Bonanza Residential Construction Project

A project of 10 stories building with 20 apartments, 20 car parks and 20 storage system has to be built. The project has already has an approval for eight stories and additional approval has to be taken from the council which would take 3 weeks to plan and 4 weeks for approval.

Bonanza Residential Construction Project
Table of Contents
Introduction.......................................................................................................................2
Finance management........................................................................................................2
Contract Management.......................................................................................................2
Risk Management..............................................................................................................3
Conclusion........................................................................................................................4
References.........................................................................................................................4
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Bonanza Residential Construction Project
Introduction
A project of 10 stories building with 20 apartments, 20 car parks and 20 storage system has to
be built. The project has already has an approval for eight stories and additional approval has
to be taken from the council which would take 3 weeks to plan and 4 weeks for approval. 12
apartments are already sold and remaining eight have to be sold.
Finance management
Project manager would get $12,000,000 as project budget and $2500 per week of payment
and $10,000 incentives for every flat sold. It is expected that project manager would be able
to complete the project work in $10,000,000 and thus, make a profit of $2,000,000 and $2500
per week as well we $10,000 as incentives per 8 apartments that have to be sold.
The prices for the contractors and suppliers would be agreed upon between them and the
project management organization. A contract sum would be assured to them for the whole
project and a provisional sums would be allotted as allowance for specific project elements.
Interim payment certificates would be made to allow payment of these provisional sums
during interim deliveries of the project. Half of the contract amount would be retained and
remaining would be paid as provisional sum. The retained sum would be paid post
completion (Njie & David Langford, 2017).
Contract Management
The contracts would be needed between suppliers and construction contractor, project
manager and developer, and Developer and construction contractor. There would be three
types of contracts including fixed price contract, fixed price plus incentives, and unit price
contract (LEVELSET, 2019).
Supplier Contracts: For developer contracts with suppliers, unit price contracting approach
would be taken in which price for each unit of material would be fixed and the contract
would also mention the estimate of the amount of material that would be needed on the
project (Sarde, 2016).
Construction contract: As the duration of the project is fixed, the project manager knows
the duration for which the workers would be involved on the site for the construction work.
Hence, a fixed price contract would be made with the construction contracts (Hendrickson,
2008).
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Bonanza Residential Construction Project
Project Management & sales management Contracts: There would be dual contracts
between the project manager and the developer to take care of the responsibilities related to
managing the construction work and the work of sales of the apartments. The construction
project management would have fixed price contract made for the duration of work and the
sales would need a fixed price plus incentives contract so that on the sale of every apartment,
an incentive of $10,000 besides the profits that would be made on the fixed price of
$12,000,000 that would be allotted in the whole construction plus sales project (Hendrickson,
2008).
Risk Management
The project is likely to face the following risks:
 The project is expected to get the revised design in 3 weeks and approval for
additional construction in four weeks post that. However, there can be delays in these
activities that can affect the project durations and as a result incur additional cost for
construction as the workers would already be hired to start building the foundation
even before approval. As there is affixed price contract between contractors and the
developer based on the number of days, the additional sum would have to be made for
additional duration of the project. At the same time, the contract between the project
manager and the developer does not allow increasing of the price in such a case as it
is allotted not on the basis of duration but on the project deliverables. To avoid such
problems, the schedule would be prepared taking the buffer for delays so that any
delay can be accommodated within limits. Also, there would be a mitigation measure
taken by allotting a contingency fund that can be utilized in such time (Markgraf,
2018).
 Project can also face a risk of a staff leaving the work in between causing lack of
resources which can make it difficult for remaining workers to take care of the
timelines causing delays. To avoid this from happening, contracts would specify that
discontinuation of the work due to workers leaving would have to be taken care of by
the construction contractor such that the risk is transferred to the contractor.
 The prices of the supplier materials can change during the course of the project
resulting into the rise of project cost. To avoid this from affecting the project, the
company would have clauses in the supplier contracts to not change the price for a six
months duration in which the project would be planned, approved as well as
constructed (Rodrigues-da-Silva & L.H., 2014).
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Bonanza Residential Construction Project
Conclusion
The project involved designing and approval of proposal for extension of a 8 stories building
to 10 stories to be managed at the cost of $12,000,000 for construction. The report illustrated
how payments, contracts and risks would be managed on the project.
References
Hendrickson, C. (2008). Project Management for Construction. Carnedge Mellon University.
LEVELSET. (2019). Common Construction Project Delivery Methods: A Breakdown. LEVELSET.
Markgraf, B. (2018). Project Management Techniques in Planning & Controlling Construction
Projects. AZ Central.
Sarde, R. R. (2016). An Overview of Front-End Planning for Construction Projects. International
Research Journal of Engineering and Technology (IRJET), 1298-1300.
Njie, G., & David Langford. (2017). Factors Affecting the Selection of Building Contract Payment
Systems. University of Strathclyde.
Rodrigues-da-Silva, & L.H., C. J. (2014). The project risk management process, a preliminary study.
Procedia Technology, 16, 943-949.
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