Construction Of Karratha Health Campus: Project Delivery And Financial Contract Type

Selection of project

Discuss about the Construction of Karratha Health Campus.

The paper mainly reflects on the Construction of Karratha Health Campus with the help of the general contractor named “APIC CONSULT” that serves as a private consultant to both the government as well as private agencies. The Karratha health campus project is a new 40 bed health campus construction project in the town of Karratha for replacing the existing hospital named “Nickol Bay” with expanded emergency as well as ambulatory care departments (The West Australian, 2018).  The health campus will be helpful in supporting existing facilities throughout the region of Pibara with proper helipad by making the facility accessible from various remote communities as well as mining related projects.

The paper mainly focuses on the Karratha health campus construction with the help of APIC CONSULT”.  It is found that Karratha health campus is undertaken for construction  for replacing the Nickol Bay Hospital in order to expand the medical facility by enhancing the emergency department bays, new surgical centre, helipad, expanded outpatient facilities as well as delivery suites (The West Australian, 2018).  The construction of the hospital will be helpful in bringing wide range of services on a single site by increasing the healthcare facilities to the people of local communities.

It is found that budget of around $207.15 million is generally needed in order to complete the construction of the project. The Brookfield Multiplex as well as Cooper and Oxley formed a joint venture for delivering the project within the needed time. The construction of the campus will be helpful in brining valuable experience. In addition to this, it will be helpful in improving the medial facility, assists in enhancing the access to various specialist services as well as helps in enhancing the Aboriginal Health initiatives.

Project delivery method is referred as one of the system which is used by one of the agency in order to organize and finance construction, design as well as other operations for a particular structure by entering within a legal agreement with one more or more number of entities. There are number of types of project delivery methods that are mainly discussed below:

Design Bid Build: In this method, the owner mainly selects as well as enters within a contract with other design professionals. The design professionals are responsible for developing the design as then creates bid documents that are provided to the contractor for various types of competitive bids (Gad et al., 2015). This approach is considered as the best approach when the owner actively gets involved within the entire design procedure and gets a fixed cost before the commencement of project construction. This method is usually utilized for large as well as complex projects.

Background of the case project

Design Build: The owner is responsible of creating contract with one single entity in order to provide both the design as well as building construction. The main intent of this type of contract is to properly foster the teamwork within the contractor as well as architect in order to facilitate budgeting, financing as well as programming (Yoon, Jung & Hyun, 2016). The greatest  advantage of this delivery method is that the owner is responsible of looking only at a single party for design as well as construction.

[email protected]:  In [email protected], the construction manager is hired by the owner who is mainly responsible of constructing the entire project within the expected time (Bilbo et al., 2015).  It is found that the construction managers require to create proper GMOP which will further helpful in providing it to the subcontractor after successful completion of the project design.

The table that is given below will be helpful in reflecting the scores and weighted scores so that proper analysis can be done in order to determine the best project delivery method.

Criteria	Weight	Project Delivery System
		DB contract	DBB Contract	[email protected] Contract
		Score	Weighted score	Score	Weighted score	Score	Weighted score
Deliverable speed	25	6	150	5	125	8	200
Quality	30	7	210	6	180	4	120
Time	25	2	50	6	150	5	150
Communication	20	5	100	4	80	8	160
Total	100		510		535		630

With the help of the table that is provided above, it is analyzed that when deliverable speed of the project delivery system is concerned, [email protected] has the highest score which is 8 in comparison to DBB and DB. This is mainly because the  project managers generally have the capability of finishing the entire project within the expected budget and time in spite of the work pressure. In context to communication, it is found that [email protected] have highest score in comparison to both DBB as well as DB and this is because the construction managers are able to communicate the needs as well as requirements of the project properly and as a result the entire project can get completed successfully. When the project quality is analyzed,  it is reflected that DB delivery method has the highest point because in this type of delivery method both the owner as well as the designer works together so that they can be able to provide proper quality. In addition to this, it is found that when time for the project delivery method is concerned, DBB contract has the highest score and that is 6. This is because They generally have the blueprint of the project with themselves and as a result they started working on that blueprint and able to finish the project quite earlier as compared to other types of project delivery methods. After analyzing all the three delivery methods, it is identified that [email protected] is the best project delivery method in order to construct the Karratha health campus as the construction manager is the individual who manages all the construction work within the expected budget and time.

Project delivery method: Explanation

 The term financial contract is referred as an arrangement that generally takes the form of a negotiated contract or an agreement that is commonly entered with the help of participants in the financial markets. There are number of types of financial contracts which are elaborated below:

Lum sum contract: It is one of the contract with a single lump sum for all the activities of the project and the contractor of the project is mainly responsible of completing the project within the agreed cost that is generally set forth by the contract (Fernández & Gulan, 2015). If the contractor is able to complete the entire project within the fixed total cost then the contractors are able to make additional money with the help of the projects.

Guaranteed Maximum price contract: It is a type of agreement with one of the contractor in which it generally agrees with the contract sum and thus the budget of the project will not get exceeded (Roberts, 2015).  It is found that the mechanism is generally utilized depending on the design and build contracts, where the entire responsibility is taken by the construction manager for finishing the design as well as other construction works and thus they can also able to control the cost of the project.

Cost-Plus Fixed Fee contract: It is considered as one of the cost-reimbursement contract that generally assists in providing payment to the project contractor which is fixed in spite of the inception of the contract (Delmolino et al., 2016).  The fee of the contractor does not get vary with the actual cost of the project but they can get adjusted due to the changes that is done within the project work. This type of contract generally helps in permitting contract for efforts however it does not provide the authority to the contractor to control the cost of the project.

 The table which is given below reflect the score as well as weighted score for various financial contract in For determining the best financial contract for the project.

Criteria	Weight	Financial Contract type
		Fixed fee – Cost plus Contract	Lump Sum Contract	Guaranteed Maximum Price Contract
		Score	Weighted score	Score	Weighted score	Score	Weighted score
Contractor’s responsibility	25	8	200	5	125	7	175
Risk	20	3	60	6	120	5	100
Cost	30	5	150	6	180	7	210
Time	25	6	150	3	75	5	125
Total	100		560		500		610

From the above table, it is analyzed that when the responsibility of the contractor is analyzed, Fixed fee – Cost plus Contract has the highest score that is 8 as compared to Lum sum contract as well as Guaranteed Maximum Price Contract. This is because with the help of Fixed fee – Cost plus Contract, the entire project gets finished within the time that is expected as in this contract, the contractor will receive much higher amount if they are capable of finishing the task as early as possible. In context to the project risk, it is found that Lump Sum Contract has the highest score that is 6 in comparison to other type of contract. The lump Sum contract has the highest score as they are able to know the risks that a client can face and thus they tried their best to limit the cost of the project. When the cost of the project is concerned, Guaranteed Maximum Price Contract has the highest score that is 7 in comparison to Lump sum as well as Fixed fee – Cost plus Contract. This is mainly because with the help of Guaranteed maximum price, the [project contractor will be able to give the left-over costs of the project to the project owner. In addition to this, it is found that in context to time, the Fixed fee – Cost plus Contract has the highest score that is 7 as compared to other financial contracts. This is because with the help of this financial contract the project manager does not face any type of cost constraint and as result they does have time limit before the project initiation. After analyzing all the financial contracts of the project properly, it is found that Guaranteed Maximum Price is the best contract for this project as with the help of this contract, the owner will be able to get the left-over money that is not utilized in the construction of the project.

Selection of best project delivery method

Procurement method is defined as one of the procedure which is mainly used in order to procure the entity for the needed goods, services as well as other types of works. It is found that there are number of types of procurement methods that are elaborated below:

Completive: Completive procurement is defined as one of the method that generally involves within the opening of a tender for getting the best value (Gur, Lu & Weintraub, 2017).   It generally involves the buyers to receive bids from both the vendors as well as sellers in order to select a supplier.

Negotiated: This is considered to be one of the best procurement method for selecting a contractor without getting involved within any type of formal advertising or formal price of completion (Brennan, 2016). It is found that proper number of regulations as well as rules are mainly employed in order to specify the selection of various contractors.

Best value: This method helps in reflecting on number of different factors including the price, expertise  as well as quality of the vendors and contractors during the process of recruitment (Kornevs, Kringos & Meijer, 2016). In this method, the value which is related with number of procured services as well as goods are generally elaborated in comparison to number of costs as well as benefits.

The table which is given below reflects on the score and weighted score in order to determine the best method of procurement for the construction of Karratha Health Campus.

Criteria	Weight	Procurement contract
		Competitive	Negotiated	Best Value
		Score	Weighted score	Score	Weighted score	Score	Weighted score
Responsibility	25	8	200	5	125	7	175
Risk	20	4	80	6	120	5	100
Cost	30	6	180	7	210	8	240
Time	25	7	175	4	100	6	150
Total	100		635		555		665

From the above table, it is identified that when responsibility is concerned competitive procurement method has the highest value in comparison to the other methods. It generally involves the buyers to receive bids from both the vendors as well as sellers in order to select a supplier. When cost is concerned, best value has the highest score and this is because it reflects on number of factors while recruitment and thus they will be able to manage the cost of the project.  When the time is concerned, completive has the highest value is 7 in comparison to other procurement methods. However, after analyzing all the procurement methods, it is identified that best value is the best suited method for this project as it generally focusses on lot of factors during recruitment.

The risk management plan for the construction of the Karratha Health campus is provided below:

Risks	Description	Probability	Impact	Mitigation
Schedule slippage	Due to slippage of schedule, the project managers can face difficulty in finishing the construction work within the expected time.	Medium	High	It is the responsibility of the project managers to manage the schedule of the project properly.
Budget shortage	Shortage of budget can create number of financial issues and as a result the progress of the project can get obstructed.	High	High	Earned analysis must be undertaken in order to estimate the required budget for the project properly.
Utilization of low quality of materials	If low quality of materials is utilized then number of quality related issues and challenges will occur within the project	Medium	High	It is necessary to use proper quality of materials within the project for maintaining quality.
Inexperienced project managers	Due to inexperienced project managers, it will be quite difficult to manage the project work properly within the estimated time.	Medium	Medium	Experienced project managers must be hired so that they can be able to manage the work of the project effectively.

The quality management plan for the Karratha Health Campus is provided below:

Problem	Purpose	Outcome	Responsible
Improper material quality	The main reason is to utilize materials of good quality for improving the quality of the project.	The quality of the materials that are used in the construction got improved.	Quality analyst
Inexperienced quality analyst	Hiring experienced quality analyst will be helpful in maintaining the quality of the project.	Quality of the project will be improved.	Human resource manager
Absence of quality team	In the absence of quality team, it is quite challenging to focus on quality.	Quality of the project get analyzed after each phase.	Operation manager

 

Financial contract type: Explanation

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