Definition of construction and field management Projects

Over the years it has been observed that the governments all over the world have been delivering major projects via private sector instead of using traditional private sectors using the concept of concession strategy or the Build Own Operate Transfer.  

Definition of construction and field management Projects

Projects which are founded on the concession granted by government to promoters who are given the responsibility of financing, operation, construction and maintaining facilities over specific periods before transferring the fully  operational facilities to the government.

The promoters are charged with responsibility of owning and operating facilities, collection of revenues to finance investments cost, maintenance expenses and make a sideline profit.

Concession contracts

Concessions contracts are mostly concern with the:

Finance build own operate transfer

Build own operate

Design build own maintain

Build own operate subscribe transfer

The organizational and contractual structure

Principal: This is the definitive proprietor of the facility who is responsible for granting concession (Steve Rowlinson, 2005).

Promoter: This is the organization which has the permission to build, own, operate and transfer facility.

Organizational and contractual structure

Supply contract: This is the contract that is foreseen between two people that is promoter and the supplier (William Hughes, 2006).

  Loan agreement: This is the contract that is agreed upon by the lending company and the promoter (Austroads Limited, 2014).

Operation contract: this type of contract is normally between the promoter and the operator.

Construction contract; agreeably this is the contract that is honored by two individuals or groups which is the promoter and the constructor (Peter Morris, 2010).

Description of delivery systems

• This is where consortium may decide to take the project or the government may sort to take the project(Chris Hendrickson, 1989).
• In both cases governing body will often contact for expressions of parties which are interested from the competing consortia(Schulte, 2012).
• In this scenario government is forced to protect the intellectual assets (IP) contents after evaluating EOI’s
• The consortia who are shortlisted will be invited to develop and present own proposals.
• After the proposals have been evaluated, the government may decide to select one of the consortiums for further negotiation(P.S. Brandon, 2005).
• After the concluding concession has been agreed on and signed, effective conclusion of terms and conditions are made.
• This terms and conditions stipulates how promoters will proceeds mainly through coming up with special vehicle (PSV) companies and the one who is in charge of the contracts between this and those who participated(Kim Heldman, 2007).
• A very advanced web composed of relationships that is guided by the owner contracts
• For the relationships to be strong, all risks that might being malfunction must be identified allocated and quantified. The risks at the market are very vital which means they have to be capped before they get out of hand(Cover, 2005).
• Construction, design, facility performance (customer’s satisfaction, suitability for purpose and many other risks which are borne by promoters)(Yuzhe Wu, 2016).
• Both the promoter’s interest and the public interest must be carefully weighed for everyone to win.
• Normally if the economy is unstable, the finance or re-finance is requested internationally
• To confirm that the public give support to considerable investment on the environmental and social issues, this should include commutation and community participation.

BOOT methods

• Role of government
• Role of financiers
• Promoter’s role
• Role of equity investors
• Role EPC contractor
• Role of operators
• Role of insurers
• Role of the community and the media

Factors influencing performance and selection of project delivery system

Government establishment and control

Fiscal framework like law of taxation, depreciation, other incentive included

Regulatory framework like permits, concession legislation, approval process

Political framework for provision of enough assurance towards political risks

Project delivery risks

• Nationalization, compulsory acquisition and expropriation
• Discriminatory lawmaking or regulatory changes, oppression included
• Environmental laws and regimes of tax discriminatory.
• Political injustice such as strikes, riots, civil unrest invasions religious turmoil, wars and terrorism
• Restrictions due to the imposition of repatriation of dividends and profits
• Changes in the concessions understanding like tariffs

Swot analysis

• Promoters might be involved with the consortium of organizations with complementary capabilities such as contractor, financier, operator and construction.
• During the early stages of promotional phase or the beginning, promoters fund the project with their resources also known as risk fund up to the concession award.
• After winning the grant award promoters normally establish a special purpose vehicle firm which looks into various interlocking understanding.

The role of financiers

• They ensure that the interest of the financiers are well taken of
• They ensure that parties taking risks are well positioned to do so
• They ensure that the whole promotion and implementation measures/ condition are ideal and properly documented

The roles of purchasers

Several projects/ infrastructures such as roads, hospitals, power, and water are Government Corporation/public utility also known as customers services

Government is charged with the duty of controlling prices and volume of the commodities in the market

Sometimes purchasers dictate prices and capacity resulting in marginalized projects  

Rules of Equity / investors

• On numerous projects, promoters’ investor is partial to the expanse spent earlier to concession award, after which other financiers are sought
• Equity and bonds arcades might offer benefits over debt funding, or a combination of those two can be advantageous.
• With funding innovation rapidly evolving project financiers plays major roles in the economy.

Contractor’s role

Normally EPC constructor is considered as part of the promoter’s team

In all circumstances, a different contract is needed for construction and the design of the facility

Concession contracts

In most of the firms that deals with EPC contracts have fixed prices, fixed period and on a turnkey base 

Union provides numerous attractive options

Usually, EPC’s the whole cash flow is pledged against accomplishment and cost approximation risks.

Roles of operators

• SPV projects/ companies tend to sign long-term contracts with operators unless the company itself is the operator
• Operator see to it that vital performance are done for the success of the project
• Operator sometimes may engage on pay per output or reward/ risk of some form.
• It is recommended that the operator be part of the organization to help develop project and operate it

BOOT insurance coverage at times may be advanced and multifaceted

Normally it is advisable for consortium of promoter should include insurance agent for advice

BOOT deals insurers require earlier approval before completion and appending of signature to ensure insurance coverage is there to cover risks and liabilities.     

Role of the community and media

The community as a whole has a very important role to play, and it’s very influential when it comes to BOOT projects.

The influence that the community has on BOOT is normally exercised during the mandatory consultation.

Communities are nowadays informed hence consensus is reached without many issues arising

Firm views can be resisted such as harsh opposition towards development.

Documentation, qualification and selection criteria

Enterprise Resource Planning

Enterprise system arranges for United IT architecture to upgrade data stability and integration of modular submission that provides support and power business process. Enterprise resource planning are done in such a way that they can support both

• The operational and functional processes of administration’s value chain which include finance, accounting, customer and human resources
• Supply in chain management and sales

Enterprise resource planning system is capable of lowering risks which may be occurred in an organization such as

• Integration
• Automation
• Standardization

Automation

When change happens to be in an organization’s operating coordination, the Enterprise resource planning systems automatically updates

• Chain management supply such as inventory stock level, employee work plan, purchase order to the suppliers, the immediate alteration of production schedule and the co-scheduling with business.
• The relationship built between the customers and the management e.g. the opportunity for gross sales and up sales, updates of the customer’s and preparation of the fulfillment and support.
• Financial accounting and management e.g. powered generation of the accounting and expenses forms, credit evaluation and invoices.

Standardization

Business growth is normalized, controlled and regulated across the entire the enterprise by making protocols. Enterprise resource planning systems are effective way to enforce standardization.

The standardization takes an active role in lowering operation variability since it lowers managerial freedom of choice in information dispensation and verdict making.

Integration

The value of chain procedures throughout an enterprise develop tightly joined and receptive to one another both vertically and horizontally.

Horizontally:  many sales branches in various regions work as if they are combined and follow the same procedure, exchange data and pool resources collectively to achieve best results.

Vertically: This is the upstream and downstream collaboration work to give out an effective reaction e.g. when the market situation suddenly changes.

Enterprise resource planning system is made in such a way to offer seamless integration of procedures across the functional parts within the improved work flow, having access to real-time information and standardization of many business practices.

An Enterprise resource planning system is made in a way that it can easily manage the entire company activities via self-governing software modules as it updates the central database.

The organizational and contractual structure

Over the past years, new Enterprise resource planning systems were designed for within integration which made them be distributed as an inflexible code concentrating on the original applications they were meant for. However, Enterprise resource planning users realized the excellent benefits of the open systems which they quickly accepted hence modifications, additional or linkage to the external software was adopted.

Integrated Facility Engineering

• The integrated facility engineering system is intended to help none stop value addition and risk lowering philosophy
• The Integrated facility engineering is used to integrates data on the foundation of project areas such as deliverable and components
• Integrated facility engineering uses life cycle intentions so as to integrate PM functionality and the decision processes.
• The integration risks and partial business success of facility are assumed by the project director or the project manager and the Alliance.

Advance Alliancing

Business Frame work System

• Shift to life cycle objective functions
• Links consultants’ risks or the contractors and rewards to life cycle objective functions
• Single stage integrated project distribution
• Construction approach and concurrent engineering

Life cycle objective functions are:

• Relate to the entire life quality or performance and operability also known as customers satisfaction.
• Relates to all risks and liabilities, since. Environmental, OH and S and other liabilities
• Financial e.g. IRR, TLCC, worth ration or NPV

Technical and Technological system

• An application of the technology
• Continuous innovation
• Resolution of the uncertainties versus life cycle objective functions
• Pool data and expertise

Introduction to the Project Delivery Systems  

Project Delivery Systems

This unit consists of various aspects which are going to be looked upon carefully; among them is the contractual characteristic of project administration.  

The essential characteristics which are mainly considered are:

• Outsourcing
• Delivery methods
• House resourcing
• Contract types

A project can be executed in two ways, that is

Outsourcing: this is where external resources are used by contracting. Also known as contracting out or farming out.

In-house Resourcing:  this is where an organization uses its resources. At times it is called direct control, departmental work or direct labor. However, it is very possible to have the combination of the two (outsourcing and in-house resourcing)

In-house Resourcing

 Advantage

• It has a great control by the owners
• It is suitable for small scale jobs
• It helps to develop in-house expertise
• It requires short lead time
• Scholarly property is essential for progressive specialized work

Disadvantages

• Completion is lacking
• It is not good for someone who does not consist with work
• Many concurrent projects may not work
• Imposes restrictions on business resources

Contract types 

• Here it is stipulated how consultants, employees, and contractors are paid for the services they offer.
• How expenditures for work, materials, equipment are made
• Lastly, what are the payment options?

Contract type is capable of provision of numerous incentives to the worker and stimulates the prices, time of delivery and project performance

Delivery methods

In delivery methods, we are going to look at the relationship between the contractual projects and the project stakeholders.

• Different plans functions such as management, Design, construction sub-projects and activities are allocated
• Sometimes contact delivery or procurements are used together with methods, strategy system, approach or arrangement.
• The roles played by the employees and the interrelationships founded between them and the project is stipulated at the organization level.

The Project, Program and Portfolio Management

• The portfolio is referred to as a group of programs, projects, operations and sub-portfolios managed as a collection to attain strategic objectives.
• The portfolio apparatuses is not a must to work together to achieve a wanted results.
• The portfolio apparatuses are calculable thus they can be ranked, measured and prioritized.

The Relationships among Programs project and Projects   

All the portfolio apparatuses of portfolio should show certain joint features as shown bellow   

• Be illustrative of the investments made or scheduled by the business
• Be in one direction with organization’s objectives and goals
• Should have the ability to be counted and therefore can be ranked, measured and prioritized
• Be able to compete and share the organization resources
• Should have a common feature that allows the business to put them together for an effective   

An organizational Setting of Portfolio Executive

The impact of portfolio idea upon its strategy is achieved the following six steps explained below:

• The maintenance of portfolio alignment
• The allocation of human resources
• The allocation of financial resources
• Management of risks
• The allocation of equipment resources or material
• Measurement of portfolio apparatuses performance

Project management

Project management simply means the application of skills, know-how (Knowledge), techniques and tools to safe guide the project undertakings to meet requirements of the project.

Project management is normally achieved through well-organized applications integration of the project management procedures which comprise of five processes shown below: 

• Planning
• Initiating
• Closing
• Controlling and monitoring
• Executing preamble

Management of the project typically involves:

• Identification of requirements
• Addressing some concerns, needs, and expectation of investors as the project is scheduled and carried out.
• Setting up and keep effective communication with the investors
• Balancing the challenging project constraints

Organizational Structure

A change in business can come as an opportunity for business transformation and an exciting moment for those who are in charges such as managers, directors or any other persons who are with duty in a business organization. In the other hand, change can also bring disruption or threaten other individual or group of people in an organization. Response to these changes by employees and management is what defines a business transformation or tear the business down. Change in business takes it to another level in the business environment and like it or not; a business change is a must whether in private or public sector for that business to relevant and continue to compete fairly in the field of entrepreneurship.  

Description of delivery systems

Change in business originates from different grounds such as external sources ranging from economic pressure, advance in technology, social or political, or sometimes it can originate from within the organization as a result of poor management, change in client/customer needs, cost of product, human resource and performance issues. This affects the entire business organization or just a small area in business. None the less, all changes in a business organization whether they originate externally or internally, small or big do requires some strategic adjustment regarding mindset, policies, behaviors, processes and practices.

Regardless the source of change in an organization, managing change is the process of advancing and taking well-structured plan and approach to help an organization pick up with the change. It is not an easy task to for a business to just take off with new changes hence, working together with an organization stakeholders is recommended to help understand what change would mean for the business. This would mean that change must be adjusted from managerial rank down to the ordinary employees for it to accommodate everyone within the organization.

What is an organization?

• An organization is a set of social set up of more than two persons’ who have come together to serve a common
• It is designed to pursue general goals
• An organization is charged with duty of controlling its performance
• The organization has a boundary which separates it from the environment surrounding it.
• It depicts the nature of living Thus it does have a life cycle, that is birth, growth, maturity and death unless it sustains itself hence its continuity.

The importance of managing change in an organization

For an organization to adapt to new changes, there are some questions which management or the heads of an organization should be ready to be acquainted with.

• Can the changes imposed benefit the organization?
• Can the heads of the organization explain the changes
• Can those changes bring a breakthrough in the organization
• Are those changes necessary for the organization
• Area employees willing take those changes positively  

Making a breakthrough or milestone in business is not the primary goal for change in business. The successful change for business involves different measures such ability of employees’ capacity to adapt to new changes and work effectively and efficiently in the new business environment. People will take changes in an organization positively or negatively depending on how these changes are presented to them. The peoples’ ability to adapt to change can be lowered if they misunderstand or refuse to comply with the change, leading to disagreement within the organization. If people happen to understand the benefits change within the organization, they are most likely to see to it that changes are successfully carried out and in return least disruption in an organization.     

Components of organization

• System
• Stakeholders
• Mission
• Staff
• Customers
• Values
• Partners
• Structure
• Vision

Organizational structure

• Project-based dynamic
• Lean re-engineered
• Hierarchical
• Quality managed
• Divisional structure
• Functional structure
• Matrix structure  

Construction and Project Management Method plus EPCM Method

Construction Management

The owner is the one who is responsible for the management and procurement of consultants. The owner is again charged with oversight duty as it for the proprietor to see to it that materials and the services are supplied and that management is well kept, designing and documentation is properly done.

Factors influencing performance and selection of project delivery system

The contractor, on the other hand, is charged with duties such as management and procurement of construction supplies and labor packages, site services, preliminaries, industrial relations, OH&S, schedule, and quality.

Construction Management can sometimes be selected by tender for a good amount of money when the tenders are being given out for management services, and preliminaries and adjustment may be made if there are delays caused by the owner.

Preliminaries give an illustration of the project which permits the contractor to verify cost, but they do not do anything as part of any package of work, as they required with the methods and circumstances.

Preliminaries are however noted that it should not be confused with a preamble which gives details on tender procedures, that is not supposed to interfere with the contractor’s prices.

Preliminaries

• General Summary
• Method statements. This is the situation whereby the contractor clarifies the health, safety, and dangers which have been recognized such as; demolition or dismantling, lifting operations, working on higher grounds, use of plants and installing equipment.
• Information is given before the construction kicks off e.g. terms and conditions, management and design regulations
• Noise control
• Details regarding other options to be considered by tenderers.

  Advantages of Construction Management

• Construction Manager appends signature on the GMP contract most of the time for the entire facility
• Incentives to reduce period might be added
• Construction Management approach gives flexibility which is best to advance hurriedly and poorly done projects
• Construction Management might be involved in the early phase to give input to the project definition, documentation and design.
• Construction Management at times acts as a broker for the owner when held up with management and suppliers for other constructors.
• The performance of the facility can be transferred to Construction Management depending on some of the issues shown below:   
• Nature of Construction Management contract
• Role in defining design, vetting or facility
• The degree of responsibility exercised/ authority practiced by Construction Management

Disadvantages of Construction Management

• Construction Management might not carry cost risks and schedule but only professional skills and due care.
• Construction Management might not carry out performance of the facility risks/design
• Potential liabilities coming up from action/inaction of the Construction Management
• Shortage of tender cost should Construction Management fail to honor his roles in the contract effectively.
• Should collateral deeds incur, Construction Management short coming and obligations are lowered
• Without additional of incentive Construction Management performance is not guaranteed   

Project Management

• It is the same as contracting management
• Can be connected to an incentive
• Construction Management or PM manages the process of fee management
• PM or contractor firm is appointed to take charge the whole implementation stage i.e. from the beginning to the last stage
• Construction Management or PM acts as broker for the client

Contract management

Introduction

This is the type of deal which is the most vital factors when making a proposal or approximating the budget and the profit of the project. It is also very crucial to know the magnitude of the risk that is likely to incur through the contract. It is best to put in mind the high and low risks that contract type might cover.

Bidding process

During bidding which involves two or more persons’ and some parties offer a lower bid compared to others, it is to question the legitimacy of the lower contract bid and try to find out if the proposed contract can achieve the objectives set by the company/organization or not. Should the tender be considered, it is very important to include some terms and conditions or rather penalties that will see to it that the contract is protected should things go as not planned.

It is very important to evaluate carefully:

• Qualification and availability of contractors
• The experience of clients size and urgency to complete the contract among other factors

Advantages and disadvantages experienced during contractual arrangement must be put into consideration to choose the best method for that particular project.

A decent procurement practice can be elevated to make profit by

Maximizing on lump sum discount which would mean the company uses fewer resources

Taking only quality supplies

Minimize on the expenditure problems

Since procurement contributes awesomely profit, it has been centralized to reduce paperwork hence standardized practices. Procurement has two strategies:

• Corporate procurement strategy: this is where procurement is centralized hence the standardization
• The project procurement strategy: In this scenario, the project manager is given the power to perform solely source procurement with no need to involve the centralized procurement third parties.

The procurement strategies can have a variation in their procurements due to the constraints, the existence of availability of critical resources and the specific requirements required by the given different customers.

Project delivery risks

The strategies existing in procurement strategies are usually;

• Procuring all the goods and services. The procurement is done from a single source.
• Procurement of all goods and services from various multiple sources.
• Only procuring small portions off the goods and services.
• Procuring none of the goods and

In the environment of procurement, there are various conditions that are considered. There are critical factors that affect conditions of acquisition. The mentioned environmental conditions are categorized into two environments. These environments are;

• Macro environment
• Microenvironment

Macro environment

Environment macros are the general features that externally validate the influence of enterprise on the procurement. These factors include the;

• Recessions and inflations.
• The cost of money borrowing
• The possibility of the buyer or seller to exist in the market.
• The possibility of unemployment

Micro environment

These features are the factors that internally affect the procurement process of the firm. The policies of the firm are also considered. One more micro environmental consideration is the imposed procedures that are used in the firm. The procedures imposed on the project or the client.

This environment also comprises of the procurement and contracting system. The process has some processes that run according to the PMBOK

• Planning of procurements
• Conducting the procurements required in the process.
• Administration of the procurements.
• The closure of procurements.

Contacting by the Management

The contracting of management is an art and science at the same time. The managing of contractual agreement in the entire contracting process.

The assignment of contracts involves two or more parties. Hence, the management process of contracting is therefore performed by the buyer and seller.  The seller in this scenario is the contractor.

The contractors provide management processes that are in correspondence with the buyer process. This activity comprises some processes. This procedure includes;

• The presale activity
• The bid or no-bid making of decisions
• The bid and proposal method preparation
• The process of contract negotiation and its formation of the procedure.
• Administration contracting
• The closeout of contract.

Planning procurements

The step in procurement begins with the planning process for purchases of and acquisitions. A particular point of view lies in the development of a procurement planning that states;

• The item that is being procured
• When the item is being procured
• How the item is being procured

The planned procurement involves the following;

• The definition of the need for the project procurement.
• The development of the statement work of procurement is specifications and the breakdown structure.
• The need to prepare a WBS dictionary that when necessary can be applied.
• Conducting a make or buy in the analysis.
• The identification of the source selecting criteria.
• Listing the possible procurement or project risks.
• Getting an authorization and the approval to proceed

A narrative that has the statement of work (SOW) describes the work that needs to be accomplished and the resources that need supplies.

The companies may also use the statements of the objectives for the project. The projects designed are the performance-based effort projects.

The SOOS are used in the company during the process of procuring. When the company needs leverage in advancing technologies or capabilities, they apply the procuring process. The expertise of the contractors is also important to consider during the process.

Another substitute to the use of SOW that makes a description of specific details to the contract that needs work. The process also gives a guide on how the procurement should be performed. On the other hand, using SOO only paves the way for the description of the end objectives aimed by the project. Thereby the project objectives are stated in the SOO.

Alternatives of procurement

There exist ways in which the end item can be realized. To obtain feasible procurement, various alternatives are possibly executable. They include;

• A make or buy
• Leasing or buying
• Buying or renting
• Leasing or buying

To begin with, the make or buy analysis marks the start. Durin the make decision, the following are put to notice;

• There is less cost, but this cannot be in all situations.
• There is easy operation interaction the decision
• There needs to be the ability to utilize existing capacity that is idle
• Maintenance of direct control.
• Maintenance of design or maintenance of secrecy of production.
• Avoidance of unreliable supplier base
• Stabilization of existing workforce.

In the buy decision;

• There is a less cost involved but not in all situations.
• Supplier skill utilization
• Small volume requirement that is not cost effective in production
• The existence of limited capacity or capability.
• Indirect control.

In the lease or rent analysis, the analysis is usually a financial decision and lease is usually having a longer term than the rent provision.

The procurement plan should address risks that re-incurred in the procurement. Some companies have manuals that contain risks incurred in well-sectioned writings. An example of a procurement risk as below.

• Contracting and agreeing on damages and specifications that are open to misinterpretation. Also, there are vague wording and permits or licenses that are in paperwork.
• The existence of responsibility and liability. There are force majeure and liability inn the scope limitations.
• Financial risks. The risks incurred in credit, payment of plans and inflation of currency and bonds.
• Political risks. There is political stability that may arise. More to it is the arbitration laws and the import-export
• The repairs and non-standard requirements apply.
• Technical and technology solutions
• Customer inspection and acceptance criteria.

In the process of developing a procurement plan, the following will be addressed;

• The amount of procurement that will be required.
• The state of standard activity or specialized procurement activity.
• The possibility of making some of the product or purchase
• The possibility of the existence of qualified suppliers.

The process of conducting procurements.

1. Evaluation or confirmation of specifications.
2. Confirmation of qualified resources
3. Reviewing the sources of past performances.
4. Reviewing the team or partnership performance.
5. Producing packages of solicitation

The solicitation package contains bidding documents, lists of qualified vendors, the criteria for evaluating proposals, bidding conferences and the plan of the supplier payment process.

Project evaluation criteria

The criteria used in evaluation reflect the selected award strategy of contracts that are;

• Price-based award strategy. This contract is awarded to lowest priced or the technical offer available.
• Best-value strategy

One more thing is the negotiation process that consists of large contracts. (John Murdoch, 2002

References

Austroads Limited, E. C. (2014). Building and Construction Procurement Guide: Principles and Options. Atlanta: Austroads Limited.

Chris Hendrickson, T. A. (1989). Project Management for Construction: Fundamental Concepts for Owners, Engineers, Architects, and Builders. Atlanta: Chris Hendrickson.

Cover, F. (2005). 4D CAD and Visualization in Construction: Developments and Applications. Washinton DC: CRC Press.

John Murdoch, W. H. (2002). Construction Contracts: Law and Management. Utah: Routledge.

Kim Heldman, C. M. (2007). PMP Project Management Professional Exam Study Guide. Boston: John Wiley & Sons.

P.S. Brandon, T. M.-R. (2005). Investment, Procurement, and Performance in Construction: The First National RICS Research Conference. NewYork: Routledge.

Peter Morris, J. K. (2010). The Wiley Guide to Project Technology, Supply Chain, and Procurement Management. New York: John Wiley & Sons.

Schulte, K.-W. (2012). Real Estate Education Throughout the World: Past, Present, and Future: The Past, Present, and Future. Boston: Springer Science & Business Media.

Steve Rowlinson, P. M. (2005). Procurement Systems: A Guide to Best Practice in Construction. Chicago: Routledge.

William Hughes, P. M. (2006). Procurement in the Construction Industry: The Impact and Cost of Alternative Market and Supply Processes. Washington Dc: Routledge.

Yuzhe Wu, S. Z. (2016). Proceedings of the 20th International Symposium on Advancement of Construction Management and Real Estate. Boston: Springer.