Part 6-2. Features of Construction Industry explained in 5M, Advanced Civil Engineering, (NTUST, 5908701)
MT KAO (Blog: http://mtkaoforum31.blogspot.tw/) (firstname.lastname@example.org)
(1) Prototype, bespoke; portable, fixed.
a. Machine, prototype
People in construction industry need to know machine, plant and equipment for their manipulation, size, cost, productivity and supplies required.
The general contractors used to own machines, in the days they're expensive relative to human cost.
When a country start to build infrastructures, they need to move earth, lift heavy weight, paving concrete and asphalt, and confront water or inaccessible. There're machines typical to do these jobs and we call them the prototypes: bulldozers, cranes, graders, trucks, mixing plants, paving machines, compactors, working boats etc.
The works are many in fledging economies, so the machines are welcome for repeating usages in seemingly endless construction. They’re powerful to replace manpower and quick to deliver the landmark projects. So when machines with international brands such as Caterpillar and Komatzu appear at construction sites, they symbolize the government’s commitment to the economic growth.
b. Machine, bespoke
As countries proceed to build infrastructures projects of more sophisticated nature, the machines and the method employed may need special design and fabrication, we called the order and the makes bespoken. The usages are limited unless market is big and construction is in succeeding, but it will finish the works for that human won’t be accessible or to do. The most obvious one is tunnel boring machine of different diameters and shapes at restrained spaces.
c. Machine, fixed type, mobilization and assembling cost
Most of machines can be transported to construction sites, either by self-driving or mounting on trailer for long distance, we call them portable, such as dump trucks, excavators, dozers, loaders, etc. For mixing plants, TBM, tower crane, or machines too big for transportation, they're divided in parts or compartments, and then hauled to the site for erection; we call them fixed type of machine.
Engineers must take into consideration the cost and time required to mobilize, install and demobilize construction machine. Sometimes in the remote area or hazardous places disembarkation and the installation of plants and equipment can be difficult and costly that the engineers have to think about the solution. The damages possibly incurred to the parts or entire plants during transportation shall be foreseen and at least insured against accidents.
Also people need to know the value of certain fixed plants decimated very much in single usage, and the remaining value after one project could be only the material cost after dissection.
(2) Operation, maintenance and repair.
a. Owning Cost: Depreciation, Interest, Productivity
In the days when the value of machine and spare parts far exceeded cost of people serving them: operators and crew for maintenance and repair, only companies big enough would buy machines as main asset and source of revenue. For two historical reasons the machine ownership had to be overtaken by specialty companies: 1. Facing rising human cost and fastidious labor and safety laws, only companies able to concentrate effort to manage problems related to operation, maintenance and repair are in a position to handle the machines. 2. Company owning big fleet of machine wouldn’t have chances to share costs with other companies through rental arrangement.
The machine owning cost shall be calculated as buying price plus interest payment over the machine's service life. One is called flat depreciation method, use the buying price divided by estimated remaining service life; the other is weighted depreciation method, assuming the first 2 or 3 years the machine will have high productivity and place the cost depreciated certain fraction more in such 2 or 3 years.
However, the taxation offices legally also have power to decide amount permitted for depreciation for different equipment. It affects how the owners should have decided on to charge their equipment.
Interest payment can be considered for each company outside of the machine cost calculation.
b. Maintenance and Repair Cost
Machines need operators to move them, the owners must pay to the operators the hourly wage and overtime. And machines also needs daily, or periodical maintenance; the related cost are the wages of the workers responsible for maintenance and amounts covering for consumable, lubricant and tool. Repair cost in general is low when machine is new, but it will be accelerated when machine's condition become less fair in later part of work life. The elements of repair cost consist of mainly two parts; one is labor, and the other will be that of spare parts. In developed economy, the repair cost shall be between 100% and 200% of the initial cost according to statistic, depending on different equipment.
In developing countries where machine price is high compared to human cost, the wage of operator can be 4-5 times of that of manual labor and output of machines will be higher than what can be achieved in advanced economy. Because when machine is expensive, the owners don’t care to give higher payment to operators, which can be easily covered by revenues from higher machine productivity.
(3) Rental and owning.
Started from 70's last century, general contractors ceased to own construction machine themselves in consideration of big investment over uncertain business opportunity, difficulties to handle labor relationship with operators, maintenance and repair workers, and judgement based on specialty knowledge over replacement or repair of major parts.
The bosses of equipment rental companies always start to acquire construction machines with blessing from big construction companies guarantee the continuity of the works. It's important in Asian countries that this kind of company were operator com maintenance workers, being able to keep equipment and trucks in good conditions with their entrepreneurship.
Furthermore, they may work with their supra contractor on quantity and rate. The arrangement is costly efficient but not assured schedule wise especially massive amount of mechanic works to proceed.
It is proven that the general contractors have no way to replace the small owner for construction machine maneuver involving operation/ maintenance/repair. Nowadays the rental rates can be as high as that 2 years charges may be equal to the buying price of a plant.
(4) Construction method and machine selected.
a. Selection of Work Method and Construction Machines.
Designing an efficient construction method is key to successful deliver of infrastructure works: right construction sequence, get through most critical part of work, minimize undue outside interference, and avoid hazardous incident from happening shall be considered when the plan is drawn. Engineers may have wide range to select machines for construction method; however, it will be influenced by the market availability for machine itself and operators, for example, in Taiwan excavators are everywhere but dozers and loaders not frequently to see contrary to North America. The reasons could be incidental that maybe the ones first introduce them to Taiwan prefer them and others just followed, or the operators are dexterous to maneuver the machines in congest excavation site in Taiwan.
Market size and available replacement could play a part, the use of tower crane was another example, because the maintenance and mobilization cost shared by small number become significant and mobile crane can be substitute, so the tower cranes are not so many in the island.
In Taiwan, selection of machine once accepted by the officials, budgeting and supervision for that particular item will be almost fixed in public works. Changes to another machine or method will have to be accommodated to the bureaucracy; adding another point that people and work gangs aren’t so innovative to create new construction plans. Another proof that civil contracts is local and conventional.
b. Machine and Manual Labor
In countries like India, machines face strong competition from man power; Bulldozers and earth moving machine are levied with high import duty and surcharges, that men and their assistant with hoes and dustpan will have chances to outperform construction method based mainly on mechanization as cost is concerned.
When owning a machine become expensive, the efficiency will decide its survivability.
So, in the case of India construction market, the wages pays to the machine operators won’t be significant compare to the revenue generated by extra output brought by the operator’s better performance. Thus the wages of operators can be 5 times of the common labors in developing economies.
c. Cost factors in Prototype and Bespoken Machines
There is situation that prototype machines will not meet construction requirement, the bespoken one will be the solution.
But engineers need to know: 1. Lead time to design and build the plant is long; they’re not available at once like ordinary plants on the market. 2. When one part goes down, entire system will idle or fail. 3. Though people will try to re-use it for next project but the chance is slim. 4. The whole value of the bespoken plant can be high and when it scraps after one project, the depreciation allowed can hardly be claimed. 5. Turnkey contracts become popular these days; the contractors will have chances to design structure sections optimal and fit into owned bespoken equipment.
(1) Local and Conventional Material shall be chosen for Construction.
a. Transportation Cost and Locally Available Material
Material for construction is bulky and transportation cost is high, so they have to be obtained from local for maximum extent as quality and property may not differ so much from the outside world.
Attention shall be drawn to the fact that sometimes the overwhelmed material requirement of a gigantic project may tilt the supply/demand balance drastically in an isolated area. Investment in term of time and money shall be considered before projects start to assure a quality and punctual completion.
However, material prices can be fluctuated from time to time either in the case of limited supply, such as aggregate and sand, or as a result of global boom like steel and rebar. It can be deadly to an ignorant contractors, that the risk can only be addressed through contracts with so called escalation clause giving minimum protection for the builders.
Because the projects are there for economic development so that the employment of local artisans and labors shall be considered as early as in the design stage. Engineers must think about the possibility to use traditional technique involving local people and product even to the point to edit the specification to show respect to the tradition. For example, the Baku piles were used in Southeast Asia for soil retaining and promote compaction effect in embankment, it has been used in international class projects for its convenience to install.
b. Continuous Evolution for Material used in Construction
In old days, human's weight lifting capacity was limited, long distance hauling capability also prohibitively expensive and could only go through waterway. People had to use small and light material from local, like timer, brick and mortars for buildings and structures in most of the cases. Granite and basalt were used in part of Europe especially for churches, castles or monumental structures.
Wooden structure was erected in Asia for aristocrats and land lord, but the timber size reduced as a result of deforestation. In general the masses had to live in hut and dens for which they built with any material they could pick up from nearby area.
Discovery and use of steel in civil engineering works change the world. They replace traditional construction material resulting in great cost and time saving. Steel in the form of rebar, sections and strains give buildings and structure new dimensions and spatial aesthetics. People still think of innovation for construction material better than steel, such as fiber glass or high strength concrete, commercially one day it would be popular as steel used today.
Mankind are smart to utilize everything from nature but sometimes it can be tragic. For instance, there’re countries like Bangladesh where hard stones and sand difficult to obtain. So the local people extract and burn clay from alluvium into brick like material. Then women and children will use hammers to break them into sizes of and utilize them as aggregates and sand. Then they mix them with cement to obtain concrete. The solution risks human life because buildings and bridges sometimes collapse for the weak strength those improvised materials provided. It's wrong type of localization; poverty force people to continue the practice.
c. Green Consideration
Nowadays, carbon reduction is an issue, the material used in the projects shall be considered climate friendly, and engineers need green knowledge to incorporate construction material made from renewable, waste or need less processing.
Commercial calculation won’t be the only consideration.
(2) Material and Equipment to be incorporated into Permanent Project.
a. Project More Sophisticated
As economy advances in a country, the construction work won't be simple structural work again; many systems and equipment will be installed in addition to steel and concrete. So, procurement will be more complicated than dealing with composition, dimension and strength of material. At the time of procurement or before that, tender, delivery of well functioned system, operation and maintenance, shall be arranged with assistance of reliable makers or specialty contractors.
An experienced general contractor will know there will be risk hard to control during the course of make, transportation, installation, inspection, monitor, test run and commissioning of the complicated equipment and systems in modern construction contracts. So, the contractor has to be in cooperation with firms working in different field and the partnership may include consortium, main and sub-tier, or something in between to minimize the risk burdened by a single entity.
b. Nominated Subcontractor
In practice the owner may actually designate the maker of the system and equipment based on confidence and trust the brand bearers have exhibited. After award the winning contractor has to sign the sub or supply contract with the specified makers at least to overtake the partial responsibility of delivery, which always include risks begin with engineering, then making, shipment, installation, commissioning, test run and until operation.
In other words, the signing parties has to share whatever may have happened with the owner: strike, sabotage, mistakes, bad performance, act of god, all kind of disruption that may occur.
When someone is asked to buy aggregate, steel or tiles, he's not supposed to spend or provide so much in monitor and control as in the cases of buying a system. And under the circumstance, we call it handling charges as it will include cost for persons assigned for coordination and communication, bank guarantees, insurance premium, legal expense for the nominated subcontract.
However, many people are still ignorant about modern day project. During budget establishment, there will be bureaucrats, design consultant, auditors and financing people reject the idea that the contractor need overhead to handle the nominated subcontract. They consider the frontage contractor won't increase anything physical on the equipment or system to be installed and thus added no value on the works.
The denying of invisible cost stemmed from the days the economic output mainly counted on agriculture and manufacturing. The ignorance causes big problem in pushing the works forward; another proof that the fix for engineering and construction contract must come from culture and mentality changes.