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The Bellmarsh hotel developments are medium sized hotel and leisure group with nine other hotels and leisure developments within a 60 mile radius. They have sought professional advice in the form of market research and now they plan to extend their current number of hotels to 20 over the next three years. They also plan to refurbish their existing hotel. As their part of expansion they bought an existing Mid Victorian hotel which is situated in rural environment.
The plan for the hotel is,
to incorporate all modern luxury features like modern kitchen, enlarged function area
to construct a linked leisure and sports complex in a new two/ three storey building. It includes training, swimming, squash and bar facilities along with the required support services.
The report describes the importance of stakeholders engagement, project risks, work packages, importance supply chain management techniques related to the project, procurement (cost estimate, feasibility).
THE STAKE HOLDERS:
In general, a stakeholder is anyone who will create, practice or have an effect on any aspect of your project.
Classification of stakeholders:
Internal Stakeholders - The people who involved in legal contracts with the client.
External Stakeholders - The people who have direct interest in the project.
A fundamental premise of construction project management is that the client should have the capability to brief about the requirements to the team.
The demand side list shows, the client is a complex organization and may not be fully aware of the demand side stakeholders interest, particularly from the client's employees and their customers.
In the supply side, the combination of interests is arrayed who receives its benefits through the income by working on the project and learning through solving the project issues for the organization whose marketing is reputed rather than biding based. Typically, the reputation generated through working on the project is one of the biggest benefit for them. As well as the architects care more for their own reputation than meeting client needs. So, these different perceptions might be lead to conflict of interest between stakeholders on demand side and supply side as they compete to appropriate the income stream form the project.
There is more diversity among the external stakeholders. The internal stakeholders will largely in support to the project. External stake holders may be in favour, against or indifferent.
The power / interest matrix is used to develop a strategy towards managing the different stakeholders. It consists of two dimensions,
the power of the stakeholder to influence the definition of the project
the level of interest that the stakeholder has in that definition
Both dimensions are better perceived between them rather than binary options.
The level of interest is a function of the size expected benefit or loss from the project and the power is a slippery concept which can be considered as the ability to influence the project definition. The following matrix shows four categories of stakeholders based on their interest and power to influence on this project.
There are two groups of stakeholders. The first group are those who have minimal effort on the project such as client's customers and client's employees. The second group like local residents and environmentalists needs to be informed because they may oppose the project by well organized movements and are able to mobilize the press behind them causing severe disruption or even cancellation of the project.
It is a process in which stakeholders are mapped to their own interest themselves in the project, to identify the perceptions potential levers for action.
The construction industry and its clients are widely associated with a high level of risk due to the nature of construction business activities, processes, environment and organization.
Bufaied 6 describes risk as a variable in the process of a construction project whose variation results in uncertainty as to the final cost, duration and quality of the project.
It is commonly known that risks within the construction industry are continually realized with a variety of situations involving many unknown, unexpected, frequently undesirable and often unpredictable factors. Ashley 8 and Kangari and Riggs 9 have all agreed that these situations are not limited to the construction industry.
Why Risk Management?
Project management practices and contractors have different reasons for using risk management,
To analyze and control risk as the key to profit, as construction is a risky business.
To evaluate and determine project feasibility because construction development is a business with a high number of variables.
To reduce loss by risk management in an industry where even normal contracting causes difficulties.
To identify project risks and calculate the probable cost of each risk and plan for it.
To avoid unsatisfactory projects and to increase margins.
To control factors which will affect completion of projects within budget and schedule.
To keep insurance premiums to suitable levels and reduce losses.
To limit professional indemnity claims.
To provide an understanding and control risks in the projects.
To allow suitable measures to be taken, to control the effects of risks and convey cost contingency for clients.
To protect the organization's credibility and reputation.
Classification of Risks:
The above figure, summarizes the general prototype of risks. By considering these categories separately we can develop a detailed classification scheme of project's risks.
Identification of Risk sources:
The risk source are primary condition that can generate a possible risk event at some time forward from the point of decision-making. For instance, unsafe working practices are an existing risk source while an accident is a risk event that could occur at some point in the future. The proposed classification scheme is composed of six risk categories:
Acts of risks by nature;
Financial and economical risks;
Political and environmental risks;
Job site - related risks.
Acts of Risks by nature:
The risk of acts by nature, describes about the events that are unpredictable and simply beyond anyone's direct control. These events occur as a result of nature and are often referred to as natural phenomena. The common risks under this category are those related to physical damages and personal injuries due to earthquakes, floods, fires, landslides, etc.
The typical risks that fall under this category are associated with damage of a property or asset that the contractor owns or has under his control. Such risks include: damage to structure or property; damage to equipment and material; labor injuries and death;
Financial and Economic Risks:
Most risks that evolve in construction projects are financially related. Project funding is obviously a potential financial risk for contractors. Insufficient sources of project funds by an owner or funding agent may create time delays and financing problems which to many contractors are unbearable. The owner must have enough funds to complete the work, and must make these funds available to the contractor in a right manner and time that supports the contractor to continue with the work. Another potential risk, which is not frequently mentioned, is the risk of financial failure by one of the sub-contractors.
Political and Environmental Risks:
These risks may arise from the interactions between the contractor, the host government and the surrounding environment or society. The main risks in this area include: the people who are living in the surrounding.
Risks normally incurred by the design professional include defective design, unclear specifications and plans, errors and omissions in design, inaccurate geological and geotechnical evaluation, and interaction of design with methods of construction.
Job Site-Related Risks:
Each sector of the construction industry has its own job site-related risks. Building contractors may find labor productivity and equipment breakdown as a major determinant in schedule delays. Hence, job site-related risks are numerous owing to the different operations in construction projects.
The following are potential risks that are considered typical in every construction project:
availability and productivity of labor;
soil, site and other changed conditions;
material shortages and quality of materials.
''A work package is a sub-element of a construction project on which both cost and time data are collected for project status reporting. All work packages combined constitute a project's work breakdown structure'' (Halpin 1985, p. 154).
Work packaging is a planning process that requires detailed understanding of the scope of the work and constraining factors. Without proper consideration of the constraints, work packages would not be an effective means of managing the job (Kim and Ibbs 1995).
A work package is a definite amount of similar work to be done (or a set of tasks) repeatedly in a well-defined area, using particular design information, material, labour, and equipment, with prerequisite work completed. Grouping similar work allows a constant flow of resources to be achieved by moving labour teams from one area to the next. That way, unnecessary interruptions can be avoided. The fastest way to complete the work in construction is assumed as do the work whenever possible, but this assumption disregards the effort and time that consumes in mobilizing and demobilizing for any operation. In order to avoid this issue, the operation should not be started until we know that it can be done without any interruptions.
Elements of Work packages:
In term, it is considered as the work below the ground level including the ground floor bed. There are various types of foundation based on the existing ground condition. For example, foundation, RC columns, walls below the ground level, ground beams and ground floor bed.
It can be defined as all structure above the substructure both internally and externally. It consists of two elements called primary and secondary elements.
Primary elements are components of buildings above the substructure excluding secondary elements; like finishes, services and fittings. For example: columns, beams, roofs, external walls, internal walls, stairs and ramps.
Secondary elements is defined as completion of structure including completion around and within openings in primary elements. For example: doors and door frames, windows, balustrades for stairs, roof-lights, borrowed lights and hatches and door linings.
The final surface which can be self finished with a trowelled concrete surface or an applied finish. For example: tiles or carpet for floor; Internal walls - plastering wall, paint or wallpaper for wall, dry lining and trims; External walls - tile hanging, weather boarding and rendering; External roof - tiles or slates; Stairs - tread and riser finish such as tiles or carpet, nosing trims;
SUPPLY CHAIN MANAGEMENT:
The positive impact of the supply chain management on a firm's performance has been reported from many industries. Proctor & Gamble (P&G) strengthened its leadership position in the consumer package goods business by besting at supply chain management. P&G has made huge savings in supply chain about more than US$325million by Continuous Renewal Plan and Efficient Customer Response. Also, Honeywell Industrial Automation and Control reported a 90% reduction in their product defect rates based on its supply management program during the period of 1990 through 1996.
In general, 'supply chain management' can be defined as ''an integrative philosophy to manage the total flow of a distribution channel from the supplier to the ultimate user'' _Cooper and Ellram, 1993.
The SMO (Supply Management Orientation) contains the following performance characteristics. Those characteristics are,
A long-term relationship with suppliers,
Supplier involvement in the product development process,
A reduced number of suppliers,
A 'quality focus' meaning that quality performance is the number one priority in selecting suppliers.
Supplier Performance (SP) and Buyer Performance (BP) are the two variables in each model.
A systematic view of the construction production supply chain was presented by O'Brien (1998), which shows that supply chain management offers the potential to optimize supply chain cost performance. He investigated 18 firms and identified the capacity constraints of subcontractors and suppliers which affect the costs associated with construction project schedule and scope changes when they borrow and modify the production manufacturing models.