design phase has been completed.  Once the design has been finalized, the project owner will take bids from contractors for the work. This method is popular because it allows project owners to provide very specific project requirements for contractors to bid on. Once a contractor has been selected, they may hire one or more subcontracting companies to deliver specific aspects of the project.

Design-Build – Design-build is an alternative to design-bid-build that seeks to shorten project completion times by having the same party handle the design and construction phases. A design-build contractor offers architectural, engineering and contracting services, and also maintains relationships with subcontractors whose services complement their own capabilities. Project owners may prefer the design-build project delivery method as it reduces the project completion time and it creates a single point of responsibility for the entire project.

Integrated project delivery (IPD) – Integrated project delivery is an emerging project delivery model that employs a team-based approach to the design and construction process. In this model, the parties working on the project enter into a multi-party agreement and work collaboratively throughout the entire design and construction process. The multi-party agreement aligns the incentives of all parties, offering incentives based on the performance of the project. Close collaboration between architects, building engineers, technical consultants, an MEP contractor, and a project manager helps to reduce waste throughout the process and encourages each contributor to look beyond their own role and focus on maximizing project outcomes for the team as a whole.

Integrated labor delivery (ILD) – Integrated labor delivery is an innovative project delivery method that builds on the IPD framework, integrating concepts from lean construction and the Design Build Institute of America. In the ILD framework, subcontracting organizations participate in the planning, budgeting and scheduling process of the project. Subcontractors may also be included in the initial multi-party agreement as a means of holding them accountable for labor delivery and sharing project risk and reward.

Subcontractors can be involved in projects in very different ways depending on the delivery model. In a design-bid-build contract, subcontractors play a relatively narrow role in project delivery as they are brought in after the design phase and paid a fee to provide labor. In the ILD model, subcontractors are heavily involved in each stage of the construction process from planning to construction and delivery.

Establishing a Project Management Plan

Once a contractor or subcontractor has been commissioned, the construction project manager should begin developing a project management plan that describes how the project will be managed. A project management plan for construction needs to cover at least the 12 items listed below:

1. Scope of the Project – The project manager should clearly define the scope of the project and what services or deliverables are included.
2. Critical Success Factors – The project manager should create a definition of success for the project. This could be related to performance against a budget or deadline, or other project performance indicators.
3. Project Deliverables – The project manager should create an itemized list of the individual deliverables for the project.
4. Work Breakdown Structure – The project manager should divide the project into a list of activities that can be managed on a task-by-task basis.
5. Schedule – Project work is almost always oriented around deadlines, as the project owner typically wants to use the building for a business purpose. The project manager establishes and maintains a project schedule to ensure that work is completed on time. Project managers use different types of graphical tools to visualize and manage the project schedule.
6. Budget – A project manager should create a comprehensive budget for the project that accounts for the cost of every activity in the work breakdown structure, incorporating both material and labor costs.
7. Quality – Project managers should define the quality standards that will apply to each individual project, develop a strategy for measuring the quality of the project and collaborate with the project delivery team to meet the stated quality targets.
8. Human Resources Plan – American construction companies and subcontractors are currently facing a shortage of skilled trade workers. Project managers must identify the human resources that are required for the project and identify strategies for recruiting, training, developing, and managing all members of the project delivery team.
9. Stakeholder List – A stakeholder list simply lists all of the project stakeholders and describes their interests and concerns with respect to the project.
10. Communication – The project manager should define a communication plan for the project that establishes methods of communication between all stakeholders and a schedule for formal communications about the project.
11. Risk Assessment – Project managers need to address risk on an ongoing basis throughout the project life cycle. The initial risk assessment should identify potential sources of risk to the project and identify them along with their probability, impact, priority, and triggers. Effective project managers prepare contingency plans that can be quickly implemented when anticipated risks materialize.
12. Procurement Plan – A procurement plan defines what materials or services must be sourced from external providers, how the procurement process will function, and how suppliers and vendors will be managed during the project.

Each of these 12 items plays an important role in overall project success, but the ultimate goal for construction project managers is to complete projects on-time and on-budget to ensure profitability for their organizations or the entire integrated project delivery team.

Project Scheduling Methodologies

A detailed project schedule that accounts for even the smallest tasks on the construction site helps to ensure that the project meets its ultimate deadline. Project scheduling allows project managers to coordinate the presence of different subcontractors and the order of activities on the job site to maximize labor productivity. Project managers use several techniques to build complex construction schedules that help drive results.

Gantt Charts offer a simple way of representing a lot of information about how a project is scheduled. A Gantt chart is a simple graph with a calendar on one axis and a list of project tasks on the second axis. The bars on the graph represent the duration of each task within the project calendar. At a glance, you can easily see when the project begins and ends, what tasks are defined in the work breakdown, the start, finish and duration of each tasks, and which tasks overlap with each other.

Critical Path Scheduling is done by identifying the longest stretch of dependent activities in the work breakdown structure and determining the overall duration of the project. Project managers must define the required sequence of work for the project and all of the dependencies between activities. Critical path scheduling determines the shortest possible time to complete the project and organizes activities around completing the project as quickly as possible.

Line of Balance is a useful project scheduling methodology for subcontracting organizations that perform repetitive labor tasks. The project manager establishes performance objectives for completion of the task and compares actual progress to the objectives on an ongoing basis. A diagram is created that represents the projected work schedule as a single line on a graph. As the project progresses, the project manager plots the progress on the same graph and the two lines can be compared. This makes it easy to visualize performance vs goals, identify the follow-on effects of delays, and forecast future performance.

Q Scheduling means quantitative scheduling. Each task on the work breakdown structure is represented on the Q schedule along with the location of the task on the job site. The primary goal of Q scheduling is to ensure that there is no interference between activities on the job site by scheduling one task at a time for each location. Q scheduling is increasing in popularity as it provides a high level of granular control over the project schedule.

Budgeting and Estimating Costs for Your Construction Project

The most difficult task of a construction project manager is establishing the project budget since it must be done before the work can be started. To ensure that the correct items are included in the budget, it should be created after defining a clear scope of work for the project and creating a work breakdown structure that clearly describes every task that must be completed to deliver the project. A project budget should make allowances for at least the following expense categories:

1. Labor – Labor costs can be derived from historical data, current market rates, union rates or guidebook estimates.
2. Materials – Project managers implement and execute on a procurement strategy to get the best price and value for materials that meet the technical requirements of the project.
3. Equipment – If a contractor needs to purchase or rent equipment for a project, the cost of the equipment (including wear-and-tear) should be included in the project budget.
4. Subcontractors – If a contractor plans to subcontract out some of the project delivery, that should be included in the project budget.
5. Supplies – Materials are used to build the project, supplies are used to maintain the construction operation. Supplies include things like gasoline for vehicles, oil for maintaining equipment, etc.
6. General Conditions – Includes items such as project management staff, telephones, permits, fees, cleaning, and other sources of indirect costs in relation to the project.
7. Profit – Contractors and subcontractors want more than to simply cover their costs – they want to make a profit. Profit should be calculated and worked into the budget plan and the project manager should continually track and seek to optimize the forecasted profitability of the project.
8. Taxes – Contractors and subcontractors are responsible for paying state and federal taxes on their operating profits each year. When preparing a project budget or estimate, project managers should always be aware that a portion of the profits will be used to satisfy their company’s tax liabilities.

The Role of CPMs in Project Design

The role that project managers play in project design is heavily dependent on the project delivery method. In a design-bid-build project where design and construction are performed separately, project managers may not join the project until after the design has already been completed. In contrast, the method of integrated labor delivery has project managers working on collaborative project teams with architects, engineers, and subcontractors. In this case, project managers may be considerably involved in overseeing the design phase and coordinating with engineers and architects to ensure that technical project requirements are satisfied.

Part Three: Construction Project Management in the Construction Phase

Construction project managers lead and participate in planning and organizing activities during the pre-construction phase. In the construction phase, the project manager spends less time creating new plans and comparatively more time overseeing progress on the construction site, measuring the progress of the project in relation to defined goals, and working to ensure that the project finishes on-time and on-budget.

The construction phase is where the majority of the project budget and schedule is spent. The pre-construction phase, during which project managers are responsible for thoroughly planning and scheduling the project, typically consumes just 7-12% of the total project budget, while the construction phase itself accounts for 90%. Skilled construction project managers plan thoroughly during the pre-construction phase to ensure that resources are optimally utilized in the construction phase of the project.

As the construction phase begins and project managers begin to focus more on progress monitoring and daily management tasks, planning and risk management activities should still remain a focus. Project managers always need to be identifying sources of risk and developing contingency plans to protect the project schedule and budget. Beyond ongoing planning and risk management, there are five key activities for project managers to focus on during the construction phase.

1. Managing Procurement in the Construction Phase

Construction project managers are responsible for organizing the procurement of materials for the project, as well as the delivery of materials to the job site in accordance with the project schedule. Project managers must purchase materials that meet the technical specifications for each aspect of the project as agreed by the architect and designers during the submittals process.

Effective procurement and materials handling has a significant impact on project outcomes. Labor crews on the job site must have access to the materials required to perform their specified tasks as per the project schedule, otherwise, the project will fall behind schedule due to poor worker productivity. The project manager must negotiate shrewdly and choose vendors carefully to get the very best price on materials that satisfy the technical requirements of the project, ensuring that the work can be completed for a profit.

Construction project managers can employ several different strategies for choosing vendors and coordinating materials to the job site. A project manager may put out an RFQ (request-for-quote) to several different suppliers, asking them to submit quotes for a specified quantity and quality of materials.

They may assess suppliers across a range of criteria, including cost, quality, risk, financial stability, service characteristics, and payment options. They may also maintain relationships with suppliers that have consistently met their needs in the past, or they may be required by the construction contract to deal with a specified supplier for specific items.

Construction project managers must also develop a strategy for ensuring that materials are available on the job site when required. If the materials are all delivered to the job site as construction begins, they may take up too much space. Many subcontracting organizations have their materials supplier ship construction materials to a separate warehouse location that is proximal to the job site. Here, the materials are organized and shipped to the job site according to what is needed that day. Maintaining a warehouse of materials close to the job site makes it easy to ensure that the required materials are shipped to the job site each day.

2. Managing Change in the Construction Phase

If the pre-construction phase was completed thoroughly, there should be little need to develop new construction plans during the construction phase. Still, there are occasions when the project owner requests a change or when unforeseen circumstances arise that necessitate a change to the original project design. Project managers should strive to minimize the need for change by thoroughly investigating the job site and working conditions, properly identifying risks during the pre-construction and construction project phases, and ensuring that legal requirements are met and required permits obtained before work begins.

Changes can be directed by the designer, contractor, engineers, or the project owner. Once work begins, it is ideal if the project design can be executed-as-tendered, with any requested changes coming directly from the project owner. Project managers must implement a change control procedure to manage the process of changing the design, ensure that any design changes are reviewed for safety and performance requirements, and ensure that the changes are appropriately billed to the customer.

Construction project managers are increasingly adopting change order management and tracking software to ensure that changes are accurately billed to the customer and executed on the job site. An electronic change order describes the change being requested, who is requesting the change, and the reason for the change, but project managers are still responsible for evaluating and mitigating risks associated with the change, assessing whether the change might have any other consequences, and ultimately approving or rejecting the proposed change.

Project teams must collaborate to determine the cost-vs-value of potential changes, and any new changes to be implemented should be clearly defined and agreed as necessary by all project stakeholders.

3. Tracking Work on the Construction Site

Construction project managers play a leading role in the management of labor on the job site. Project managers are directly responsible for keeping the project on-schedule, an objective that can only be achieved by maximizing labor productivity throughout the construction phase.

Construction project managers must collect information from the construction site to effectively monitor labor productivity and ensure that work is happening on schedule. This requires a consistent and regular flow of information from the job site, typically in the form of work logs and daily activity reports. Daily construction reports should always include:

• A description of the weather for the day

• Who was present on the job site and what area of the work site they were operating in

• A description of the work accomplished

• Quantities of material that were used by workers on the job site that day

• A record of which subcontractors were present on the job site

• Number of hours worked by crews and individuals, including breaks and lost time

• A description of what equipment was used by workers

• Information about any potential upcoming delays that could impact productivity

• Any important events that happened on or around the job site

• Any visitors to the job site should be documented

• Document any safety discussions or training that was delivered

• Document any meets that occurred and the results

• Document the results of a visit from any legal authority (field inspector, police officer, etc.)

• Signature of the project superintendent (or whoever authored the report)

Project managers depend on their colleagues in the field for a consistent supply of accurate information that can be used to effectively manage labor productivity on the job site. eSUB construction project management software helps streamline the process of communication between the back office and field, helping to ensure that daily reports are delivered consistently and that project managers can act quickly to mitigate delays.

4. Cost Control Monitoring in the Construction Phase

If the project schedule is a project manager’s number-one concern during the construction phase, controlling costs is surely a close second. Cost control simply means ensuring that the project is delivered within the approved budget.

Just as project managers strive to reduce the need for changes through comprehensive project planning, the majority of cost control activities happen in the planning process. Up to 80% of project costs are dictated by decisions made during the design process, while just 20% of costs are determined during construction. Still, project managers must exercise management of the project budget by assessing the completion of work (accumulation of costs) against the cash flow plan (availability of capital) to ensure that the project remains both viable and profitable.

Construction project managers should strive to maintain an up-to-date cost plan that contains the most current estimate of the final project cost and of future cash flow. Project owners and other stakeholders should receive regular budget reports that describe the current cost situation with respect to the project. Project managers may also use graphical methods to visually depict the cost performance of the project versus the predicted budget.

Project managers rely on daily reports from the job site to assess the current progress of work, determine total costs based on labor and material usage reports, and compare those figures to their initial schedule and cost projections.

5. Document Control and Records Management for Construction

The pre-construction phase already generates a huge amount of documentation, but construction project managers are still responsible for maintaining a system of document control and records management during construction.

In the pre-construction phase, project managers collaborate with a project delivery team to create and deliver a complete project schedule and design. Here, they are responsible for managing submittals, architectural drawings, technical specifications, and other data, and compiling them into a project manual. Once the construction phase begins, however, project managers take on responsibility for managing additional types of documentation, such as:

Requests-for-Information (RFIs) – If a worker is unclear on how to perform a specific task, they may send in an RFI to request more information, such as a copy of a drawing or submittal document. A project manager must always be careful to provide the right information from the correct version of the plans when responding to RFIs, as errors in communication here can frequently lead to costly rework.

Construction Daily Reports – Daily construction reports need to be reviewed on a regular basis to verify that the project is progressing smoothly, but they are also typically the most important type of evidence used to contest a construction contract dispute. Construction daily reports can be used years in the future to prove when and how specific tasks on the job site were completed, so it’s important that subcontractors accurately document them.

Change Orders – Every change order should be subjected to the change control process and filed somewhere safe for reference later. eSUB’s cloud-based project management platform acts as a document storage solution for subcontractors, ensuring that documents are securely stored and that the most current versions are accessible to all project stakeholders.

Part Four: Construction Project Management in the Post-Construction Phase

Once construction is completed, the final stage of the project is known as the post-construction. Here, project managers take on an administrative role and work to finalize the project in all of its aspects.

Closing Out a Completed Project

When a construction project is finally finished, the completion of the project should be documented by the project manager. The project manager should verify that all tasks identified in the work breakdown structure have been completed according to the quality standards that were defined in the initial project management plan. There should also be a review of any change orders that were submitted to verify that the changes were completed as specified and that they are reflected in invoices and budgetary documentation.

From an accounting perspective, closing the project means finalizing the accounting for the project, ensuring that all subcontractors, suppliers, and vendors have been paid, and preparing reports on the financial performance of the project.

Implement the Handover Strategy

A handover strategy is simply the process of transitioning the completed building and work site away from the control of the contractor and into the hands of the project owner. The project owner should be interviewed to verify their satisfaction with the completed work and a final inspection of the project should be completed to ensure that the building meets the required technical specifications and quality standards.

As part of the handover strategy, the project owner must be provided with all of the information and documentation necessary to operate the building. This includes things like building schematics, owner/operator manuals for building components, and instructions for managing building utilities and other features. Once the project owner assumes occupancy of the building, a warranty period may begin during which the contractor remains a liability for any construction defects.

Review Your Work and Strive for Continual Improvement

Project managers in the construction industry should conclude every project with a review of their own performance and an objective analysis of how they could improve on their work for future projects.

Some project managers are exceptional at collaborating with others in the planning phase but have less expertise in construction phase cost-control and schedule monitoring. Other project managers are exceptional at task management but don’t always collaborate well. Whatever your specialty, you should develop ways of working that emphasize your strengths while continuously improving on your weaknesses. Exceptional project managers learn lessons in success and failure and continuously strive to improve their project work.

Review Project Performance and Outcomes

In addition to reviewing personal performance, project managers are also responsible for the overall project outcomes and performance. Project managers can go back to the project management plan and ask whether the critical success factors were realized, or whether the project achieved its projected or desired outcomes in terms of profit, meeting deadlines, producing quality work, etc.

This is also where project managers can try to correlate some of their project management decisions with project outcomes to determine which strategies worked and which didn’t. It can be useful to analyze the performance of other parties as well to determine whether it might be productive to seek an ongoing partnership with other project stakeholders. Project closeout is the right time to strengthen relationships with potential industry partners on the basis of a job well done.

Disposition of Project Files

A construction project produces large amounts of documentation throughout all phases of design, construction, and finalization. When the project is completed, it would be a huge mistake to simply throw all of those documents in the trash or to file them away where they will never be seen again. If a legal claim is brought against a contractor or subcontractor by the project owner due to defective construction work or negligence, the project files will act as an important source of evidence.

How long should subcontractors retain their project files? The answer depends on the specific laws in the jurisdiction where the work was performed. Some states have deadlines for filing a lawsuit, a type of law known as a statute of limitations. Others have states of repose, which protect architects and engineers from unending liabilities by imposing a deadline for the project owner to bring actions against the builders.

The most secure and cost-effective way for builders to retain their project files is through an electronic file storage system. eSUB’s construction project management platform makes it easy for organizations to store and manage project files. In addition to protecting against lawsuits, project files can be used to inform future estimates and job costing activities and as a valuable source of performance data for activities that builders performed on the job site.

Summary

Project managers play a significant role in ensuring the success of each stage of the construction project life cycle. Through a combination of planning, monitoring, and administrative activities, project managers exercise control over the project life cycle and work to meet their critical success factors and drive profits for their employer and results for the project owner.

Subcontractor project managers can benefit from eSUB’s purpose-built platform for construction project management. With eSUB, subcontractors gain access to a suite of tools that make it easier to monitor progress on the job site, share and manage project documents, communicate with stakeholders and maintain a repository of project files that can be used for job costing or to protect against litigation.

Watch a live demo of eSUB to learn more about how our platform can help you manage your next project to success.