Over the years it has been observed that the governments all over the world have been delivering major projects via private sector instead of using traditional private sectors using the concept of concession strategy or the Build Own Operate Transfer.
Definition of construction and field management Projects
Projects which are founded on the concession granted by government to promoters who are given the responsibility of financing, operation, construction and maintaining facilities over specific periods before transferring the fully operational facilities to the government.
The promoters are charged with responsibility of owning and operating facilities, collection of revenues to finance investments cost, maintenance expenses and make a sideline profit.
Concession contracts
Concessions contracts are mostly concern with the:
Finance build own operate transfer
Build own operate
Design build own maintain
Build own operate subscribe transfer
The organizational and contractual structure
Principal: This is the definitive proprietor of the facility who is responsible for granting concession (Steve Rowlinson, 2005).
Promoter: This is the organization which has the permission to build, own, operate and transfer facility.
Organizational and contractual structure
Supply contract: This is the contract that is foreseen between two people that is promoter and the supplier (William Hughes, 2006).
Loan agreement: This is the contract that is agreed upon by the lending company and the promoter (Austroads Limited, 2014).
Operation contract: this type of contract is normally between the promoter and the operator.
Construction contract; agreeably this is the contract that is honored by two individuals or groups which is the promoter and the constructor (Peter Morris, 2010).
Description of delivery systems
BOOT methods
Factors influencing performance and selection of project delivery system
Government establishment and control
Fiscal framework like law of taxation, depreciation, other incentive included
Regulatory framework like permits, concession legislation, approval process
Political framework for provision of enough assurance towards political risks
Project delivery risks
Swot analysis
The role of financiers
The roles of purchasers
Several projects/ infrastructures such as roads, hospitals, power, and water are Government Corporation/public utility also known as customers services
Government is charged with the duty of controlling prices and volume of the commodities in the market
Sometimes purchasers dictate prices and capacity resulting in marginalized projects
Rules of Equity / investors
Contractor’s role
Normally EPC constructor is considered as part of the promoter’s team
In all circumstances, a different contract is needed for construction and the design of the facility
In most of the firms that deals with EPC contracts have fixed prices, fixed period and on a turnkey base
Union provides numerous attractive options
Usually, EPC’s the whole cash flow is pledged against accomplishment and cost approximation risks.
Roles of operators
BOOT insurance coverage at times may be advanced and multifaceted
Normally it is advisable for consortium of promoter should include insurance agent for advice
BOOT deals insurers require earlier approval before completion and appending of signature to ensure insurance coverage is there to cover risks and liabilities.
Role of the community and media
The community as a whole has a very important role to play, and it’s very influential when it comes to BOOT projects.
The influence that the community has on BOOT is normally exercised during the mandatory consultation.
Communities are nowadays informed hence consensus is reached without many issues arising
Firm views can be resisted such as harsh opposition towards development.
Documentation, qualification and selection criteria
Enterprise Resource Planning
Enterprise system arranges for United IT architecture to upgrade data stability and integration of modular submission that provides support and power business process. Enterprise resource planning are done in such a way that they can support both
Enterprise resource planning system is capable of lowering risks which may be occurred in an organization such as
Automation
When change happens to be in an organization’s operating coordination, the Enterprise resource planning systems automatically updates
Standardization
Business growth is normalized, controlled and regulated across the entire the enterprise by making protocols. Enterprise resource planning systems are effective way to enforce standardization.
The standardization takes an active role in lowering operation variability since it lowers managerial freedom of choice in information dispensation and verdict making.
Integration
The value of chain procedures throughout an enterprise develop tightly joined and receptive to one another both vertically and horizontally.
Horizontally: many sales branches in various regions work as if they are combined and follow the same procedure, exchange data and pool resources collectively to achieve best results.
Vertically: This is the upstream and downstream collaboration work to give out an effective reaction e.g. when the market situation suddenly changes.
Enterprise resource planning system is made in such a way to offer seamless integration of procedures across the functional parts within the improved work flow, having access to real-time information and standardization of many business practices.
An Enterprise resource planning system is made in a way that it can easily manage the entire company activities via self-governing software modules as it updates the central database.
Over the past years, new Enterprise resource planning systems were designed for within integration which made them be distributed as an inflexible code concentrating on the original applications they were meant for. However, Enterprise resource planning users realized the excellent benefits of the open systems which they quickly accepted hence modifications, additional or linkage to the external software was adopted.
Integrated Facility Engineering
Advance Alliancing
Business Frame work System
Life cycle objective functions are:
Technical and Technological system
Introduction to the Project Delivery Systems
Project Delivery Systems
This unit consists of various aspects which are going to be looked upon carefully; among them is the contractual characteristic of project administration.
The essential characteristics which are mainly considered are:
A project can be executed in two ways, that is
Outsourcing: this is where external resources are used by contracting. Also known as contracting out or farming out.
In-house Resourcing: this is where an organization uses its resources. At times it is called direct control, departmental work or direct labor. However, it is very possible to have the combination of the two (outsourcing and in-house resourcing)
In-house Resourcing
Advantage
Disadvantages
Contract types
Contract type is capable of provision of numerous incentives to the worker and stimulates the prices, time of delivery and project performance
Delivery methods
In delivery methods, we are going to look at the relationship between the contractual projects and the project stakeholders.
The Project, Program and Portfolio Management
The Relationships among Programs project and Projects
All the portfolio apparatuses of portfolio should show certain joint features as shown bellow
An organizational Setting of Portfolio Executive
The impact of portfolio idea upon its strategy is achieved the following six steps explained below:
Project management
Project management simply means the application of skills, know-how (Knowledge), techniques and tools to safe guide the project undertakings to meet requirements of the project.
Project management is normally achieved through well-organized applications integration of the project management procedures which comprise of five processes shown below:
Management of the project typically involves:
Organizational Structure
A change in business can come as an opportunity for business transformation and an exciting moment for those who are in charges such as managers, directors or any other persons who are with duty in a business organization. In the other hand, change can also bring disruption or threaten other individual or group of people in an organization. Response to these changes by employees and management is what defines a business transformation or tear the business down. Change in business takes it to another level in the business environment and like it or not; a business change is a must whether in private or public sector for that business to relevant and continue to compete fairly in the field of entrepreneurship.
Change in business originates from different grounds such as external sources ranging from economic pressure, advance in technology, social or political, or sometimes it can originate from within the organization as a result of poor management, change in client/customer needs, cost of product, human resource and performance issues. This affects the entire business organization or just a small area in business. None the less, all changes in a business organization whether they originate externally or internally, small or big do requires some strategic adjustment regarding mindset, policies, behaviors, processes and practices.
Regardless the source of change in an organization, managing change is the process of advancing and taking well-structured plan and approach to help an organization pick up with the change. It is not an easy task to for a business to just take off with new changes hence, working together with an organization stakeholders is recommended to help understand what change would mean for the business. This would mean that change must be adjusted from managerial rank down to the ordinary employees for it to accommodate everyone within the organization.
What is an organization?
The importance of managing change in an organization
For an organization to adapt to new changes, there are some questions which management or the heads of an organization should be ready to be acquainted with.
Making a breakthrough or milestone in business is not the primary goal for change in business. The successful change for business involves different measures such ability of employees’ capacity to adapt to new changes and work effectively and efficiently in the new business environment. People will take changes in an organization positively or negatively depending on how these changes are presented to them. The peoples’ ability to adapt to change can be lowered if they misunderstand or refuse to comply with the change, leading to disagreement within the organization. If people happen to understand the benefits change within the organization, they are most likely to see to it that changes are successfully carried out and in return least disruption in an organization.
Components of organization
Organizational structure
Construction and Project Management Method plus EPCM Method
Construction Management
The owner is the one who is responsible for the management and procurement of consultants. The owner is again charged with oversight duty as it for the proprietor to see to it that materials and the services are supplied and that management is well kept, designing and documentation is properly done.
The contractor, on the other hand, is charged with duties such as management and procurement of construction supplies and labor packages, site services, preliminaries, industrial relations, OH&S, schedule, and quality.
Construction Management can sometimes be selected by tender for a good amount of money when the tenders are being given out for management services, and preliminaries and adjustment may be made if there are delays caused by the owner.
Preliminaries give an illustration of the project which permits the contractor to verify cost, but they do not do anything as part of any package of work, as they required with the methods and circumstances.
Preliminaries are however noted that it should not be confused with a preamble which gives details on tender procedures, that is not supposed to interfere with the contractor’s prices.
Preliminaries
Advantages of Construction Management
Disadvantages of Construction Management
Project Management
Contract management
Introduction
This is the type of deal which is the most vital factors when making a proposal or approximating the budget and the profit of the project. It is also very crucial to know the magnitude of the risk that is likely to incur through the contract. It is best to put in mind the high and low risks that contract type might cover.
Bidding process
During bidding which involves two or more persons’ and some parties offer a lower bid compared to others, it is to question the legitimacy of the lower contract bid and try to find out if the proposed contract can achieve the objectives set by the company/organization or not. Should the tender be considered, it is very important to include some terms and conditions or rather penalties that will see to it that the contract is protected should things go as not planned.
It is very important to evaluate carefully:
Advantages and disadvantages experienced during contractual arrangement must be put into consideration to choose the best method for that particular project.
A decent procurement practice can be elevated to make profit by
Maximizing on lump sum discount which would mean the company uses fewer resources
Taking only quality supplies
Minimize on the expenditure problems
Since procurement contributes awesomely profit, it has been centralized to reduce paperwork hence standardized practices. Procurement has two strategies:
The procurement strategies can have a variation in their procurements due to the constraints, the existence of availability of critical resources and the specific requirements required by the given different customers.
The strategies existing in procurement strategies are usually;
In the environment of procurement, there are various conditions that are considered. There are critical factors that affect conditions of acquisition. The mentioned environmental conditions are categorized into two environments. These environments are;
Macro environment
Environment macros are the general features that externally validate the influence of enterprise on the procurement. These factors include the;
Micro environment
These features are the factors that internally affect the procurement process of the firm. The policies of the firm are also considered. One more micro environmental consideration is the imposed procedures that are used in the firm. The procedures imposed on the project or the client.
This environment also comprises of the procurement and contracting system. The process has some processes that run according to the PMBOK
Contacting by the Management
The contracting of management is an art and science at the same time. The managing of contractual agreement in the entire contracting process.
The assignment of contracts involves two or more parties. Hence, the management process of contracting is therefore performed by the buyer and seller. The seller in this scenario is the contractor.
The contractors provide management processes that are in correspondence with the buyer process. This activity comprises some processes. This procedure includes;
Planning procurements
The step in procurement begins with the planning process for purchases of and acquisitions. A particular point of view lies in the development of a procurement planning that states;
The planned procurement involves the following;
A narrative that has the statement of work (SOW) describes the work that needs to be accomplished and the resources that need supplies.
The companies may also use the statements of the objectives for the project. The projects designed are the performance-based effort projects.
The SOOS are used in the company during the process of procuring. When the company needs leverage in advancing technologies or capabilities, they apply the procuring process. The expertise of the contractors is also important to consider during the process.
Another substitute to the use of SOW that makes a description of specific details to the contract that needs work. The process also gives a guide on how the procurement should be performed. On the other hand, using SOO only paves the way for the description of the end objectives aimed by the project. Thereby the project objectives are stated in the SOO.
Alternatives of procurement
There exist ways in which the end item can be realized. To obtain feasible procurement, various alternatives are possibly executable. They include;
To begin with, the make or buy analysis marks the start. Durin the make decision, the following are put to notice;
In the buy decision;
In the lease or rent analysis, the analysis is usually a financial decision and lease is usually having a longer term than the rent provision.
The procurement plan should address risks that re-incurred in the procurement. Some companies have manuals that contain risks incurred in well-sectioned writings. An example of a procurement risk as below.
In the process of developing a procurement plan, the following will be addressed;
The process of conducting procurements.
The solicitation package contains bidding documents, lists of qualified vendors, the criteria for evaluating proposals, bidding conferences and the plan of the supplier payment process.
Project evaluation criteria
The criteria used in evaluation reflect the selected award strategy of contracts that are;
One more thing is the negotiation process that consists of large contracts. (John Murdoch, 2002
References
Austroads Limited, E. C. (2014). Building and Construction Procurement Guide: Principles and Options. Atlanta: Austroads Limited.
Chris Hendrickson, T. A. (1989). Project Management for Construction: Fundamental Concepts for Owners, Engineers, Architects, and Builders. Atlanta: Chris Hendrickson.
Cover, F. (2005). 4D CAD and Visualization in Construction: Developments and Applications. Washinton DC: CRC Press.
John Murdoch, W. H. (2002). Construction Contracts: Law and Management. Utah: Routledge.
Kim Heldman, C. M. (2007). PMP Project Management Professional Exam Study Guide. Boston: John Wiley & Sons.
P.S. Brandon, T. M.-R. (2005). Investment, Procurement, and Performance in Construction: The First National RICS Research Conference. NewYork: Routledge.
Peter Morris, J. K. (2010). The Wiley Guide to Project Technology, Supply Chain, and Procurement Management. New York: John Wiley & Sons.
Schulte, K.-W. (2012). Real Estate Education Throughout the World: Past, Present, and Future: The Past, Present, and Future. Boston: Springer Science & Business Media.
Steve Rowlinson, P. M. (2005). Procurement Systems: A Guide to Best Practice in Construction. Chicago: Routledge.
William Hughes, P. M. (2006). Procurement in the Construction Industry: The Impact and Cost of Alternative Market and Supply Processes. Washington Dc: Routledge.
Yuzhe Wu, S. Z. (2016). Proceedings of the 20th International Symposium on Advancement of Construction Management and Real Estate. Boston: Springer.
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