Global Project Management In Construction Sector

Part A: Project Contracts

This report is focused on a project for construction of Regency Plaza hotel complex and it is the role of contractors as well as the team members to ensure successful completion of the project. It has been found that the project was running behind schedule and over budget due to inadequate budgeting or proper planning. In this report, the analysis is carried out on various contract types to identify a suitable type that will be appropriate for the project. A schedule along with the project costs has been reflected in this report to ensure successful completion of the project. A communication plan has also been prepared to demonstrate how communications will be managed during the project. Further, discussions has been presented on the role being played by different elements in close-out phase of the project.

This type of contract shifts all the costs liability from client to the contractor. In this type of contract, the contractor agrees to work according to specific schedule along with usage of a management system for reporting or controlling quality. In this type of contract, the risks that may generate from the client activities get reduced because of the fixed price though this rate can vary based on the type of the industry. This contract is referred to as one of the most easily understandable and accepted contract type. The changes in orders can also be minimized in this contract (Halpin, Lucko & Senior, 2017). The major challenge in this type of contract is that if the contractor bids too low for winning the contract, then strict controls have to implemented to control the time and budget. If the contractor bids too high, then there may be chance of not winning the contract.

The cost of work plus fee contract is referred to as one of the most conventional contract type as it is much profitable and widely utilized in all type of industries. This type of contract encourages the contactors to undertake certain project or jobs that may be risky for them. It is suitable as there is guarantee that they will receive a set fee for the job also the contractors do not have to be worried for controlling cost of the project. With the help of this approach the contract manager will be able to deliver better quality project to the clients. This contract type is not dependent upon materials and labors (Bajari, Houghton & Tadelis, 2014). This type of contract is always settled at a reasonable and fixed prices to avoid issues of bargaining at a later stage during construction. It saves the overall time and owner also gets benefited by falling within the fixed material and labor time. For any type of incomplete construction project this contract type is helpful.

Though the Guarantee Maximum Price (GMP) contract an owner can obtain a complete unspent contingency. The owners are allowed to take active participation in the savings and that is not possible in case of the lump sum contract. The owners can successfully maintain the quality of project with the help of this contract as they will become capable of accessing the actual cost (Tran et al., 2018). For both the controversial as well as fast tracking construction projects this contract type is always applicable. The owners become capable of taking much better decision making power eve for the changed orders and relative cost. The contact can be successfully controlled and manage. Moreover, it can be said that this contract includes the cost of work and additionally guaranteed maximum price as per the contract.

Legal benefits and challenges of different contract types for the project

This type of written agreement is developed by the owners and establish in between the third party managerial companies and owners. This contract helps to track the project more efficiently. The establishment of the Construction management (CM) contract leads to increase in annual rate of employee turnover. It generates positive and successful employee tax codes, accounting and overall management (Chen et al., 2015). However, an issue that may generate with the usage of this specific contract is lag of privacy.  

Design-build or design-and-construct (D&C) contract 

Different opportunities related to innovation and project delivery can be obtained from the design build or design and construct contract. Due to increasing flexibility as well as advanced risk management strategies the claims numbers get reduced (Chen et al., 2015). Various useful project level change implementation become easier and the overall work burden from the project administrative is diminished.

Mitigation strategy for potential challenges related to the different contract types

Different contract level risks are being identified that are needed to be mitigated to reach the desired project outcomes. The mandatory steps to be followed by the project manager are as follows:

• All the details of the insurance and contractual requirements are needed to be reviewed professionally by the contract lead at the project initiation phase.
• The contractors need to make sure that all insurance needs are kept in mind before contract bidding (Hughes, Champion & Murdoch, 2015).
• It gives the contractor opportunity to measure that whether the requirements are reached or any further clarifications are required.
• This type of contract will also help to measure the required rate of additional cost.

For this particular project on construction of Regency Plaza, the most appropriate contract type is the Cost of Work plus fees with a guarantee maximum price contract. Typically, in this type of contract, the investor does not have to invest much alike the actual cost which is incurred for the implementation of a successful project. This type of contract is availed by the contractor then the project owner would get opportunity for sharing the cost savings.

Before the initiation of any project the construction project head needs to identify and develop accurate project documentation based upon the project planning to avoid all types of functional and operational risks. At the preliminary stage of the project planning the risks those are needed to be addressed for a successful project resultants are as follows:

Inappropriate estimated budget of the project: For avoiding cost relates issues, at the project initiation phase the project manager needs to estimate the complete project budget. The finance manager is responsible to design and develop the fix budget for the project (Clough et al., 2015). The governing body and the project sponsors are always selected based on the total budget estimated for the project. If anyhow it is found that the finance manager fails to estimate the actual project budget then the project will not be able to meet the desired outcomes.

Budget risk mitigation strategies: For ensuring that the project cost is not exceeding the fixed estimation, the finance manager should make a feasibility study before initiating the project. The feasibility report will ensure successful completion of the project (De Sande et al., 2015). For the particular project to construct Regency Plaza, the cost should be estimated regarding interior design, condominium unit’s marketing etc.

Inadequate skills of the project team members: Lack of adequate skill and knowledge is another major issue for projects. For commercial success and competitive advantages the project and overall business the team members must possess enough skills (Rahmani, Maqsood & Khalfan, 2017). If they are found to be not enough skilled then the project will fail to meet the expected outcomes, preliminarily set goals and objectives.

Stipulated or lump-sum contract

Mitigation strategy: In order to mitigate the skills related issues, the project manager needs to arrange professional training and development program. Not only this but also a completely separate and new project team should be developed for Regency Construction project. For proper time to time reporting to the project manager named Hodgkins, three sales staffs should be hired. An advanced base design should be prepared to make coordination with the condominium unit buyers.  

Effective project management approaches should be adopted by the project manager along with the project team members to deliver successful and desired outcomes to the project clients. The effective approaches utilized for this project outcome delivery are as follows:

Project plan development based on documentation: Considering the project definition documents the construction project manager should design and implement the project plan. The project managers are responsible to design the project plan in such a way that there is no requirement for major changes in the plan at a later stage (Ogunde et al., 2017). At the initiation phase of the project the overview should include project objectives, scope, goals, aim and project management approaches.

Creating project work plan: After considering all construction instruction the head of the construction project manager should develop the detailed project work plan. The sub activities should follow the main tasks horizontally and these structures become much transparent to the project team members with development of a Work Breakdown Structure (WBS). The project level risks will be completely avoided if a prior project plan is created by the project owner (Leite et al., 2016).

Adoption of proper project management process: Before developing any project plan most suitable project management methodology is required to be identified and adopted by the project manager. In addition to this, use tools and techniques should also be adopted by the project manager while developing the construction project (Ogunsanya, Aigbavboa & Thwala, 2016). The process of project management comprises of different procedures such as communication management, quality analysis, change management, risk assessment etc. In order to meet the project objectives and goals within estimated budget and time the project manager and the project team members need to play active role.

Approval for scope change: Before implementing any change regarding the project contract the project team members should take approval from the project sponsors and project manager. In order to control and monitor the construction project accurately the project manager needs to design the scope management plan properly (Kerosuo et al., 2015). If all the scope change management factors are properly considered by the project manager before implementing the project scope change then all the possible issues and risks that may interrupt the success of the project will be completely resolved.

Supporting example

There are many successful construction projects available all over the world however, the case of Regency Plaza construction has been taken into consideration as an example. All the above mentioned procedures have to be followed accordingly by the construction project manager. It is found that the construction project will meet all clients’ demand and requirements of the owner’s successfully within the estimated budget of $3,718,450.00 and time of 1 year. Not only this but it is also assumed that the Regency Plaza will start gaining more than 10% ROI after 2 years of its inauguration.

Cost of work plus fee contract

The project costs will be organized in an efficient manner with the help of breaking down the cost according to various activities. The bottom-up approach has been chosen for this project as it provides accuracy along with detailing of each and every expense that is associated with different activities. The costs for standardized work package and formalized structure has been estimated for organizing the project costs.

The costs associated with the project for construction of Regency Plaza has been demonstrated as below:

WBS	Task Name	Cost
0	Regency Plaza construction project	$3,718,450.00
1	Phase 1: Initiation	$13,040.00
1.1	Setting up the project objectives	$1,520.00
1.2	Preparation of the budget	$3,720.00
1.3	Bid for the contract	$5,000.00
1.4	Analysis of present market	$1,200.00
1.5	Development of marketing strategy	$1,600.00
2	Phase 2: Planning	$96,130.00
2.1	Plan for procurement	$3,920.00
2.2	Plan for stakeholder management	$2,160.00
2.3	Plan for communication	$1,440.00
2.4	Preparing the architectural drawings	$5,200.00
2.5	Designing of blueprint	$83,410.00
2.5.1	Preparation of the blueprint for construction	$80,050.00
2.5.2	Review and approval of the blueprint	$3,360.00
3	Phase 3: Execution	$3,606,880.00
3.1	Construction works	$2,568,302.00
3.1.1	Clear site	$3,000.00
3.1.2	Acquire materials	$477,738.00
3.1.3	Pour lower concrete	$143,698.00
3.1.4	Layout of structural foundations	$147,298.00
3.1.5	Layout of pillars and beams	$218,548.00
3.1.6	Construction of walls	$218,148.00
3.1.7	Construction of floor supports	$144,898.00
3.1.8	Finishing the ground floors	$134,080.00
3.1.9	Build roof supports	$198,928.00
3.1.10	Construction of roof walls	$276,978.00
3.1.11	Building roof ceilings	$276,578.00
3.1.12	Installation of roof	$324,810.00
3.1.13	Finalizing the construction works	$3,600.00
3.2	Plumbing, Electrical and HVAC layout	$746,018.00
3.2.1	Installation of electrical layout	$178,578.00
3.2.2	Installation of plumbing layout	$229,520.00
3.2.3	Installation of HVAC requirements	$336,880.00
3.2.4	Review of layout works	$1,040.00
3.3	Interior and Exterior design	$292,560.00
3.3.1	Designing the exteriors	$143,680.00
3.3.2	Designing the interiors	$143,680.00
3.3.3	Review of the design	$5,200.00
4	Phase 4: Closure	$2,400.00
4.1	Sign-off from stakeholders	$360.00
4.2	Post project review	$1,680.00
4.3	Lessons learnt and documentation	$360.00

The major deliverables are considered as the four phases that are required to complete the construction of Regency Plaza. The major deliverables of the project along with the estimated timeline is presented as below:

Figure 1: Major deliverables of the project

(Source: Created by Author)

The Work Breakdown structure for the project demonstrates the various activities that are included in the deliverables to ensure achievement of the project goals and objectives. The Work Breakdown structure for this particular project to complete the construction of Regency Plaza is presented as below:

WBS	Task Name	Duration	Start	Finish
0	Regency Plaza construction project	218 days	Wed 02-01-19	Fri 01-11-19
1	Phase 1: Initiation	17 days	Wed 02-01-19	Thu 24-01-19
1.1	Setting up the project objectives	2 days	Wed 02-01-19	Thu 03-01-19
1.2	Preparation of the budget	3 days	Fri 04-01-19	Tue 08-01-19
1.3	Bid for the contract	5 days	Wed 09-01-19	Tue 15-01-19
1.4	Analysis of present market	3 days	Wed 16-01-19	Fri 18-01-19
1.5	Development of marketing strategy	4 days	Mon 21-01-19	Thu 24-01-19
2	Phase 2: Planning	43 days	Fri 25-01-19	Tue 26-03-19
2.1	Plan for procurement	7 days	Fri 25-01-19	Mon 04-02-19
2.2	Plan for stakeholder management	6 days	Tue 05-02-19	Tue 12-02-19
2.3	Plan for communication	4 days	Wed 13-02-19	Mon 18-02-19
2.4	Preparing the architectural drawings	10 days	Tue 19-02-19	Mon 04-03-19
2.5	Designing of blueprint	16 days	Tue 05-03-19	Tue 26-03-19
2.5.1	Preparation of the blueprint for construction	10 days	Tue 05-03-19	Mon 18-03-19
2.5.2	Review and approval of the blueprint	6 days	Tue 19-03-19	Tue 26-03-19
3	Phase 3: Execution	153 days	Wed 27-03-19	Fri 25-10-19
3.1	Construction works	113 days	Wed 27-03-19	Fri 30-08-19
3.1.1	Clear site	5 days	Wed 27-03-19	Tue 02-04-19
3.1.2	Acquire materials	9 days	Wed 03-04-19	Mon 15-04-19
3.1.3	Pour lower concrete	10 days	Tue 16-04-19	Mon 29-04-19
3.1.4	Layout of structural foundations	10 days	Tue 30-04-19	Mon 13-05-19
3.1.5	Layout of pillars and beams	10 days	Tue 14-05-19	Mon 27-05-19
3.1.6	Construction of walls	10 days	Tue 28-05-19	Mon 10-06-19
3.1.7	Construction of floor supports	9 days	Tue 11-06-19	Fri 21-06-19
3.1.8	Finishing the ground floors	8 days	Mon 24-06-19	Wed 03-07-19
3.1.9	Build roof supports	10 days	Thu 04-07-19	Wed 17-07-19
3.1.10	Construction of roof walls	8 days	Thu 18-07-19	Mon 29-07-19
3.1.11	Building roof ceilings	10 days	Tue 30-07-19	Mon 12-08-19
3.1.12	Installation of roof	9 days	Tue 13-08-19	Fri 23-08-19
3.1.13	Finalizing the construction works	5 days	Mon 26-08-19	Fri 30-08-19
3.2	Plumbing, Electrical and HVAC layout	15 days	Mon 02-09-19	Fri 20-09-19
3.2.1	Installation of electrical layout	5 days	Mon 02-09-19	Fri 06-09-19
3.2.2	Installation of plumbing layout	4 days	Mon 09-09-19	Thu 12-09-19
3.2.3	Installation of HVAC requirements	4 days	Fri 13-09-19	Wed 18-09-19
3.2.4	Review of layout works	2 days	Thu 19-09-19	Fri 20-09-19
3.3	Interior and Exterior design	25 days	Mon 23-09-19	Fri 25-10-19
3.3.1	Designing the exteriors	10 days	Mon 23-09-19	Fri 04-10-19
3.3.2	Designing the interiors	10 days	Mon 07-10-19	Fri 18-10-19
3.3.3	Review of the design	5 days	Mon 21-10-19	Fri 25-10-19
4	Phase 4: Closure	5 days	Mon 28-10-19	Fri 01-11-19
4.1	Sign-off from stakeholders	1 day	Mon 28-10-19	Mon 28-10-19
4.2	Post project review	3 days	Tue 29-10-19	Thu 31-10-19
4.3	Lessons learnt and documentation	1 day	Fri 01-11-19	Fri 01-11-19

Purpose	Between	Duration	Medium for Communication	Description
Familiarizing the project team with the desired goals and objectives that will be fulfilled by the project	Project manager and the Project team	1 hour	Face-to-face meetings and Interview sessions	The communication of project goals and objectives is necessary to make the project team aware about the achievement that will be acquired from the project.
Approval of the project budget	Finance manager and the Project manager	1 hours	Face-to-face meetings and Presentation	The budget that has been determined from the project has to be approved to ensure that project could completed within estimated budget.
Status reports about the project	Project manager, Project sponsor and the Finance manager	2 hours	Face-to-face meetings and Emails	The documentation of project status should be done on a timely basis and shared within the project team to determine how much work has been completed till date.
Details about the project contract	Contractors and project manager	1 hour	Face-to-face meetings, Presentation and Emails	It is essential that the project contractor is familiar with the desired goals and the project objectives. The awareness of project contractor about the project requirements is essential so that completion of the project could be ensured within the estimated time and budget.
Present Market analysis and competition	Marketing manager and the Project sponsor	2 hours	Conference Meetings and presentations	In this project, the market have to be analyzed for determining the present market status and how much competitive benefit will be achieved from completion of the project.

Name of the stakeholder	Type of report	Preferred medium for communication
Project manager	Status report of the project	Team meetings, Formal presentations and interview sessions
Finance manager	Budget of the project	Face-to-face meetings and Email communication
Marketing manager	Status report of the project	Face-to-face meetings and Formal Emails
Project Sponsor	Management level reports	Face-to-face meetings, Emails and presentation

Name of the stakeholder	Level of detail
Project manager	Plan for the project and schedule of the activities required to complete the project
Finance manager	Cost and budget feasibility of the project to ensure successful outcomes as per desired requirement
Marketing manager	Marketing strategies and analysis of present market status for the project
Project sponsor	Budgetary requirements and financial statements for the project

Project acceptance – This element in the close-out phase will help the project manager and the team members of the Regency Plaza to agree that the desired requirements has been fulfilled (Mubarak, 2015). This element reflects whether the project has been completed as per the desired criteria and the project objectives or not. At this stage, this element presents that the project should be accepted as the bidder has agreed to fulfill objectives by maintaining the desired quality.

Contract close-out – This element refers to termination of contract for the Regency Plaza construction after immediate completion of the project. In this activity, the sign-off will be done by the contractor along with other stakeholders to approve the closure of contract (Lock, 2017).

Document turnover and archiving – This element will involve preparation and handing over the essential documents after completion of the Regency Plaza project. The technical documents along with the lessons learned report will be stored in appropriate place so that it could be referred to for future projects (Walker, 2015).

Team performance appraisal – This element will comprise of appraising the team members of the Regency Plaza project with certain incentives or award programs and motivate them to perform better in future project.

Team reassignment or demobilisation schedule – This element will involve dissolution of the project team and reassigning them to their previous roles or activities (Alavipour & Arditi, 2018). In this activity, the schedule for demobilizing the team will be prepared so that they could return to their previous roles.

The lessons learned component will be coordinated through proper analysis of the information that has been gathered from the case study of Regency Plaza to ensure that future projects could be carried out successfully. The lessons learned from the Regency Plaza project case will be documented as technical document and archived so that it could be used as reference for future projects.

Conclusion

From the overall report, it can be concluded that it is the role of contractors as well as the team members to ensure successful completion of the project. The process of project management comprises of different procedures such as communication management, quality analysis, change management, risk assessment etc. In order to meet the project objectives and goals within estimated budget and time the project manager and the project team members need to play active role. It has been found that the project was running behind schedule and over budget due to inadequate budgeting or proper planning. Therefore, it has been determined that Cost of Work plus fees with a guarantee maximum price contract is suitable for the project. From the developed schedule, it has been found that the project will require 218 days to complete with a cost of $3,718,450.00. Planning is required for successful completion of the project and the schedule have to be followed so that the desired goals and objectives could be met.

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