Decision-making in Construction Projects

This report discusses the decision-making process in construction projects, focusing on SHAM ASIA PACIFIC CONSTRUCTION GROUP. It covers cash inflow and outflow, work breakdown structure, cost estimation, and risk management. The goal is to make informed decisions that maximize profitability.

Decision-making situation

Table of Contents
Part 2....................................................................................................................................................3
Introduction.........................................................................................................................................3
Alternative 1.........................................................................................................................................3
Alternative 2.........................................................................................................................................8
Alternative 3.......................................................................................................................................12
Conclusion..........................................................................................................................................12

Part 2
Introduction
Decision making is a process of identify various alternatives, and selecting the most suitable
option among them. Construction project one of the most challenging and competitive task
for a company because it involves various aspects such as planning, budgeting, cost
estimation, resources management etc. The present report is based on SHAM ASIA PACIFIC
CONSTRUCTION GROUP which is Australian construction company which building
different types of housing and commercial projects. In this report, there are different aspects
such as cosh inflow and outflow, work breakdown structure, cost estimation and other
aspects. The main purpose of this report is to make an appropriate decision making which
provide profit the company.
Alternative 1
Cash Flow: There are two types of cash flow given in this project:
Inflow:
Outflow: SHAM ASIA PACIFIC CONSTRUCTION GROUP required that to identify its
cash outflow of their alternative one. These are:
Cost items Cost in $
Engineering
Design
Commission
Project management
90000
20000
80000
Purchases
Concrete
Steel
Metal
Glass
Piping
Electric
Wood
380000
20000
30000
15000
5000
2000
10000
8000

Other cost 290000
Construction
Labour charges
Electricity and Power
Insurance and legal expenses
Others
285000
80000
15000
50000
140000
Contingency 40000
Total 895000
Work Break down structure:
WBS one of the most usable tool to divide a complex project and increase project efficiency
and its effectiveness. According to the given case in the first alternative a company can divide
the major project in to two parts. Ground floor having separate work which helps to
implement the overall project in an effective manner.

Cost estimation: Cost estimation in the construction project is one of the complex and
competitive task which involves various factors. For the cited company, they need to estimate
their project in a manner and forecast the budget for a suitable bidding. There are different
types of cost involves in a project which required to understand and set the margin which can
be easily recovered. As per the alternative one, the following cost involves in project which
are mentioned below:
Similar project: This is the best references for a company is to understand the overall project
cost. Cited firm already constructed a variety of project which can be used by the company.
Planning cost: This is one of the major cost involves in a project which required to plan in
advance. In the case of alternative one the planning cost will be 25 percent of the total cost. In
Alternative 1
First floor Ground Floor
Bedroom 1
Bedroom 2
Bedroom 3
One large
Bathroom
space for 2 cars.
1 parent bedroom
Kids playground
Kitchen with attached dining
Pool

this way, the planning cost of this project is 237000 approx. This is further divided in to
variety of cost such as deign, plan, project management etc.
Legal cost: This is another cost which is related with the approved cost from government
authorities and etc. such types of cost in a construction project is depending on the nature and
scope of the project. The minimum legal and other consultant fee will be approx. 25 percent
of the overall cost.
Material cost: This is one of the major expenses in any project which need to estimate in an
effective manner. For the project one the cost of $380000 which already given in the previous
part of this report.
Wage cost: These charges are related with the labour fee which is also having large influence
of a construction project. On the basis of given case this cos is approx. $80000.
Cost of equipment: There are various equipment are used in a construction site which also
need to consider. There is heavy machinery which cannot available for a company and needs
to be hire from another party. These cost are very not large and depending on the project time
frame.
Schedule of work: This is another aspect where construction company required to plan their
all activities in advance so that they can complete its project in a limited time frame.
Figure 1 Gantt Chart

Figure 2: Activities
Figure 3: Network Diagram
Risk matrix and solution: It is essential for a company is required to make a plan for their
risk in advance which can overcome potential threat on their project in an effective manner.
There is various risk associated with the project which must be minimised and develop an
appropriate solution.
Risk matrix for alternative one:
Degree of
risk
Human
health
Environmenta
l impact
Technical
damage
Financial
impact
Schedule
impact
Very high Site
evacuation
Long term
damages
Extensive
damage
1000 100%
High Multiple
injuries
Temporary
damages
Major
damage
5500 50%
Moderate Severe
injuries
Moderate
damages
Moderate
damage
3000 30%
Low Minimum Minor damages Minor 1500 10%

injury damage
Alternative 2
Cash Flow: There are two types of cash flow given in this project:
Inflow: This is one of the most significant for a company to analyses its cash inflow, in the
context of construction company they need to arrange finance from its external sources such
as Banks.
Outflow: SHAM ASIA PACIFIC CONSTRUCTION GROUP required that to identify its
cash outflow of their alternative one. These are:
Cost items Cost in $
Engineering
Design
Commission
Project management
220000
80000
50000
90000
Purchases
Concrete
Steel
Metal
Glass
Piping
Electric
Wood
Other cost
410000
50000
30000
25000
8000
1000
7000
10000
279000
Construction
Labour charges
Electricity and Power
Insurance and legal expenses
Others
285000
70000
25000
55000
140000
Contingency 28000
Total 915000

Work Break down structure: This is one of the most critical tool where project manager
required to divide the work in to small parts resources for them. In SHAM ASIA PACIFIC
CONSTRUCTION GROUP, they required to use such approach and divide their alternative
one in to following parts:
Cost estimation: There are following cost involves:
Planning cost: In the case of alternative two, the planning cost will be $220000 approx.
which is 15 percent more than alternative one.
Legal cost: This is one of the major contribution in a construction project where more than 30
percent cost incurred of total cost. Because, the impact of these cost is very crucial for a
Alternative 1
First floor Ground Floor
Bedroom 1
Bedroom 2
Bedroom 3
space for 2 cars.
1 parent bedroom
Kids playground
Kitchen with attached dining
Separate storage room
Pool

company. For the alternative 2 this cost will be more than 20 percent and cited firm need to
minimised in an effective manner.
Material cost: In the case, for alternative two material purchase will be more than $410000
which is quite lower than the alternative one.
Labour cost: In the context of alternative 2, the labour charges are lower than approx. $70000
due to reduction in various facilities.
Other cost: There are other expanse also incurred in a report which required to identify and
analyses in an effective manner.
Cost of equipment: The cost of equipment will be same as per the alternative one and the
changes are depending on the project time frame.
Schedule of work: The schedule of project 2 is mentioned below:
Figure 4: Gantt Chart

Figure 5: Activity
Figure 6: Network Diagram
Risk matrix and solution:
Degree of
risk
Human
health
Environmenta
l impact
Technical
damage
Financial
impact
Schedule
impact
Very high Site
evacuation
Long term
damages
Extensive
damage
2000 90%
High Multiple
injuries
Temporary
damages
Major
damage
4500 40%
Moderate Severe
injuries
Moderate
damages
Moderate
damage
2800 35%
Low Minimum
injury
Minor damages Minor
damage
1800 20%

Alternative 3
Conclusion
As per the above report it has been concluded that the role of decision making in the context
of construction project. This report helps to understand various aspects of construction phase
specially the cost related issue. There are three types of project and its cost are given which
related with the measure and evaluating an appropriate option on the basis of different
aspects. These elements can be cash estimation, cash inflow and outflow, profitability, work
breakdown structure for each project, different types of equipment and its cost, variety of risk
associated with the construction project, and scheduling for each work in an effective manner
so that co0mpany can chose and suitable alternative for beneficial for both company and
client.

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