Discussion
Develop Risk Management Plan including Risk Register, Risk Quadrant Analysis, and risk mitigation plan.
In this assignment, the APIC CONSULTANT has undertaken a project. The project is “construction of a retail showroom in New South Wales, Australia”. The project needs a particular delivery system that has to be selected in order to carry it out. It also needs a finance contract, procurement method, risk management and quality management plan. All the factors have been discussed below in details for the project.
Project Background
The project of constructing a retail showroom needs to consider various factors. These factors include delivery method, risk management, finance contract and many more. These factors are considered and decisions are taken accordingly. These decisions are taken in such a way that it affects the project in a positive way. In this particular project the design has to made. According to the design, the site has to be decided considering the quality of land. The resources are to be decided considering their prices. These factors are to be considered while the project is undertaken.
Delivery method
The selected project can be delivered in various ways. The delivery methods are Design-Bid-Build and Design-Build. The first two construction methods are used nowadays. The methods are described below and one of these methods is selected for this particular project.
Design-Build: this delivery method maintains a joint venture between the designer and general contractor. This system consist both the parties in a same entity. This makes it easier for the contractor through the whole project. This system also has a one-point contact where in case of any queries and concerns regarding the project, the owner needs to contact the design builder. This system provides a fastest method of delivery. The elimination of bidding process saves a definite amount of time. After all the building details are finalized, preparation of site can be carried out. One entity would be responsible in case of any problem. This eliminates the liability of the owner for construction as well as design issues.
The design builders have a stock of the recent construction costs. This helps the design to be created using the cost-effective methods and resources. With the help of this method the design and construction services overlap each other in order to enable the fastest delivery of the project. Along with this, it allows the owner to make changes in the design before it is finalized. This system allows the owner to have just one contract with the design builder instead of having two different contracts with the general contract and the architect. This eliminates risks from the behalf of the owner.
Project Background
Design bid build: this system has different entities for the construction and design part of project. The general contractor and architect do not have any connect among them until the plans are finalized for the project. This system goes through a bidding, construction and design phase. This is because in this phase the construction and design phase are not integrated. As a result, this system takes more time than expected. In this system, every phase needs to be implemented separately. The next phase cannot be started until the previous phase s completed. If the construction cost is increased due to the increase in material cost, the project might face delays. The plans need to be finalized before the project is started. This step increases the overall time required for the project.
In this particular project, the Design-build delivery system would be integrated because it consumes much less time than the later system.
Financial contract
There are various financial contract plans that could be used in this particular project. The plans include lump contract, guaranteed maximum price contract and cost-plus fixed fee contract. Lump sum contract is one of the most common processes of construction contract. In this form of contract, a lump sum budget is decided before the project is started. In this particular contract, the project is properly defined. Here the contractor is allowed to price the activities that they would carry out in the project. Lump sum is not utilized when speed is the major factor.
Guaranteed maximum price contract is a legal agreement, which decides a maximum price for a project that would be paid by the entity. This contract includes the actual cost needed to carry out the project along with a specific amount of fee. In case of any cost overruns, the contractor would be hold responsible and in case of cost under runs, the amount is returned to the contract.
The cost-plus fixed fee is a contract where contractor is paid the normal expense required for the project along with a fixed amount of fee for the services they would provide. This lets the contractor, collect a definite amount of profit from project. The expenses incurred in cost-plus contract are decided considering the market values. The fixed fee provided for the services can be negotiated among the parties. The fee may vary depending on the needs of the project.
In this particular project, the last type of contract is preferred. This is because the cost-plus fixed fee contract provides more flexibility than other contracts. In this case, the contractor is benefited by providing incentives for minimizing the costs. Minimization of cost is beneficial for the contract as well. The reasons for using this contract are as follows
Delivery method
Benefits of the owner: Using this type of contract would lead in good quality projects. This is because the contract does not skimp on the labor or materials used. For prepaying the expenses, the contractor can be guaranteed some bonus pay. This contract reduces the risk of over bidding of project. This contract is always set at a worthy price. The owner is benefited if the price of the materials is reduced.
Benefits of the contractor: In this project, a contractor can accept an unfinished layout with the help of cost plus fixed fee.
No risk: Using this contract would not hold the risk of loss that can be raised from the changed prices of materials, underestimated or wrong estimate quotations. This contract provides an automated escalation clause such that the cost increase is adjusted as well as recovered.
The members of the Australian Procurement and Construction Council Inc or APCC have taken the responsibility for the procurement, asset management and construction for any construction project that is being established in Australia. All the procurement process that takes place in a construction project in Australia is passed through the APCC in order to maintain feasibility in the project plan. This would help in saving as well as maximizing the service delivery for the construction project as well as the communities of Australia. Following would be the procurement methods that should be feasible for the said construction project in New South Wales:
Objective Statement: The primary objective for the application and implementation of feasible procurement methods in this project is to utilize the resources provided for the project regarding the construct project and maximising the service delivery according to that. This could only be achieved if the project deliverables are coordinated with the resources required for the project. If these two things are dissimilar, then it could be found that the entire project is coming to a downfall. In addition to this, it could be seen that every procurement method brings about possible risks if the resources are not matched with the projected deliverables. The following would describe this factor in details with the help of an organized chart.
Project objectives, requirements, characteristics and risks: The project procurement methods and objectives for different project are varied since it all depends upon the requirement of the clients. The project objectives for this construction project are also varied according to the requirement of the customers. The project objectives, the requirements, characteristics of the project objectives and the risks associated will be described in details as follows:
|
Project objectives |
Requirements |
Characteristics |
Risks |
|
Verification for the needs |
This objective depends on the requirement of the customers and the resources that the company has required for the project |
In this project the project is evaluated well according to the project resources and the client’s needs |
The risk associated with this objective is the non-coordination of the needs and the resources which would affect the project progression |
|
Assessment of options |
Options must be done to make out other options that can be beneficial to the project or if the project can be propagated following any other way |
If there are budget constraints, then other options except the planned ones are difficult to implement |
The risk associated with this objective is the exceeding of the required budget if other options are considered without much research done |
|
Develop Procurement Strategy |
A project procurement strategy needs to be developed by the organization so that they can keep a track on the budget as well as the returns the project would deliver if the works all go according to the pre-planned project charter |
It is required that the organization develops a project procurement plan with the least amount of budget proposed but maintaining proper quality as well |
Without a proper procurement strategy, the business association in responsibility of the project may not focus on attaining profit with the project involved |
|
Implement Procurement Strategy |
The project procurement plan should be implemented properly to expect suggested revenues for the benefit of the organization |
This can only be done when the project charter is thoroughly sought out and there is no scope of lag in any part of the project |
Procurement strategy, if not implemented correctly may result in further deviation of the project from its main target of attaining benefits for the organization. |
|
Project Delivery |
Project delivery is inversely proportional to the time required for the project. The less the time, the more effective would be the project delivery keeping the quality of the project intact |
The project is estimated to be delivered on time, thus maintaining the client’s needs and gaining positive reviews for the company |
Project deliverables depend on time, if these are not met properly, the project may cause a huge loss to the organization financially as well as socially |
|
Post Project Review |
All the steps that are involved in the project charter needs to be maintained thoroughly through monitoring of each step through the progression of the task and any inconvenience should be recorded and reported to find out is there is any impending risk associated with it |
All the steps have been monitored and presented properly. The inconveniences have also been recorded to mitigate the risks associated with it as soon as possible |
Project not reviewed properly leads to faulty evaluator results which would further depict a poor outcome of the project as there would be nothing to evaluate every step of the project progression |
Financial contract
Agency and Market capabilities: The capability of the agency that is currently handling the construction project in New South Wales have been reported to be of top notch and the market for retail industry along the required area is also reportedly high. Thus this project can be feasible enough to carry along with.
Applicable procurement methods: The procurement methods mentioned above can all be applicable as long as the project budget is constant and within the range of the customers. It would only attain fallout when there are no funds to support the project.
|
Risk |
Description |
Impact |
Probability |
Mitigation strategy |
|
Technical Risks |
This risk includes the uncertainty of resources or the unavailability of the materials, inadequate site inspection or incomplete design |
High |
Less likely |
This can only mitigated with the thorough planning of the project strategy and project propagation before starting off with the project |
|
Financial Risk |
Inflation, local taxes, and availability and fluctuation in foreign exchange are a few of the possible financial risks you might incur during a construction project. |
High |
Most Likely |
This can be mitigated by thorough monitoring of the project and reporting any incompetency found along the project relating to finances |
|
Managerial Risk |
The most common management related risk is uncertain productivity of resource, which can even lead towards disastrous situations |
High |
Possible |
This step can also be mitigated by thorough monitoring and reporting |
|
Environmental Risk |
These include the natural disaster, weather and other seasonal implications |
Moderate |
Less Likely |
Potential risks can be avoided by making proper project planning |
Quality management plan of the construction project in New South Wales for establishing a retail business depends upon various factors. These factors can be listed as follows:
- Human Control
- Material Control
- Machinery and Equipment control
- Method Control for the construction project
- Environmental Control
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