Road Construction Project Analysis

This assignment examines the crucial role of project management in road construction projects. It highlights the significance of techniques like network diagrams and budgeting for effective decision-making. The analysis delves into potential risks associated with road construction while emphasizing the high profit potential within this sector. Case studies and real-world examples, particularly concerning Australian infrastructure development, are used to illustrate key points.

PROJECT REPORT

Executive summary
Present research study is prepared on road construction project that will be carried out on two
highways. On basis of analysis it is identified that there are number of risks associated with road
construction projects. Due to this reason project cost increased suddenly. Hence, it is very
important to analyze project in proper manner by performing relevant tests. By doing so cost can
be controlled. Firms need to establish contact with other companies that are operating in same
industry so that whenever required assistance can be obtained and project can be performed
smoothly in effective manner.

TABLE OF CONTENTS
Executive summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................1
Part A...............................................................................................................................................1
(1)Budget for the project.............................................................................................................1
(2) Project stages..........................................................................................................................2
(3) Memorendum to CEO............................................................................................................5
Part 2................................................................................................................................................7
2.1 Literature review on key aspects of project...........................................................................7
2.2 Background analysis of project.............................................................................................9
Tender document for Forest highway and Pacific highway project............................................9
WBS for Forest highway and Pacific highway project...............................................................9
Duration of major steps.............................................................................................................10
Schedule and drawings..............................................................................................................11
Sources of resources..................................................................................................................12
2.3 Analyzing the project...........................................................................................................13
2.4 Recommendation.................................................................................................................14
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Project management is one of domain which have due importance for the firms. In the
current report budget and activities sequence is prepared. Apart from this, memorendum is also
prepared for CEO. In second part of the report, two highway related projects are picked and same
are analyzed. At end of the report, conclusion section is prepared in the report.
Part A
(1)Budget for the project
Table 1Budget for project
Cash inflow August
Septembe
r
Octobe
r
Novembe
r
Decembe
r
Januar
y
Net cash inflow 0 -23637.5
13362.
5 13362.5 10362.5 9162.5
Bank loan amount used
(Monthly) 70000 70000 70000 70000 70000 70000
Cash expenditure
Employee cost
26637.
5 26637.5
26637.
5 26637.5 26637.5
26637.
5
Logistics expenditures 5000 7000 6000 8000 9200 7000
Purchase of raw material 20000 21000 22000 23000 23000 24000
Purchase of assets 40000 0 0 0 0 0
Documentation or legal fee 2000 2000 2000 2000 2000 2000
Total expenses
93637.
5 56637.5
56637.
5 59637.5 60837.5
59637.
5
Net cash inflow
-
23637.
5 13362.5
13362.
5 10362.5 9162.5
10362.
5
Budget is the one of the important techique that is used by the firms for making
projections. In budget usually cash inflow and outflows are estimated and accordingly net cash
inflow is computed (Schwalbe, 2015). Budget have due importance for the projects because
using same stiff control is maintained on the cost that are incurred in the business. It can be said
that there is significent importance of the budget for the project management teams.
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Figure 1Work break down structure
(2) Project stages
Task
Mode Task Name Duration Start Finish Predecessors
Manually
Schedule
d
Start date 1 day 1/14/2018 1/14/2018
Manually
Schedule
d
Commerce report outline 35 days 1/15/2018 3/2/2018 1
Manually
Schedule
d
Identify projects for site
evaluation 65 days 3/5/2018 6/1/2018 2
Manually
Schedule
d
Site project evaluation 1 20 days 3/5/2018 3/30/2018 1,2
Manually
Schedule
d
Analyze project
evaluation 1 2 days 6/4/2018 6/5/2018 3
Manually
Schedule
d
Site project evaluation 2 22 days 4/2/2018 5/1/2018 4
Manually Analyze project 2 days 6/6/2018 6/7/2018 5
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Build road
Construct
road

Schedule
d evaluation 2
Manually
Schedule
d
Prepare draft report 1 day 6/6/2018 6/6/2018 4,5
Manually
Schedule
d
Team review of draft 1 day 5/2/2018 5/2/2018 6
Manually
Schedule
d
Ammend draft report 1 day 6/8/2018 6/8/2018 7
Manually
Schedule
d
Submit draft to CEO 2 days 6/7/2018 6/8/2018 8
Manually
Schedule
d
CEO review 1 day 5/3/2018 5/3/2018 9
Manually
Schedule
d
Convert draft to final
report 1 day 6/11/2018 6/11/2018 10
Manually
Schedule
d
CEO final review 1 day 6/11/2018 6/11/2018 9,10
Manually
Schedule
d
Preparation for Board
presentation 1 day 6/11/2018 6/11/2018 11
Manually
Schedule
d
Presentation to board 1 day 5/4/2018 5/4/2018 12
Manually
Schedule
d
Distribute Board decision
internally 1 day 6/11/2018 6/11/2018 11,12
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Figure 2Network diagram
Figure 3GANTT chart
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PERT and CPM is the one of the most improtant method that is used to evalute the project. By
using these tools varied stages through which project will pass is identified. Accordingly, it is
identified that which tasks can be delayed and which one need to be performed on time. It can be
said that project management methods have due importance for the firms because by using same
project related day to day decisions can be taken in easy and effective manner (Fleming and
Koppelman, 2016). Managers need to monitor progress of project time to time and accordingly
they need to make changes in their plan. By doing so project cost is managed in easy and
effective manner. This is the reason due to which project management method is widely used by
the firms in their business to manage project in proper manner.
(3) Memorendum to CEO
To George Stirling
From Herry
Date 12-1-2018
Subject Budget and scheduling of project
Structure of team
Determining new milestones are very important for the business success. Due to this reason
time to time it is very important to take new projects. In present time also management is
planning to pick two new and similar projects and in respect to same budget is prepared along
with scheduling of project related activties is also done. It must be noted that bank loan
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CEO
Project manager
Personal
assistant to
CEO
Scheduler Planning
engenieer
Clerical
support
Estimato
r

amount is arranged and it is expected that bank loan of approximately will be required to be
invested in the business in order to complete the project. Major target is to keep stiff curb on
expenditures, in respect to same workforce will kept same in size. No additional recruitment is
planned and it is anticipated that employee cost will remain constant. Raw material cost will
get changed and with passage of months relevant expenditures will enhanced in business from
20000 to 24000. Assets single time purchase will be made and investment will be equal to
40000. It can be seen from the budget that expenses are increasing continuosly in the project.
Logistics expenses increased from 5000 to 8000 and then this value declined to 7000. It can be
said that value of logistics is fluctuating sharply. Employee cost almost remain same as it is
assumd that no new additions will be made to the project in terms of workforce. Raw material
price increased consistently from 20000 to 24000. This is done because with progress
happened in project expenses will also elevate. It is assumed that bank loan will be secured
and in installment investment will be made. Budget for legal fee is determined at 2000 on
monthly basis. Project will be completed in 128 days and it is advised to the project team that
they must not delay the activities that are marked as red in network diagram. In sequence all
activities must be performed so that project get completed on time and in proper manner.
Completion of each task of the project on time is very challanging but it is very important to
perform all relevant tasks in proper manner and on time so that strict control can be
maintained on expenses in the business. It can be said that there is huge significence of the
network diagram method and due to this reason project team strictly need to follow stipulated
time while working on project. This is the only way that will ensure control on project cost.
Table 2Cost calculation sheet
COST ELEMENT BASE
ESTIMATE
PROJECT MANAGEMENT 220,000
PLANNING 30,000
DESIGN
PRELIMINARY DESIGN 60,000
DETAILED DESIGN SERVICES 300,000
DESIGN TOTAL 360,000
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PROPERTY
MARKET VALUE OF LAND 1,000,000
VARIABLE COSTS 250,000
LESS: SURPLUS LAND RECOVERIES 0
PROPERTY TOTAL 1,250,000
ENVIRONMENT
ENVIRONMENTAL COMPENSATION 200,000
ENVIRONMENT TOTAL 200,000
CONSTRUCTION
ROAD CONSTRUCTION
GRADE CONSTRUCTION 1,000,000
PAVING CONSTRUCTION 500,000
UTILITY CONSTRUCTION 100,000
OPERATIONAL CONSTRUCTION 200,000
ROADSIDE CONSTRUCTION 100,000
OTHER CONSTRUCTION 100,000
ROAD CONSTRUCTION SUB-TOTAL 2,000,000
STRUCTURAL CONSTRUCTION 1,000,000
CONSTRUCTION TOTAL 3,000,000
CONSTRUCTION SUPERVISION 270,000
OTHER COSTS
<INSERT ITEMS> 45,000
OTHER COSTS TOTAL 45,000
PAST COSTS (prior to <insert date> ) 50,000
MANAGEMENT RESERVE (if
applicable)
TOTAL 5,425,000
Part 2
2.1 Literature review on key aspects of project
According to Walker, (2015) while constructing roads lots of things need to be done.
Project basically refers to series of activities that are performed to achieve specific task and on
which multiple people are involved to achieve that specific objective. This is because in road
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construction there are number of obstacles that construction company have to face. It must be
noted that new construction material need to be used while road construction and many times
due to internal corruption wrong quality of material is used to construct roads which reduce life
of mentioned infrastructure. During construction of roads rocks are one of the most important
barrier that create complexity in operations. Sometimes forest also need to be eliminated from
land. Experts sometimes make wrong estimation of cash flows and due to this reason expenditure
increased at fast rate on many projects. Such kind of things need to be taken in to consideration
while preparing cost sheet for the project. By doing so it can be ensured that project costing is
done in proper manner.
As per views of Boud,Cohen and Sampson, (2014) earthwork is the one of the main
complicated operation that one have to perform on the project. During excavation lots of
operations need to be performed like material removal, filling of holes, compaction annd
construction of supporting items. All these things lead to fast increase in cost of the project.
Thus, it can be said that there are lots of factors that must be taken in to account while doing
costing of product. Many times experts failed to make perfect estimation of situation and
calculate cost in wrong manner which ultimately lead to fast increase in project cost. In case of
many road construction projects of Austrlia it is observed that cost increased at very high rate
then anticipated value. In order to solve this problem some of the past projects data can be taken
in to account and by doing so to some extent accurate estimation can be made about capital
expenditure that will be made on construction project. Simulation methods are the another
alterntive that are also available to firms that are working on construction projects. Such kind of
things help managers in taking more accurate decisions.
According to Boulangé and Sterczynskia, (2012) there are different methods of road
construction like earth road, gravel roads, soil stabilized and water bound roads and cement
concrete roads. Cement concrete roads are usually prepared in rural areas where lots of vehicles
passes day and night. In residential colonies also cement roads are prepared. Soil stablized roads
are prepared in areas where natural calamities frequently occur. By preparing such roads in those
areas government reduce cost of destruction of property. Gravel roads are observed in rural areas
where gravel are put on roads and by doing so road is made balanced. However, highways are
also developed by using gravel but cost of same is very high as one need to use road rollers and
many other equipments to build strong and durable road.
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As per views of Knox and Harvey, (2011) in order to design roads CBR technique is
commonly used and is more effective. Under this sample of soil is taken and test is performed.
This approach is used to measure strength of road subgrades. It consistt of linger of stsandard
area to penetrate as soil sample at standard rate. If subgrade is identified stronger road is made
less thick by the road contracters. Thus, it can be said that in order to design road first of all test
is performed by experts on land.
2.2 Background analysis of project
Tender document for Forest highway and Pacific highway project
 Pre construction information: Company having experience in road construction from
last five years. Equiments equiped with modern technology are used by the workforce
for road construction (Lam, Varbanov and Klemeš, 2010). Road rollers, crans and other
excavation machines that are commonly used are in well condition and are able to do
work at fast rate for road construction. Thus, company can complete task in short
duration and at minimum cost.
 Site waste management plan: As part of site waste management plan entire wastage will
be shift to waste carrying vehicles which will dump entire waste to area where city entire
garbage is dumped (Rahmat and Kinuthia, 2011). This process will be performed on daily
basis and by doing so waste will be managed.
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WBS for Forest highway and Pacific highway project
Figure 4Work breakdown structure
Duration of major steps
Task
Mode Task Name Duration Start Finish Predecessors
Manually
Schedule
d
Site preparation
Manually
Schedule
d
Clear size 4 days 1/15/2018 1/18/2018
Manually Remove debris 2 days 1/16/2018 1/17/2018 1
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Schedule
d
Manually
Schedule
d
Purchas materials 1 day? 1/19/2018 1/19/2018
Manually
Schedule
d
Estimate quantities 1 day 1/19/2018 1/19/2018 2
Manually
Schedule
d
Purchase lumber 1 day 1/18/2018 1/18/2018 3
Manually
Schedule
d
Purchase tools 2 days 1/19/2018 1/22/2018 2,3
Manually
Schedule
d
Construct road 1 day? 1/22/2018 1/22/2018
Manually
Schedule
d
Dig footings 7 days 1/22/2018 1/30/2018 4
Manually
Schedule
d
Build frame 8 days 1/22/2018 1/31/2018 5
Manually
Schedule
d
Lay decking 5 days 1/22/2018 1/26/2018 4,5
Manually
Schedule
d
Seal lumber 5 days 1/19/2018 1/25/2018 6
Manually Clean up
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Schedule
d
Manually
Schedule
d
Return unused materials 14 days 1/23/2018 2/9/2018 7
Manually
Schedule
d
Remove scrap 6 days 1/23/2018 1/30/2018 8
Schedule and drawings
Figure 5GANTT chart
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Figure 6Network diagram
Sources of resources
Labour will be arranged through recruitment process and if required then contact will be
estasblished with other contractors and their labour will be employed on road construction. In
return some amount will be paid to the other company whose employees are recruited for project.
Equipments are already available of all types and if further required then at initial stage of
project equipment fresh purchase will be made from company. In case suddenly any break down
happened in machine then from business friends machines will be obtained for road construction
project.
Forest highway
 Description of project: Forest highway is one of the known highway of Australia. It is
96.67 KM long and opened for use in 2009. Pinjara road, Kwinana Freeway in north and
Robertson Drive in south are major junctions of mentioned highway. Location of project: South Yunerup, Lake Clifton, Myalap, Binningup and Australind are
some of the major areas where project is located (Brook, 2016). Key quantities: Two lane roads are in Forest Highway underwhich median strips can be
observed which further classify road in multiple parts. Project delievery system: As part of project delievery system design bid build system is
developed. Under this system onwer sign contract with architect which include project
specification and blueprint of roads.
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 Resources: Labours were arranged through raod contractor that are involved in
construction of roads. 28 billion of funding was done by by govwenment throuh bank
loan and other sources. Temporary structure need to carry out project: In order to manage project in proper
manner temporary offices are developed so that managers can lead project in better
manner. Project cost: 28 billion USD is project cost of Forest Highway.
Pacific highway Description of project: Pacific highway length is 790 KM in length and is considered as
major transport route in central east coast of Australia. Mentioend highway is upraded to
4 lane and is one of busiest highway in nation. Location of project: Ballina, Grafton, Coffs Harbour, Kempsey and Wahroona etc
(Pacific highway in Australia, 2018). Key quantities: Four lane road. Project delievery system: In this project also bid build system was used as explained
above. Resources: Varied contractors worked on development of roads and labour were also
supplied by them. Funding of 78 million was done to modify highway as fund raised
from government treasury. Temporary structure need to carry out project: Like Forest Highway project in case of
this project also temporary structres were developed. Project cost: 78 million USD was cost of project.
2.3 Analyzing the project
One of major risk associated with road construction project is that some times wrong
estimation is made about costing and suddenly due to mismanagement cost of project
skyrocketed. This increase burden of construction cost and finance cost on the firm. Other major
risk associated with road construction project is that time is determined but many times
operations are so complex and more time is requird to perform project related activities (Leach,
2014). All these things lead to increase in project cost. Major opporutnity associated with road
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construction is that Australia govenrment is planning to do modifications on highwways and
intend to extend roads. Hence, in upcoming time period many new contracts will be issued by
government whose value will be very high in the market. Opportunities can be developed by
entering in to joint venture contract with already existing players. This will pave a way of entry
for the firm in the relevant industry.
2.4 Recommendation
It is recommended that company must enter in joint venture agreement with any road
construction company and business must be started when ministry of infrastructure organize
press release in respect to expansion of highways in media. Board of Directors must move to
approve decisions because Australia government is fully committed towards development of
infrastructure in the nation. Hence, in can be expected that in future consistently investment will
be made on raods. This thing develop growth opportunity for the firm and due to this reason it
will be better for company to enter in to relevant new domain.
CONCLUSION
On basis of above discussion it is concluded that there is significent importance of project
management for the firms. Due to this reason project management methods like network diagram
and budget must be regularly used by the business firms to make project related decisions. It is
also concluded that there are some of risks that are associated with road construction project
which need to be managed but profit is also high in the relevant business.
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