Construction Procurement

Management
PLANNING is the function of co-coordinating in a logical order all the
activities, persons, machines, and materials necessary to complete the
project. At this stage, it considers only technology and sequence. Part of
the planning is the selection of the plan offering the best combination of
time and cost. The Pre-planning stage establishes and determines the
direction and success of any construction project.
FOUR BASIC RULES IN PRE-PLANNING

1. The construction superintendent should be included in the consultation

at the very start of the planning stage.
2. Make a job breakdown into components. This will simplify the whole
program.
3. Prepare a construction plan that will be consulted constantly. Do not
just file it in a drawer only to accumulate dust.
4. Take advantage of new tools, which have demonstrated in saving time,
money or confusion.
Purposes of Planning

1. For the owners of the company to achieve a profit by operating at the

minimum capacity, utilizing the available resources.
2. For the employees to create or maintain jobs.

Four Dimensions of Planning Functions:

1. Planning is a Philosophy. Looking ahead is a way of thinking, a concern
about the future effects of today’s action. Planning involves a state of the mind
that recognizes the need for orderliness and value of direction.

2. Planning is Integration. Both long and short-range plans provide a unified

structure to give purpose to the organization units involved. Broader plans
consider the client, the supplier and other peripheral contact of the company.
3. Planning is a Process. Goals and objectives are the moist obvious
consequences of the planning process. A winning plan includes:
1. The strategy that defines how much was to be done to achieve the
objectives.
2. the sequence of events that satisfies those strategies
3. The assignment that lead to the accomplishment of the events

4. Planning is a collection of Procedures. All companies make plans

ahead to some extent and apply their own methods of doing so.

PROJECT MANAGER is the central figure in a project. He bears the

ultimate responsibility for the success or failure of the project. His role in
the construction is one of the organizers, a person who is capable of
working through others to accomplish the objectives of the project.
Missions of a Project Engineer

1. To plan
2. To coordinate
3. To control
4. To accomplish

Pre-planning information needed by project engineer:

1. The logical construction sequence that must be followed

2. The quantity and the delivery date of various materials to be used
3. How much and what kind of manpower will be needed
4. When to start and complete the job on time
Planning Activities Undertaken in Various Levels:

I. TOP MANAGEMENT LEVEL – STRATEGIC PLANNING

Strategic Planning refers to the process of determining the major goals of the
organization and the policies and strategies for obtaining and using resources to
achieve those goals. In strategic planning, the whole company is considered,
specifically its objectives and current resources. The output of strategic planning is
the strategic plan, which spells out his decision about long-range goals and the
course of action to achieve these goals.
II. MIDDLE MANAGEMENT LEVEL – INTERMEDIATE PLANNING
Intermediate Planning refers to the process of determining the contributions that
subunits can make with allocated resources. Under intermediate planning the goals
of a subunit are determined and a plan is prepared to provide a guide to the
realization of the goals. The intermediate plan is designed to support the strategic
plan.
III. LOWER MANAGEMENT LEVEL – OPERATIONAL
PLANNING

Operational Planning refers to the process of determining how specific

tasks can best be accomplished on time with available resources. It must be
performed in support of the strategic plan and the intermediate plan.
Management Level Planning Horizon
Top CEO Strategic
President (one to ten years)
Vice Presidents
General Manager
Division Heads
Middle Functional Managers Intermediate
Product Line Managers (six months to two years)
Lower Unit Managers Operational
First Line Supervisors (one week to one year)
THE PLANNING PROCESS:
Various Steps in Planning Process:

I. Setting Organizational, Divisional, or Unit Goals

The first task of the Engineer manager is to provide a sense of direction to

his firm (if he is the chief executive), to his division (if he heads a division),
or to his Unit (if he is a supervisor). The setting of goals provide an answer
to the said concern. Goals may be defined as the “precise statement of
results sought, quantified in time and magnitude, where possible”
Example of Goals, By Organizational Level

ORGANIZATIONAL LEVEL EXAMPLE OF GOAL

COMPANY To attain a return of investment of 25%
DIVISION To increase the number of projects
undertaken by the company
UNIT To increase the number of project engineers
II. Developing Strategies or Tactics to Reach Goals
The ways to realize the goals are called strategies and these will the
concern of top management. The middle and lower management will adapt
their own tactics to implement their plans. Strategy may be defined as a
course of action aimed at ensuring that the organization will achieve the
objectives. A tactic is a short-term action taken by management to adjust to
negative internal or external influences. They are formulated and
implemented in support of the firm’s strategies. The decision about short-
term goals and the courses of action are indicated in the tactical plan.
III. Determining Resources Needed
Determine the human and nonhuman resources required by such strategies
or tactics. Even if the resource requirements are currently available, they
must be specified. The quality and quantity of resources needed must be
correctly determined. Too much resources in terms of either quality or
quantity will be wasteful. Too little will mean loss of opportunities for
maximizing income. To satisfy strategic requirements, a general statement
of needed resources will suffice. The specific requirements will be
determined by the different units of the company
IV. Setting Standards
A Standard may be defined as “a quantitative or qualitative measuring
device designed to help monitor the performance of people, capital
goods, or processes.”
TYPES OF PLANS

I. Functional Area Plans

1. Marketing Plan is the written document or blueprint for implementing and

controlling an organization’s marketing activities related to a particular
marketing strategy.
2. Production Plan is a written document that states the quantity of output a
company must produce in broad terms and by product family.
3. Financial Plan is a document that summarizes the current financial situation
of the firm, analyzes financial needs, and recommends a direction for financial
activities
4. Human Resource Management Plan is a document that indicates the human
resource needs of a company detailed in terms of quantity and quality and based
on the requirements of the company’s strategic plan.
II. Time Horizon Plans

1. Short-Range Plan are plans intended to cover a period of less than one
year. First line supervisors are mostly concerned with these plans.
2. Long-Range Plans are plans covering a time span of more than one year.
These are mostly undertaken by middle and top management.
III. Frequency of Use Plan

1. Standing Plans are plans that are used again and again, and they focus
on managerial situations that recur repeatedly

A. Policies are broad guidelines to aid managers at every level in making

decisions about recurring situations or functions.
B. Procedures are plans that describe the exact series of actions to be
taken in a given situation
C. Rules are statements that either require or forbid a certain action

2. Single-Use Plans are plans specifically developed to implement

courses of action that are relatively unique and are unlikely to be repeated

A. Budget is a plan which set forth the projected expenditure for a

certain activity and explains where the required funds will come from
B. Program is a single-use plan designed to coordinate a large set of
activities
C. Project is a plan that is usually more limited in scope than a program
and is sometimes prepared to support a program.
Contents of Marketing Plan

1. The Executive Summary which presents an overall view of the

marketing project and its potential.
2. Table of Contents
3. Situational analysis and Target market
4. Marketing Objectives and Goals
5. marketing Strategies
6. Marketing Tactics
7. Schedules and Budgets
8. Financial Data and Control
Contents of Production Plan

1. The amount of capacity of the company must have

2. how many employees are required
3. How much material must be purchased

Contents of Financial Plan

1. An analysis of the firm’s current financial condition as indicated by

the analysis of the most recent statement.
2. A sales forecast
3. The capital budget
4. The cash budget
5. A set of pro forma (or projected) financial statements
6. The external financing plan
Contents of the Human Resource Plan
1. Personnel requirements of the company
2. Plans for recruitment of the company
3. Training plan
4. Retirement plan
Parts of Strategic Plan
1. Company or Corporate Mission
2. Objectives or Goals
3. Strategies

Company or Corporate Mission refers to the strategic statement that

identifies why an organization exists, its philosophy of management,
and its purpose as distinguished from other similar organization in
terms of products, services, and markets.
Making Planning Effective

1. Recognize the planning barriers

2. Use of aids to planning

Planning Barriers

1. Manager’s inability to plan

2. Improper planning process
3. Lack of commitment to the planning process
4. Improper information
5. Focusing on the present at the expense of the future
6. Too much reliance on the planning department
7. Concentrating on only the controllable variables

Aids to Planning

1. Gather as much information as possible

2. Develop multiple sources of information
3. Involve others in the planning process