Construction of ABC Retail Plaza in Australia

This document discusses the construction of ABC Retail Plaza in Australia. It covers the project scope, project delivery method, financial contract type, and procurement method. The document also includes an evaluation of the project delivery speed, cost control, quality work, and risk/hazard sharing. The recommended procurement method is also provided.

Running head: CONSTRUCTION OF ABC RETAIL PLAZA IN AUSTRALIA
Construction of ABC retail Plaza in Australia
Name of the student:
Name of the university:

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CONSTRUCTION OF ABC RETAIL PLAZA IN AUSTRALIA
Table of Contents
Project charter: Construction of ABC retail Plaza in Australia.......................................................2
Introduction......................................................................................................................................3
1. Chosen project topic....................................................................................................................4
2. Case project background..............................................................................................................4
3. Project deliver method.................................................................................................................4
3.1 Project delivery speed............................................................................................................4
3.3 Cost control............................................................................................................................5
4. Evaluation and recommendation of Financial contract type.......................................................7
4.1 Project delivery speed............................................................................................................7
4.2 Cost control............................................................................................................................7
4.3 Quality work..........................................................................................................................8
4.4 Risk/Hazard sharing...............................................................................................................8
Quality work................................................................................................................................9
5. Best recommended procurement method..................................................................................10
5.1 Project delivery speed..........................................................................................................10
5.2 Quality work........................................................................................................................10
5.3 Selection flexibility..............................................................................................................11
6. Development of risk management plan.......................................................................................7
Conclusion.......................................................................................................................................7
Bibliography....................................................................................................................................8

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CONSTRUCTION OF ABC RETAIL PLAZA IN AUSTRALIA
Project charter: Construction of ABC retail Plaza in Australia
Title of the project Construction of ABC retail Plaza in Australia
Project details In order to accomplish the demand of fresh
grocery items and food products along with an
timely order delivery offers (both online and
offline) the owner of the project has decided to
construct a retail store in Australia. The retail
store has around 30 working employees. The
construction outline will be designed in such a
way so that it can attract the store visitors.
Project Scope The scope of the construction project is to
develop a 3D building prototype before
initiating the final construction of the retail
store. Project delivery method, financial
contract type, procurement method are required
to be developed.
Project Deliverables  To provide a greater inventory option to
the consumers of Australia
 To obtain an improved sales potential
 To reduce the rate of shipping cost and
obtain direct feedback from consumers
Identified risks and issues  Financial risk

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CONSTRUCTION OF ABC RETAIL PLAZA IN AUSTRALIA
 Environmental risk
 Technical risk
 Logistic risks
 Managerial risk
Project assumptions It has been assumed that, the construction of
the project will be completed in 8 months
within the estimated cost of $80,000.
Financial assumptions
Milestones schedule Activities Target dates
Project initiation 22/03/2019
Planning 25/04/2019
Construction design 12/08/2019
Execution 20/10/2019
Closure 25/11/2020
Introduction
Construction design is referred to as a unique process used to successfully complete any
construction project within the estimated time and budget. The number of steps varies for the
different construction project. In order to reduce project complexity the most suitable project
delivery method in terms of project delivery speed, seamless communication and cost control are
to be considered. Among three different project delivery methods design build, design bid build

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CONSTRUCTION OF ABC RETAIL PLAZA IN AUSTRALIA
and contract manager at risk (CR@Risk) the most suitable method will be identified in this
report based on the selection criteria.
1. Chosen project topic
Construction of ABC retail Plaza in Australia
2. Case project background
In order to bring something completely new for Australian consumers the project owner
has decided to construct a retail store in Australia with an attractive interior. It is expected that if
the construction is accomplished then it would be able to offer their consumers a wider shopping
opportunity under a single roof. In this competitive business market ABC plaza will offer both
online and offline shopping experience to their consumers. A risk register has been prepared to
identify the possible risks associated to construction project. Based on the risk details respective
response strategies are also elaborated in this. For avoiding contractual risks and other
procurement risks, certain selection criteria and factors are followed. Based on product category
the architect and civil engineer will plan the architecture of the retail store. From the project
details it is expected that, within the nest budget of $80,000 and time of 8 months the retail store
construction will be accomplished.
3. Project deliver method
3.1 Project delivery speed
Design bid build: As soon as the construction design documentation is prepared the
project becomes ready for its final execution. The architect and the civil engineers are assigned

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CONSTRUCTION OF ABC RETAIL PLAZA IN AUSTRALIA
to answer the questions related to project delivery speed. This process isolates the project
contractors from construction work and as a result the chance of conflict increases. It increases
the project delivery speed thus the quality is sometimes compromised. Low bidding most often
decreases the project qualities.
Design build: In this method the project owner hires a project team or an entire company
to successfully deliver the project within estimated time and budget.
Contract Manager at Risk: This is one of the most new methods of project delivery. The
contract manager for this project is selected considering certain criteria in terms of quality,
proven track and cost.
3.2 Seamless communication
Design bid build: This approach eliminates both contractors and subcontractors from the
operations and activities therefore the chances of inter team conflict increases.
Design build: If the project schedule is found to be very tight then in those situations also
the design build approach is very successful. The owners will be able to create a relationship
between the project team members. It will help to avoid all types of communication errors.
Contract Manager at Risk: From the communication perspectives it has been determined
that, CR@Risk is a very beneficial approach used to avoid communication errors. In project
management scenarios it is the most successful approach. Even if any complexity is defined then
that can also be avoided with this delivery method.

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3.3 Cost control
Design bid build: Delivery of a project is referred to as one of the most crucial criteria
must be considered to check tat whether the project is successful or not. This method is mainly
selected by the contractors as it can make the construction cost a lower one. An architect is hired
to create a design document with a lower price.
Design build: In this method the owners can establish maximum project price in the early
stage an help to control the cost easily.
Contract Manager at Risk: In this method the contract manager takes the responsibility
to give inputs regarding project budget, net construction cost and the entire project schedule with
a sub division of project activities.
Selection criteria for the project delivery method
Factors Weight Project delivery method
Design build
Score weight
Design bid build
Score weight
CR@risk
Score weight
Project
delivery speed
40 5 200 5 200 5 400
Seamless
communication
30 4 150 4 200 4 200
Cost control 30 7 300 7 300 7 250
Total 100 - 650 - 700 - 850**

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CONSTRUCTION OF ABC RETAIL PLAZA IN AUSTRALIA
According the obtained weight of the election criteria it has been determined that
CM@Risk the most suitable project delivery method.
4. Evaluation and recommendation of Financial contract type
4.1 Project delivery speed
Lump sum: The possible risks from the client side get reduced with the application of the
lump sum contract type because in this approach the price estimated is never changing and
completely fixed. However, in some cases it varies but not like any other regular contract types.
Cost plus fixed fee: This cost refurbishment contract provides payment opportunities for
the contractors. The total fee can be negotiated at the contract inception. In order to accomplish
the purpose of preliminary study exploration this contract is suitable.
Guarantee maximum price: In this method the cost get reduced if any of the activities
are eliminated or omitted by the contractors or clients. Mostly for the simple projects this method
is applicable. Expected unforeseen risks can be identified with this application.
4.2 Cost control
Lump sum: The lump sum financial contracts are developed in regular basis and with a
predictable installment. This method provides the contractors a reliable as well as stable cash
flow to make the financial structure must simple. Moreover, it helps to reduce the financial
complexities.

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CONSTRUCTION OF ABC RETAIL PLAZA IN AUSTRALIA
Cost plus fixed fee: This type of contract gives permission to the contractor to control
the cost with minimum incentives. This contract is used to develop, test and use the cost plus
incentives fee contract for those which are not practical.
Guarantee maximum price: In this approach cost control become easier as the
contractors take the entire responsibilities. If work pressure increases the n the cost will be
increased on the other hand if work is eliminated the cost will also reduced. Which implies cost
can be controlled.
4.3 Quality work
Lump sum: It helps to reduce the rate change orders and also the managerial approaches
expected from the clients get reduces. The selection process and bidding analysis method is quite
simple and straight forward. The commercial profit margin for the contractors increases in this
method thus contractors prefer follow this approach.
Cost plus fixed fee: This method deals with the regular cost associated to job. With the
successfully completion of the job the clients would be able to gain a fixed incentive rate.
Guarantee maximum price: In this type of contract the risks are mostly transferred from
the clients to the contractors. This approach is not at all beneficial for the contractors but for the
clients this is profitable. Therefore, in this case the project contractors should estimate the net
cost very carefully at the initial stage.
4.4 Risk/Hazard sharing
Lump sum: Based on the type of the construction project the expense can increase for
tender preparation. The chance of risk occurrence increases as in order to vary the price few

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CONSTRUCTION OF ABC RETAIL PLAZA IN AUSTRALIA
numbers of mechanisms are available. The employers may need to pay high range price to
prepare the scope contract.
Cost plus fixed fee: In the development of any type of major system this contract method
is not at all applicable. Until the contract officer complies along with all types of limitations this
method does not stand beneficial at all. This method may take one or more than one basic forms
of completion or terms.
Guarantee maximum price: In those cases where the contactors are responsible for
complete success of a project this method is applicable. It implies that in these cases the
contractors put in good position s that they can control the net cost. The contractor has to be
bearing the additional cost if it is found that the actual cost is higher than the planed cost.
Selection criteria for the project delivery method
Factors Weight Project financial contract type
Lump sum
Score weight
Cost plus fixed fee
Score weight
Guarantee maximum price
Score weight
Project
delivery
speed
40 5 150 7 200 8 300
Cost control 20 5 100 5 100 7 200
Quality
work
20 7 250 3 200 8 250
Risk/Hazard 20 5 150 2 100 6 100

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CONSTRUCTION OF ABC RETAIL PLAZA IN AUSTRALIA
sharing
Total 100 - 650 - 600 - 850**
From the values of the selection criteria it can be said that for this specific construction
project the most suitable contract type is Guarantee maximum price.
5. Best recommended procurement method
5.1 Project delivery speed
Competitive bidding: This public bidding process is used to put the best proposal as well
as compete nature of the project together. This process is not applicable for the contraction
projects.
Negotiated contract: The negotiated contract is an agreement developed between the
design professionals as well as owners, contractor and owners. It helps the contractors to reach a
mutual agreement upon the scope of professional services and price.
Best value: Issues of overrunning cost and over allocation of budget can be completely
resolved with this method.
5.2 Quality work
Competitive bidding: This proves helps to create transparent environment for the builder
and the contractors and much applicable for the successful design and delivery of a construction
project.

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CONSTRUCTION OF ABC RETAIL PLAZA IN AUSTRALIA
Negotiated contract: For procuring a building and clients generally numbers of suppliers
are required. Numbers if procedures available in this method such as open procedure, negotiated
process, framework process etc.
Best value: In order to take effective purchasing decision this best value procurement
method is helpful.
5.3 Selection flexibility
Competitive bidding: This commonly used procurement practice involves multiple
numbers of vendors in their application and operational activities. This approach is applicable for
any type of services and materials.
Negotiated contract: Negotiated contract is referred to as a contract that helps to assist or
govern services whose sate of authentication and authorization needs department for the
selection of performing precise entity with usage of appropriate processes.
Best value: Besides cost this process is much focused on contractors, vendors, project
quality and expertise.
Selection criteria for the procurement method
Factors Weight Project procurement method
Competitive bidding
Score weight
Negotiated contract
Score weight
Best value
Score weight
Project
delivery
speed
50 4 250 6 200 8 300

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Quality
work
20 7 100 5 70 8 200
Selection
flexibility
30 7 150 3 200 8 250
Total 100 - 500 - 470 - 750
Best value is the most suitable procurement method for the ABC plaza construction
project.

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6. Development of risk management plan
Risk id Risk details Probability
(1-5)
Impact (1-5) Score EMV Owner of the
risk
Response to the risks
Days Cost
R2 Technical risks: During construction
of ABC plaza if any technical risk is
identified then it will restrict the
contractor to create consumers
focused products
Possible (3) Significant
(4)
High (12) 12 $20,000 Project manager The project manager should develop the
project scope statement at the initiation phase
considering the requirements, possible design
errors and omissions. It is assumed that if
theses aspects are all properly managed then
the issues unavailability of quality materials,
site investigation will be resolved.
R8 Logistics risks: Before initiating the
project the project manager requires
to address the logistic risks. These
risks deal issues with transportation
facilities, labor, spare parts
equipments and fuel etc.
Likely (2) Negligible
(1)
Low (2) 5 $15,000 Operational
manager
Based on supplier’s requirements the operation
manager should establish contract to the
logistic department.
R14 Managerial risks: If the resource
manager and contractors fail to
identify and manage resources then it
will lead to uncertain productivity
risks.
Unlikely (4) Moderate (3) Moderate
(12)
8 $422,550 Functional
manager
It is the responsibility of the project manager
to assign those members as a part of the team
who has adequate knowledge of managerial
roles and responsibilities.

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R15 Financial risks: In the project
initiation, planning phase if the
project manager fails to estimate
exact project cost including local tax,
foreign exchange fluctuation,
availability. Inflation etc then major
risk that the company will face is
overrunning cost.
Likely (2) Significant
(4)
Moderate
(8)
10 $22,000 Finance manager The finance manager requires conducting a
feasibility study initially to check that whether
the project outcomes will be beneficial from
the project perspectives or not.
R20 Environmental risks: Natural
disaster, seasonal implication and
whether are the common
environmental risks that the
contractors may face during the
construction project design and
development phase.
Very
unlikely (5)
Severe (5) Extreme
(25)
Not fixed $30,000 Operational
manager
For construction projects environmental risks
are crucial to inspect most often. Before
initiating the construction work local weather
and climatic conditions of the construction site
needs to be checked. Though, environmental
effects cannot be controlled still availability of
possible precautions will stand beneficial for
the construction project.

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Conclusion
From the overall discussion it can be concluded that in order to prepare the ABC plaza
construction project best value, Guarantee maximum price and CM@ Risk are the most suitable
approaches. Apart from this, different financial contract types are there such as lump sum, cost
plus fixed fee and again based on the selection criteria for this specific construction project the
most applicable financial contract type is discussed in this report. Besides this, the most suitable
procurement type among competitive bidding, negotiated contract and best value for this
construction project is chosen and applied.

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