Condominium Development At Regency Plaza Hotel Complex: Choosing The Right Contract Type

Benefits and challenges of project contract types

This project is about the condominium development at the hotel Regency Plaza hotel complex. It is the role of the contractors and the construction project team members to design the contract in such a way so that it can gain success in future. It is found that the local economy supported for this specific project was weak thus the project was running behind the estimated schedule and budget as well. This mixed construction project is consists of 96 luxury condominium and 300 rooms. Different types of project contracts are there and among them the most suitable type of contract should be selected for this construction project, the benefits and challenges of the contract types are illustrated in the below section.

The benefits are as follows:

• The rate of risks associated to the clients will be reduced as the price will be fixed however it can vary
• This is one of the easiest accepted and understandable types of contract
• The analysis and selection of bidding process is much straight forward
• It helps to secure the contract loan by increasing the certainty degree on the client’s part
• It can minimize the change orders
• The responsibilities and management required to be taken by the clients get reduced
• It gives a stable as well as reliable cash flow and also the also payment style offers by this contract are made in predictable, regular or installment manner

• Though, it is one of the most controversial type of contract but still it is identified as one of the most beneficial and widely used contract types as well.
• It helps the construction managers to deliver a much beet and quality project to the consumers.
• The contracts do not have to stint for materials and labors
• In order to prepay the expense as they can bank over refurbishment as well as bonus fees
• The chances of project over bidding gets reduces with this approach
• Unfinished construction design can also be considered for designing such construction project

• The total unspent contingency can be achieved in a revert by the owners through this GMP type of contract
• In savings also the owners can take active participation which is not possible in lump sum
• High quality of degree can also be maintained by the owners
• The actual cost can be accessed by the owners of such contact
• This contract type is applicable for both the fast tracking and controversial construction project contracts
• For the change orders and related costs it gives a better opportunity for control and management
• It gives better decision making power to the owners  

• This is a written agreement established between the owners and the third party managerial companies
• It helps to track any project mush successfully
• It generated positive success regarding employee tax codes, accounting and managements
• The rate of employee turnover increases
• Privacy lagging is another issue that the owners may face due to this type of contract

• It gives opportunities regarding innovation and fast project delivery
• The efficiency related to design and construction increases with a save in cost and certainty for final price
• The total number of claims can be reduced with increased flexibility and advanced  risks management strategies
• It gives better opportunities to make necessary project level changes and also reduces the administrative burden from the construction project owners

In order to resolve all the contract level risks it is necessary for the owners of the project to follow certain mandatory steps accordingly.  

At the initial phase the brokers should review the contractual requirements and insurance details. Before making any bid for the contract the contractors should make sure that they have meet the insurance requirements. It will help them to realize that whether the requirements are meeting or further clarifications will be needed.  If any additional cost s required then that can also be measured with the help of this contract.  

For the regency Plaza construction project the most suitable contract is Cost of work plus fee with guaranteed maximum price contract. In this contract the owners pay a lowest amount estimated for the actual cost that has been incurred for any project. It offers high level protection and also limits the rate of total risk that the owner may face.  The owners also get opportunities to share the cost savings.

Before the initiation of the project it is necessary for the construction project head to identify and develop a pre project planning details to avoid project risks. The risks that are to be addressed at the pre project planning phase are as follow:

Incorrect project budget: In order to successfully implement any construction project it is mandatory for the project head to design a project budget.  It is the role of the finance manager to develop the project cost. Based on the estimated cost the project sponsors and governing supportive committee will be selected. However, if the project managers fail to identify the project budget accurately then the project may fail to meet the expectation.  This will also result to project delay, cost overrun.

Mitigation strategy: In order to mitigate this specific issue it is mandatory for the project committee to design the project outline to estimate the expected project budget.  Along with this a feasibility report should also be designed to measure that whether the project will be successful or not. For this construction project the cost should be specifically estimated for interior design, marketing for the condominium units.

Lack of skills of the associate stakeholders: In order to meet the expectation of the owners the skill of the project team members are other requirements must be considered.  As the commercial success of any project are dependent of its marketing projections.

Pre-project planning strategies for successful project implementation

Mitigation strategy: In order to mitigate these issues a separate project team has been developed for the Regency construction project.  A three person sales staffs are hired to report to the project manager, Hodgkins. In order to make coordination to any condominium buyers change an advanced base design has been prepared.

In order to deliver construction project successfully within estimated time phase and budget the project manager should utilize effective project management approaches.

Development of project plan based on project document: Depending upon the project definition document the project plan should have to be prepared by the construction project manager. The project managers are always focused on developing the design in such a way so that short changes are needed in the project planning processes. At the project initiation phase the overview of the project including objectives, scope, approaches and organizations should be designed.  

Creation of project work plan: The complete project work plan must be created considering instruction associated to the construction project. The planning sub activities are to be followed horizontally by developing a work Breakdown structure and cost break down structure.   A prior project work plan has the ability to reduce the project level risks.

Adoption of most suitable project management procedure: The construction project managers are required to follow the most suitable project development methodology. The project management process is consists of different activities such as scope change, risk assessment, quality assessment, professional communication etc. The proactive nature of the project contractors and the team members will help them to meet the project objectives by delivering the project within estimated time period.  

Approved scope change: During the pre-project planning phase if any certain contract oriented changes are requested then the requested should be definitely approved by the project manager and sponsors. Scope management is referred to as one of the most important activity to control the project. The issues associated to the project will be surely resolved if these approaches are considered by the project head.  

A restaurant construction project operated in Australia followed all these steps accordingly for the successful implementation of the project. As, all these pre project planning phases are maintained by the project manager during the development of this construction project. As a result the project has meet the project objectives successfully without any cost overrun time overrun.

For the separate activities that are associated to construction project this is mandatory for the project manager and finance manager to estimate individual cost for each. There are two different types of costs available for any project such as actual cost and planned cost. It is not mandatory that each time the planned cost will be similar to the actual cost. If the planned cost is found to be extra then, the actual cost then the project will be defined as a successful one. On the other hand if the actual cost is planned cost is found to be extra than the actual cost, then it results that the cost is an example of overrunning cost. The breakdown of the cost for each activity or break down work are illustrated in the below section.

1.1	Project objectives setting	5 days	Contractors	$6,000.00
1.2	Budget preparation	6 days	Project manager	$3,840.00
1.3	Bidding	8 days	Sponsors	$11,520.00
1.4	Marketing strategy development	9 days	subcontractors	$11,520.00
1.5	Current situation analysis	6 days	marketing manager	$8,160.00
2.1	Procurement planning	6 days	Contractors	$7,200.00
2.2	Stakeholder management plan	6 days	finance manager	$8,160.00
2.3	Communication management plan	6 days	Project manager	$3,840.00
2.4	Architecture drawing	10 days	finance manager	$13,600.00
2.5	Blueprint preparation	12 days	subcontractors	$15,360.00
3.1	Extensive design revision	5 days	Project manager	$3,200.00
3.2	Advanced change addition	9 days	Contractors	$10,800.00
3.3	Other requirements addition	8 days	Sponsors	$11,520.00
4.1	Project stakeholders signoff	6 days	Contractors	$7,200.00
4.2	Final project document submission	9 days	marketing manager	$12,240.00
4.3	Post construction plans	8 days	Sponsors	$11,520.00

1.1	Project objectives setting	5 days	Mon 7/16/18	Fri 7/20/18	Contractors
1.2	Budget preparation	6 days	Mon 7/23/18	Mon 7/30/18	Project manager
1.3	Bidding	8 days	Tue 7/31/18	Thu 8/9/18	Sponsors
1.4	Marketing strategy development	9 days	Tue 7/31/18	Fri 8/10/18	subcontractors
1.5	Current situation analysis	6 days	Mon 8/13/18	Mon 8/20/18	marketing manager
2.1	Procurement planning	6 days	Tue 8/21/18	Tue 8/28/18	Contractors
2.2	Stakeholder management plan	6 days	Wed 8/29/18	Wed 9/5/18	finance manager
2.3	Communication management plan	6 days	Thu 9/6/18	Thu 9/13/18	Project manager
2.4	Architecture drawing	10 days	Fri 9/14/18	Thu 9/27/18	finance manager
2.5	Blueprint preparation	12 days	Fri 9/28/18	Mon 10/15/18	subcontractors
3.1	Extensive design revision	5 days	Tue 10/16/18	Mon 10/22/18	Project manager
3.2	Advanced change addition	9 days	Tue 10/23/18	Fri 11/2/18	Contractors
3.3	Other requirements addition	8 days	Mon 11/5/18	Wed 11/14/18	Sponsors
4.1	Project stakeholders signoff	6 days	Thu 11/15/18	Thu 11/22/18	Contractors
4.2	Final project document submission	9 days	Fri 11/23/18	Wed 12/5/18	marketing manager
4.3	Post construction plans	8 days	Thu 12/6/18	Mon 12/17/18	Sponsors

Purpose	Between	Time of communication	Communication medium	Description
To make the project team members familiar about the project requirements and objectives	Construction project manager and project team members	2 hours	Face to face meeting and email	This communication is required to be done between the project manager and the project team members just to make them aware and more focused to the objectives of the project
Project status report	Project manager, sponsors and finance manager	3 hours	Face to face meeting and email	The project status report documentation should be shared between the project associates to let them know about the current condition of the project ad how much the progress is done
About project expense approval	Finance manager and project manager	3 hours	Face to face meeting and email	The finance manager and the audit heads are responsible to approve the project budget to avoid budget and cost overrun.
About detail project contract	Contractors and project manager	3 hours	Face to face meeting and email	In order to deliver a successful project within estimated time and budget this is mandatory for the project head to let the contractor familiar about the project requirement and the facility that may be generated from the successful project delivery.
About the competitive market	Marketing manager, sponsors and other associates	3 hours	Meeting and pre	In this meeting the current competitive status of the market will be discussed between the project manager and other stakeholders.

Project manager	Project status report	Face to face meeting, Presentation and  open communication
Finance manager	Progress report	Face to face meeting, open communication
Marketing manager	Project status report	Face to face meeting, email
Sponsor	Executive reports	Face to face meeting, email and presentation

Project manager	Source new product with secure financing and expansion
Finance manager	Sustainable construction project outcome
Marketing manager	Increases the market competitiveness
Project sponsor	Retained consumers and resolved business disruptions

	With the help of the project acceptance the project manager and the rest of the project team members will come to know that the project criteria have successfully meet the requirements and the project objectives.
	Stakeholders signoff from the project
	Document is approved by the project executives and if any changed are required then those are also requested in this phase
	Based on the performance of the project team members incentives and award programs are organized
	With the changing requirement the project schedule will be rearranged by the team

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