Procurement Types 3

Management Contracting

Management contracting can be known as an overlapping procurement system as the design, construction and tendering all overlap. This strategy is suited to more complex projects with accelerated commencement and completion.

The contractor is involved from the start of the design and is responsible for the integrated design and construction phase, the contractor offers the client a consultant service, based on a fee, for coordinating, planning, controlling and managing the design and construction.

Management contracting puts the contractors experience to use from the start, in the concept and design phase through to the construction, they advise the employer on the buildability of the design, plan the construction and discuss cost estimates. Contractor is responsible for tendering parcels of work and negotiating subcontracts with subcontractors (known as works/trade contractors). After client approval, management contractor enters contracts with the works contractors. The contractor manages the project for a lump sum or percentage fee, meanwhile the client has no contractual link with the subcontractors, however this leaves them vulnerable to the contractors’ failures.

Management Contract  normally follows three phases:

  1. Pre-appointment of the MC – After the initial design and feasibility have been arranged, employer invites offers from MCs
  2. Pre-construction period – during this time, the MC will help the design team by offering certain services such as advising on buildability/construction methods, etc.
  3. Construction period – the MC organises and co-ordinates the project, supervises the work and monitors cost.
Advantages
  • time saving potential for overall project duration by using construction packages and overlapping design and construction stages.
  • cost reduction potential by using competition to let work packages and by using value engineering efficiently § Friendly relationship – design and construction
  • late changes more easily accommodated
  • design team are under the clients control throughout the project
  • client has control over selection of trade contractors
  • liked by knowledgeable/experienced clients
Disadvantages
  • no cost certainty prior to commencement of work on site, or in fact until completion
  • needs informed client, able to take an active part in the process
  • design of later packages may affect work already completed on site leading to abortive additional costs
  • individual direct contracts with package trade contractors – no single point responsibility for their performance or quality of their design/workmanship
  • greater administration for the client
  • client takes responsibility for design team performance
  • client carries risk of the effects of non-performance by trade contractors, their financial failure
Construction Management

Like Management Contracting, this strategy is also used on more complex projects, construction management’s primary difference from MC is: Employer places a direct contract with each of the specialist trade contractors. This means that more experienced clients like construction management as they have more responsibility over the trade contractors and the construction manager is only liable for negligence, by failing to perform role with reasonable skill and care (unless greater liability is incorporated in the contract).

Advantages
  • time saving potential for overall project duration by using construction packages and overlapping design and construction stages.
  • Cost reduction potential by using competition to let work packages and by using value engineering efficiently
  • Friendly relationship – design and construction
  • Continuous coordination between the design and construction processes
  • late changes more easily accommodated
  • design team are under the clients control throughout the project
  • design team are managed by the CM
  • client has control over selection of trade contractors
  • liked by experienced clients
Disadvantages
  • no cost certainty prior to commencement of work on site, or in fact until completion
  • needs informed client, able to take an active role in the admin. of the process
  • design of later packages may affect work already completed on site leading to additional costs
  • individual direct contracts with package trade contractors – no single point responsibility for their performance or quality of their design/workmanship
  • greater administration for the client
  • client takes responsibility for design team performance
  • client carries risk of the effects of nonperformance by trade contractors, their financial failure No guarantee by the construction manager for total cost, time or quality of works. The owner has high risk.

 

In Other News

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Unfortunately, the lady that was due to be moving into the house at the end of the month has pulled her offer out and so the house is back on the market. 😦 sad times!

Blog Challenge 2.2 – Budget and Cost

“A budget is telling your money where to go instead of wondering where it went”
For those who may not already know, I have been renovating a property for the past 6 months and at the beginning of the venture I challenged myself to write 4 blog posts on different topics. Now that the house is nearing completion, I have decided to review the process and redo the blog challenge!
I previously wrote a reflection piece just outlining our progress and this week I am going to be writing about the budget.

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So, rewind back to May 2019, I had written my blog post highlighting my expectations for the house and had just been given the keys. We purchased the property for £86,500 and I commented in my blog that we aimed to spend roughly £105,000 in total, so just shy of £20,000 for the restoration. I’ve been keeping good track on receipts and have tallied up nearly all of our expenditure right up to the end of October. However, I am missing receipts for a couple things that we purchased online like the oven, so I would say my record could be out by no more than £1,000, and adding to this, we still haven’t paid the plumber or electrician! But I aim to do another progress report once we have gathered all the costs up, I am not looking forward to scouring receipts and payments!!
Here is the chart I created at the start of the project:

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1st Estimate Finance Chart

I have changed the colours but kept the same numbers, so it is still the same chart.
And this is where we are at now:

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6 Month Rough Spend

I have a little note pad where I record every receipt, I write item bought, the price and the date, if there are multiple products on one receipt, I tend to just label it generically i.e. plumbing equipment, tools, etc. I wish I had been a bit more detailed though because when I came to make this chart it became really difficult to split some receipts into categories as there would have been items bought that went into different areas, so I excluded them from this chart. So, the chart above is just a ballpark figure currently.

According to my records we have spent £99,912 but considering that I haven’t recorded the boiler or cooker yet, we are probably about £100,912. All that we really have left to buy is flooring and of course pay the plumber and electrician so it wouldn’t be too shabby if we finished at around £107,000; £2,000 over our initial budget. In addition to this, we had a rough evaluation a couple of weeks ago to ensure we were not over-spending and the evaluator recommended putting it on the market at £145,000-150,000, so a £38,000 gross profit would be tiddddy.

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Just to quickly debrief my estimates, comparing both charts it’s clear to see that some areas were quite close to my guess, but some were way off the mark. The roof was a pleasant surprise, after gaining a couple of opinions it was confirmed that the roof was dandy and needed little repair work, the money we have spent on it was mostly on replacing the guttering.

The kitchen segments are similar, I set a price of £3,000 in total for the kitchen which we just about reached but not quite, #winning. The bathroom was supposed to be £500 for the main suite and £500 to construct and install a brand new ensuite but we decided to not go through with those plans and instead put a little WC downstairs in the utility cupboard, with just a sink and toilet it fits nicely in there and in budget too – even better!
Also, I have added fees into the updated chart as I didn’t think about the solicitor’s fees and taxes we would be paying. Luckily, we get a discount on council tax due to the property being empty but we haven’t included what we have paid in council tax on the chart yet as I haven’t gotten around to adding it up. The structural changes on the graph have mainly consisted of knocking down the dividing wall between the kitchen and dining room and replacing it with a steel beam and this cost roughly £600. I haven’t included the porch on the new graph because all that my dad did was remove the horrible wooden cladding and brick it up to the roof that it already had using the bricks that had been knocked out of the wall inside, love a bit of recycling ❤ also, we added a window and door to it but those are included in the doors and window category.

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All in all, it’s going well in terms of budget. Hopefully, the only categories to grow before we finish will be the decorating one, the fees (from the sale), the plumbing and electrics. So happy with the project so far and will be a little bit sad to see it go, but I’m sure the pay day will cheer me up… If all goes to plan after all!!

Blog Challenge 2.1 -Renovation Update

6 Month Renovation Update

In May, my family and I were given the keys to our new property in the South of Scotland. This was such a big opportunity, especially for me as it was something I had never done before. My mum and dad had renovated a couple of smaller properties in the past but this one was going to be a learning curve for us all.

We are now 6 months into the project and to follow on from my blog challenge that I did back in May, I am now doing another challenge to celebrate. I will upload this blog every Friday for the remaining 3 Fridays in November to mark our 6-month point!

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VICTORIA HOUSE PROJECT

This first blog is just a recap of what I had outlined in the beginning and comparing it to what we have actually achieved so far. Starting with…

The Bathroom

Here are some pictures of what I was aiming for in regard to the bathroom, I got a lot of my inspiration from Pinterest.

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After we moved the position of the door, I really stuck to the green and white colour palette, but I decided to keep the original wooden boards around the edge of the room after I found a picture with something similar and thought it looked really nice. We did tile a small part of the wall behind the shower, just for practicality really. I incorporated a small line of patterned tiles to break it up slightly, if you look closely you can see a little shiny blue tile that has a little swirl in the middle which was the main reason I chose those tiles because I thought it was fair cute.

The bath suite that we chose was a P-style bath, mum and dad wanted a free-standing bath, which I liked but I preferred the P-style because I just felt it fitted the room better and was cheaper! Win, win.

The Bedrooms

At first, we believed that the bedrooms were all going to be plain magnolia with the original skirting boards and doors painted white. We mostly have stuck to this, but we are going to wallpaper one wall now.

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The Chosen Wallpaper

Additionally, due to the actual struggle of stripping the really thick, embossed, floral wallpaper from the middle bedroom, we decided to leave one wall covered. After painting over it I am soooo glad we decided to leave it because it blends in so nicely with the room, it’s so subtle and just adds a bit of a feature to the room.

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Now most of the work upstairs is complete, bar a bit of painting and wallpapering to do, we moved to the downstairs…

The Kitchen

Whilst we were working upstairs, we were waiting on the plans coming through for the downstairs. If you have read my blog 6-months ago you will have seen the draft plan I made for the changes to the layout of the house, where we planned to knock the kitchen wall down to create a kitchen/diner, I also planned on creating an ensuite upstairs but we decided against it because it just took up too much space and made the bedroom sizes quite awkward. We have put an additional toilet room downstairs in the utility.

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Currently, we have had the planning permission accepted and the wall knocked down with a supporting beam in place. As well as this, we have bought the kitchen from Homebase, French Shaker style in an eggshell blue colour.

It’s going to look lush when it’s built, just waiting on the boiler to be installed before we assemble the units completely.

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The Utility/Lean-to

We settled on bricking up the porch and put in a back door and window, so it’s came together well. Next to the porch is the utility room and like I mentioned previously, we decided to use the space to install a small toilet and sink area. In the remaining space, we have a couple extra kitchen units to put in.

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Sitting Room

This room needs very little work, we have been using it as a bit of a storage room until we complete some more of the work downstairs.

Overall, we have completed most of the major work, except the boiler which should be done in the coming weeks, and then we just have painting and decorating left to do! On Friday I will be uploading my next blog which reviews our budget. Thank you for reading this update, there are more pictures in my website gallery and on my Instagram page: @huntersparkdesign

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Summary of Scope & Project Definition

This weekly upload is going to be a study blog, written to help me revise my course, Project Management BSc. Hopefully, it will also create a good overview for anyone else looking to study the same thing.

According to the APMBoK 6th edition, “Scope comprises the totality of the outputs, outcomes and benefits and the work required to produce them”. Simply put, the scope is the entirety of a project, from the beginning to the end of project, what it comprises of and the benefits realised after its completion.

Scope management is the process that is used to control the outputs and outcomes and identify the benefits. “Scope management is the process whereby outputs, outcomes and benefits are identified, defined and controlled (APMBoK 6th)”  

Without scope management, a project is at risk of scope creep, whereby the project exceeds its intended criteria and therefore increasing in cost, time, disputes, quality, etc. and can ultimately cause the project to fail. 

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Instagram -@huntersparkdesign

There are 6 steps to defining a project: 

  1. Requirement management – this involves assessing, capturing and documenting the needs and objectives that are required by the stakeholders.
  2. Defining the project scope – to do this you need to confirm the key aspects of the project, such as, project objectives, deliverables, milestones, technical requirements, limits and exclusions and reviews with customer.
  3. Determining the Priorities – essentially you will need to establish what areas within the project are critical and which can be compromised if necessary. E.G. time, cost or quality. These priorities should be made clear within the development phase but can change throughout the life cycle. 
  4. Create a Work Breakdown Structure – a WBS is a hierarchical outline (map) that identifies the work elements involved in a project. This is a helpful way to plan a project because you can use it to break down the scope. It also helps manage plan, schedule, and budget as well as defines communication channels and assists in coordinating the various project elements.The lowest level in the WBS is the work packages.
  5. Integrating the WBS with the Organisation – You can use an Organisational Breakdown Structure (OBS) to do this. An OBS shows how an organisation is going to manage its work responsibility within the project.
  6. Coding the WBS for the Information System – this highlights the levels and organisational levels of the WBS, it’s work packages, and budget and cost elements.

 

The Responsibility Matrix

Using the WBS and OBS you can construct a Responsibility Matrix, RAM. A RAM is used to allocate the work packages to people, organisations or 3rd parties. A RAM can include information such as who is responsible, should be consulted or informed about certain tasks.

https://www.apm.org.uk/body-of-knowledge/delivery/integrative-management/organisation/

Thank you to the continued support on this blog series 🙂

 

Project Planning

This weekly upload is going to be a study blog, written to help me revise my course, Project Management BSc. Hopefully, it will also create a good overview for anyone else looking to study the same thing.

Tuesday 1st October – After our first two weeks at university which was 5 days a week, we finished the first module and completed an exam in Network Diagrams, which I have uploaded a sample for on my Project Management page. Now, we attend classes 1 day a week which is split into 2 halves, before lunch we study The Business Environment and the second half we learn about Planning and Control. I found that both topics, this week, connect and have compiled what I have revised from the lessons into 1 fact-sheet for this week.

An Introduction in Project Planning

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A link to personal experience (my trip to America) – What would an outline for the business Case look like for the San Francisco Golden Gate Bridge look like? This is a question I will answer in my next post, so stay tuned!!

Why Do We Plan?

  1. To evaluate options for delivering the project
  2. To obtain commitment
  3. To facilitate effective communication
  4. To provide the basis for effective project monitoring and control
  5. To prepare for the unexpected
  6. To respond to compulsory requirements

Strategic planning is a big part of the concept phase, during this phase, the viability of a project is determined, and the preferred solution is highlighted. Moving on to the definition phase and the strategic plans become more detailed, where elements such as budgets, schedules and resources are confirmed.

Characteristics of Good Planning (APM 2008):

  1. Plan is owned by Project Manager and team.
  2. Plan is agreed by sponsor / approved at gate review.
  3. Sufficiently answers the planning questions to satisfy the organisation that it should continue the project.
  4. Provides the basis for a successful proposal in a tender process.
  5. Provides the basis for successful management of project implementation

The Business Case

The business case is a type of plan that lays out the main reasons for undertaking a program/project, it assesses all other options and gives evidence as to why the proposed solution is the best. It also outlines all other expectations hoped to be achieved by the completion of the project, the risks and costs that need to be considered.

It outlines the value of the work needed and its main purpose is to gain funding and assurance from the organisation.

The business case is typically started before the start of the project life-cycle and is progressively defined throughout the concept and definition phase.

If There Are Multiple Investment Options -How do you Choose?

Usually, the organisations vision for the future will influence their decision. Strategic investments can be encouraged by competitors within their industry, therefore making it necessary to invest to keep up or it is needed to keep their business aligned with their business strategy.

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Photo by Ivan Bertolazzi on Pexels.com

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You can use a Network Diagram to help define your Plan in the Definition Phase, See Previous Post for more information on a Project Life Cycle 🙂