Procurement, Risk And Quality Management – Case Study

Background of the Case Project

The main aim of the project intends to identify and accomplish the application of the project execution and management. As an APIC CONSULT official I will concentrate on Watpac Company a leading company for construction and mining contracting business in Australia. I will focus to evaluate the importance of the project delivery method to the company, evaluation of the financial contract to the business, evaluating the procurement method applied in the company, designing a risk management plan for the business and lastly design a quality management plan which will include both the qualitative and the quantitative metrics for the project (Kerzner & Kerzner,2017).The project will inspect how the company has been constructing various buildings in the country and how the company’s project succeeded in expanding the Adelaide Airport Terminal Expansion project.

1. Background of the project.

Watpac construction has a 30 year history in construction of some of the Australia’s huge buildings in various fields such as the sports buildings ,health and science buildings ,defense building ,educational building construction and the in the industrial sectors within and outside the country (Turner, 2014). Watpac won the project in last 3 months which was to expand the Adelade airport. The project was estimated to consume more the $200 million as it was indicated by the management board of the company.

This was to support the anticipated passengers growth in next 8 years from now .The contract specifically targets to expand the international inbound passenger processing, the expansion of the immigration facilities in the country and also expansion of the existing international airline lounges (Kerzner, 2011). The project is anticipated to end in next 3 years from now whereby it includes the demolition, relocations of the services, landside works and fencing of the entire airline, construction of the entry roadsides to the airport and designing new civil works within the airport.

During the selection for the project there were a few challenges which faced the project (Serra & Kunc, 2015).

• Challenge in controlling the large number of employees within the company.
• Keeping a track on the cost while controlling different schedule in the project.
• Government regulations which are always changing .This has been difficult for the contractors to ensure they working in appropriate rules as encoded by the law.
• The issue of time constraints in the project has propagated huge drawbacks due to increasing projects therefore contractors for the company may be unwilling to stay in the schedule thus shifting (Serra & Kunc, 2015.
• Integrating apt technology with the project incurred some constraints.

1. Project delivery method

Design-Bid –Build (DBB).

The project engineer here works directly with the owner of the project so as to come up with the constructions plans and the appropriate specifications needed .The Watpac company has accomplished many of the DBB projects that’s running form the private sector to the public sectors in the market (Touran et al, 2010).The method is suitable for the company since upon completion of the used design the owner will choose the best construction bids as per the plans. The lowest bidder is the awarded to the contractor.

Design –Build (DB).

The DB delivery method actually saves the project owner both the time and the cost by trying

to overlap most of the construction designs and the phases of the project. The company will be

in position to innovate solutions and come up with the engineering opportunities that will be in

position to meet the necessary budgets and schedules needed by the project (Touran et al, 2010). 

Construction management at risk ([email protected]).

Involves the concept of partnering whereby the owner of the project hires appropriate

manager who will be responsible for the entire project. The company advocates for the

Recommended Project Delivery Method for Watpac

qualification, project partnering, the idea of efficiency of construction and the quality of the

engineers (Touran et al, 2010).Communication is the key aspect that controls the whole management .It involves

active communication and the effective collaborations.

Goal	Goal weight	Project delivery
		DB contract	DBB contract	[email protected] contract
		Score	Weighted score	score	Weighted score	Score	Weighted score
Efficiency	15	8	156	7	134	11	240
Communication	15	6	130	5	110	11	240
Quality of the services.	25	10	230	7	160	6	120
	55	24	516	19	404	28	600

Efficiency.

The [email protected] scores the highest value compared to the DB and the DBB thus suggesting that

more emphasize on the construction managers in the project .This will best level since it

Indicates that the appropriate time that the project will take up to its completion (Swarup et al, 2011).

Communication.

  Every project incurs different communication patterns .As indicated by the table above the idea

of communication plays a big role in the DB part of the contract. This is because this part

involves much collaborations and pattern ship which is facilitated by effective

communication (lo ,2014). Therefore it will be good for the company to adhere to this level of [email protected] since it will sustain the project.

Quality of the services.

Quality starts from the employees. That is the intensity of the service to be offered by the

workers, their level of competency and in general the working efficiency. The quality is

important in every project and in our case the DB contract illustrates the best score. This level

involves the incorporation of the design and the builder of the project.Therefore suggesting

that maximum corporation between the design and the builder will automatically guarantee the

construction of suitable project (lo ,2014).

Recommendation

 Therefore, to my point of view according to the table the company will accomplish its goals in

construction by taking into consideration the contract of [email protected] .From the drawbacks and

the communication challenges in other contract then I prefer the project to utilize the [email protected]

level which will sustain the project.

1. Financial contract type.

   Financial contract binds two parties involved in the business that is buyer and the seller. It

forms the basis on how to handle each other and therefore the manager need to choose the

appropriate contract for the project (Paulson, & Schnitkey, 2013).

Lump sum contract.

The contract subjects the owner to pay the a contractor a lump sum of money immediately

the project is over. This is done without the cost breakdown meaning that after the completion

of the work no more measurement is required between the parties involved. This tends to be

suitable since the contractor of the company will estimate appropriate money needed for the

project as per agreement during the planning. The contractor charges the appropriate amount

as the requirement by the owner (Paulson, & Schnitkey, 2013).

Cost-Plus Fixed Fee Contract.

The contract level requires the owner to pay the contractor agreed amount as stipulated by

the documented cost of the project.

Guaranteed Maximum Price Contract (GMP).

The contractor of the project is compensated for the actual costs

that may be incurred during the project plus other fixed fee that may be a subject to the

ceiling price that may be incurred during the project. Here the contractor is accountable for the

cost overruns unless in some situations whereby the GMP is increased through the formal

Recommended Financial Contract Type for Watpac

order change of the project in the company (Paulson, & Schnitkey, 2013).

Project goal	Weight of goal	Financial control type
		Cost-Plus Fixed Fee Contract.	Lump Sum contract	Guaranteed Maximum Price Contract
		Score	Weighted score	Score	Weighted score	Score	Weighted score
Contractor’s role.	15	8	180	6	130	7	160
Threats to client.	20	4	70	8	150	5	110
Expenses of the project.	25	5	140	8	220	8	210
Time required completing the project.	15	9	210	4	80	5	130
	75	26	600	26	580	25	610

Contractor’s role.

Form the work above the fixed fee records the highest score suggesting that the fee for the

project is fixed and therefore indicating that the company will become responsible for the

project thus in position to accomplish the project as quick as possible .The project fetches the

highest fee as the cost increases (Agarwal etal,2011).

Threats to client.

Every project is associated with the risk especially to the client. From the table above the

lump sum financial contract shows the highest level that can protect the client. The level

fetches the highest score suggesting that client are familiar with the contract and they have

access of every single step involved in the project .Client can estimate the scope for constructing  the project (Agarwal etal,2011).

Expenses of the project.

The table shows the lump sum and the guaranteed maximum price has the highest cost .Both have different assumptions that is; the contractor will be in position to use as many resources as possible. When there is excess amount in the lump sum used then the contractor will benefit from the excess measure as a profit provided the work is complete but the case is different in the guaranteed maximum price whereby the contractor   is guaranteed to return the excess amount to the client (Agarwal etal,2011).

Time required completing the project.

The fixed fee cost plus contract rule has the highest score since it does not involve any challenge when designing the budget. The project doesn’t not incur large use of the resources plus the scope of operation is small thus utilizing short time.

Recommendation

 To my point of view, the company should concentrate on the guaranteed maximum price since does not incur most challenges as compared to the other levels. The guaranteed maximum price is beneficial to the client especially when there is excess amount after completion of the work.

1. Procurement method.

Competitive procurement.

Competitive negotiation procurement is always appropriate for the projects which will exceed more than the $150,000 .Here the contracting agency requires the subject involved to detail all objectives that need to be achieved (García-Serrano & Malo,2013).

The following steps are followed in preparing a competitive procurement in the project.

• Request for proposal (RFP) which describes the contracting agencies involved in the project together with the requirements and the objectives. It needs to be approved by the state or the agency involved in advertising (Purdy, 2010).
• The procurement is first advertised and then the RFP is sent to appropriate contractors of the project. After a period of almost seven weeks depending on the complexity of the proposal a receipt is sent after to indicate the deadline for the project.
• After three weeks of evaluation the contract is given to the selected body whose costs and the proposal tend to be beneficial for the contracting agency.

Negotiated procurement.

The method of procurement is suitable when;

• There is a public agency –natural disaster that may deter or hinder the publishing of the intedent project (García-Serrano & Malo,2013).
• When there is single product or service in the project that need to be analyzed by the contractor.

In order for the negotiation procurement to obtain approval for the procurement in the company it should submit the appropriate document that will solicit the entire competition (Garcia & Malo,2013). The negotiation demands a copy that will be used for public advertisement of the project, a copy that describes the RFP and the last copy that includes letters from the respondents and the contractors.

Recommendation

 The best value is obtained from the competitive procurement of the project (García-Serrano & Malo,2013). The request for proposal has adequate steps that amount for effective procurement method for the project. The company will be in position to get any relevant information that is needed by their clients thus working appropriately.

1. Risk management plan.

Recommended Procurement Method for Watpac

The body plans, identifies and analyze the project risks .Parts of risk management plan are; risk

Planning, identifying risk, analyzing the risk and coming up risk response plans (Masterman & Masterman, 2013).

Risk register.

A risk register is shared between the project shareholders so as to allow them to be aware of what is to be provided in the project and how achieve each issue as discussed in the project (Routledge  et al,2012).

Risk name	Probability	Impact	Risk	Priority	Response plans
Additional supply material cost by the contractor.	4	7	28 Low risk.	Prioritizing the risk to the project. Project sponsors, the clients and the owners of the project.	Accounting for the team involved In the project. Filling the incident form.

Risk Quadrant Analysis.

Both probability and the impact need to be considered in determining risk in a project. Probability and matrix impacts are defines the chances of the risk as outlined in the risk register of the project. In the project the analysis of the risk incurred can be shown below .The medium level is preferred as best for the project (Routledge  et al,2012).It incurs small cost which contractors can evaluate and have maximum control before embarking to a business.

Probability

Element	low	Medium	High
Engineering services	$20,000	$25,000	$30,000
Construction designs	$60,000	$80,000	$100,000
Preparing for tenders	$23,450	$34,670	$56,360

Risk mitigation plan.

Involves development of the mitigation steps that would focus to form appropriate

Implementation to manage and eliminate risk in the project. Once a plan is initiated in risk

management in a project then specific step is adhered (Routledge  et al,2012).

.Some of the risk mitigations plans for the project will include;

• Assuming or accepting a particular risk and make a deliberate action.
• Adjusting the project programs so as to avoid the risk.
• Implement and control actions of the project to minimize risk.
• Transferring position or responsibilities to other stakeholders to reduce risk.
• Monitoring changes that can occur within the risk.

1. Quality Management Plan.

This part will make client to be sure of what the project will provide as per requirements

.Involves the formal blueprint where the contractor will provide system and activities to be

carried so as to achieve what is needed in the project (Pritchard & PMP,2014).

The quality and quantitative metrics includes aspects such as the;

• Identifying the quality requirement of the project. Includes the process to be used so that the client gets what was discussed on the table.
• Establishing the quality standards that are announcing the standards to be used by the project when designing the required work (Goetsch & Davis, 2014).
• On the basis of quantity management the project need to have controllable number of stakeholder’s .Is the number of workers appropriate for the project.
• Dividing roles with appropriate personnel in the project. Who will do what in the project .This forms a core part for quality management plan in project since it describes who is responsible for certain role .
• Are the resources used enough for the project.This forms the core metric for the quantity management in the company?
• Tools to be used for achievement of the quality measurement. Includes the appropriate tools needed by the project (Krenkel,2012).

How is the quality being controlled in the project .The plan will mention the activities used in

setting up the project (Ross, 2017).  The activities should be executed time to time throughout the project. It concentrates on deeper activities and techniques that the quality control will advocate for in project.

Conclusion

In conclusion the company will accomplish its goals in construction by taking into consideration the contract of [email protected], concentrate on the guaranteed maximum price since does not incur most challenges and it should consider the competitive procurement of the project. On the basis of risk, the company need to form measures that will target to reduce the risk. Management should follow the standards needed.     

 Reference

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