Table Of ContentConstruction Business
Management
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Construction Business
Management
John Schaufelberger
University of Washington
Prentice Hall
Upper Saddle River, New Jersey
Columbus, Ohio
Library of Congress Cataloging-in-Publication Data
Schaufelberger,John
Construction business management / John Schaufelberger.—1st ed.
p.cm.
Includes bibliographical references and index.
ISBN-13:978-0-13-090786-8 (alk.paper)
ISBN-10:0-13-090786-3 (alk.paper)
1. Construction industry—Management. I. Title.
HD9715.A2S358 2009
624.068—dc22
2008021656
Editor in Chief:Vernon R.Anthony
Editor:Eric Krassow
Editorial Assistant:Sonya Kottcamp
Director of Marketing:David Gesell
Marketing Manager:Jimmy Stephens
Marketing Assistant:Les Roberts
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Cover Design:Bruce Kenselaar
Cover Illustration/Photo:©M.Dillon/CORBIS.All rights reserved
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Printer/Binder:Hamilton Printing Company
Cover Printer:Phoenix Color Corp.
Credits and acknowledgments borrowed from other sources and reproduced,with permission,in this
textbook appear on appropriate page within text.
The names of companies and their employees used in the examples in this book are fictional,and are not
associated in any way with any actual companies or persons that may share the same names(s).
Copyright © 2009by Pearson Education,Inc.,Upper Saddle River,New Jersey,07458.
All rights reserved.Printed in the United States of America.This publication is protected by Copyright
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10 9 8 7 6 5 4 3 2 1
ISBN-13: 978-0-13-090786-8
ISBN-10: 0-13-090786-3
Contents
Preface x
CHAPTER 1 Introduction 1
Nature of Construction Business 1
Primary Causes of Business Failure 2
External Influences 2
Internal Problems 2
Business Strategies to Minimize the Risk of Business Failure 4
Planning Strategies 4
Plan Implementation/Control Strategies 5
Financial Management Strategies 6
Leadership Challenges 7
Organizational Behavior 8
Employee Motivation 8
Individual Behavior 9
Collective Behavior 10
Ethics 11
Summary 13
Review Questions 14
Exercises 14
Sources of Additional Information 15
CHAPTER 2 Company Organization 16
Introduction 16
Alternative Forms of Business Organization 16
Proprietorships 17
General Partnerships 18
Limited Partnerships 19
Corporations 20
Type S Corporations 21
Limited Liability Companies 22
Joint Ventures 22
Alternative Organizational Structures 23
Functional Organization Structure 24
Divisional Organizational Structure 25
Matrix Organizational Structure 26
Organizational Design 27
v
vi Contents
Policies and Operating Procedures 30
Summary 32
Review Questions 32
Exercises 32
Sources of Additional Information 33
CHAPTER 3 Risk Management 34
Introduction 34
Risk Management Strategies 35
Insurance 36
Insurance Contracts 36
Insurance Agents 37
Insurance Types 38
Subcontractor Insurance 48
Insurance Certificate 48
Bonding 48
Surety Relationship 48
Bonding Agents 52
Types of Bonds 52
Underwriting Considerations 58
Summary 64
Review Questions 65
Exercises 66
Sources of Additional Information 66
CHAPTER 4 Financial Analysis and Management 67
Introduction 67
Accounting Systems 67
Primary Accounting System 68
Secondary Accounting Systems 69
Accounting Records 71
Accounting Methods 72
Financial Statements 73
Balance Sheet 73
Income Statement 75
Financial Analysis 76
Financial Statement Analysis 76
Cash Flow Analysis 81
Financial Management 84
Summary 88
Review Questions 89
Exercises 89
Sources of Additional Information 90
Contents vii
CHAPTER 5 Strategic Planning and Management 91
Introduction 91
Planning Process 93
Mission Statement 95
Company Vision 96
Strategic Assessment 97
Strategic Objectives 97
Company Strategies and Short-Term Goals 98
Action Plans 98
Performance Measurement 99
Situation Analysis 99
External Analysis 99
Internal Analysis 105
Strategy Formulation 110
Strategy Implementation 113
Strategy Evaluation 113
Summary 114
Review Questions 115
Exercises 116
Sources of Additional Information 116
CHAPTER 6 Business Development 117
Introduction 117
Marketing Construction Services 119
Marketing Process 120
Market Analysis 122
Demand Assessment 123
Customer Satisfaction Assessment 124
Competition Assessment 125
Marketing Strategies 126
Marketing Tools 129
Marketing Plan 131
Acquisition of Work 133
Summary 133
Review Questions 134
Exercises 134
Sources of Additional Information 135
CHAPTER 7 Human Resources Management 136
Introduction 136
The Challenge 136
Decision-Making Processes 138
viii Contents
Company Culture 138
Organizational Design 140
Staffing 142
Employment Manual 147
Employee Development 149
Leadership Development 152
Succession Planning 153
Performance Management 154
Compensation and Employee Benefits 156
Employee Retention 156
Union Relations 157
Safety and Wellness Programs 158
Regulatory Overview 160
Affirmative Action 160
Age Discrimination 161
Disabled Workers 161
Discrimination 161
Drugs in the Workplace 162
Equal Employment Opportunity 162
Preventing Violence in the Workplace 163
Privacy Rights 163
Racial and Ethnic Discrimination 163
Record Keeping 164
Religious Protection 164
Sexual Harassment 165
Summary 166
Review Questions 166
Exercises 167
Sources of Additional Information 167
CHAPTER 8 Information Management 168
Introduction 168
Information Requirements 170
Hardware and Infrastructure 171
Software 172
Security Systems 173
Company Security Policy 174
Company Web Sites 174
Summary 175
Review Questions 175
Exercises 176
Sources of Additional Material 176
Contents ix
CHAPTER 9 Total Quality Management 177
Introduction 177
Quality Concepts 179
Quality Principles 180
Supporting Elements 181
Process Improvement Model 182
Implementation 183
Process Analysis 187
Sustainment 188
Effectiveness Assessment 191
Summary 191
Review Questions 192
Exercises 192
Sources of Additional Information 193
Appendixes
A—Strategic Plan for Pacific Constructors 194
B—Case Study—Cascade Builders Annual Report 200
C—Case Study—Northwest Constructors Annual Report 209
D—Employment Manual for Western States Construction
Company 224
Glossary 242
Index 247
