Report on Value And Risk Management

VALUE AND RISK MANAGEMENT

Table of Contents
PART 2............................................................................................................................................5
VALUE ENGINEERING THE DESIGN AT RIBA STAGE 4.....................................................5
RISK................................................................................................................................................1
Strategic risk................................................................................................................................1
Design and construction risk.......................................................................................................3
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
APPENDIX....................................................................................................................................13
Cost Breakdown of Citizen M Hotel Development...................................................................13

Index of figures
Figure 1Photovoltaic Cladding System.........................................................................................16
Figure 2 Key benefits or features of Triple Glazed window.........................................................17
Figure 3 Foldable Table Mounted to Wall....................................................................................18

Index of tables
Table 1: Rank based on likelihood..................................................................................................4
Table 2: Risk measurement and mapping........................................................................................5
Table 3: Risk matrix........................................................................................................................6

PART 2
VALUE ENGINEERING THE DESIGN AT RIBA STAGE 4
In every construction project, value engineering can be defined as a systematic approach
to enhance project value at lowest possible cost. It promotes substituting various sources i.e.
material, technology and processes with alternative which are available at less cost but give
better results and productivity (Assaf and Al-Hejji, 2006). Thus, the concept highly focuses on
the function or components of the project with the key aim to increase value. Here, value can be
referred as the cost effective ways to produce and perform a work.
After or during the concept design phase, value engineering work should be performed to
enhance the value of the hotel project (Kelly, Male and Graham, 2014).. Therefore, some design
solutions have to be improved and proposed to the Client through the concept&technical design
stages. Value Management Company made some feasibility studies to define the initial cost of
the building and compare it with similar projects. The initial cost estimation provides opportunity
to the Client to decide on appropriate design option and control the budget of the project. For
defining the initial cost of the hotel project BCIS Cost System has been used.
Referring to the scenario, Citizen M Hotel Development Project value can be enhanced
following VE. It will be helpful to improve technical as well as conceptual design of the
construction work to deliver more value. In this, initially, project manager need to estimate cost
and it must be match with the other similar construction projects which helps to create the best
design solution at controlled cost. BCIS (Building Cost Information Service) is the body that
estimate cost for different kind of construction projects and helps in cost planning. Thus, in order
to find out the cost of Citizen M hotel, this system has been taken into consideration.
Project budget
Budget is constructed to know required investment to build Citizen M Southwark Hotel.
The expected cost is compared with the 4 other pioneering hotels that are Travelodge, Shendish
Manor Hotel, Premier Inn Hotel and Robin Hood Airport Hotel. The 4 other hotels -that are
selected from BCIS Cost Plan System- in below Table-2 that have steel structure. Except for the
Shendish hotel they have 4 to 6 floors.
COST
ELEMENTS
Trav-
elodge
Hotel
Shendi
sh
Manor
Hotel
Pre-
mier
Inn
Hotel
Robi
n
Hood
Air-
Citizen M
Southwark Ho-
tel
Aver-
age
Cost
per m²
Deif-
fer-
ence
of Cit-

port
Hotel izen
M Ho-
tel
Cost per
m²
Cost
per m²
Cost
per
m²
Cost
per
m²
Total
Cost
Cos
t
per
m²
1- Substructure 79 123 94 27 847,829 143 81 177%
2- Superstruc-
ture 561 414 442 349 7,866,57
6
1,32
7 442 301%
3- Internal Fin-
ishes 79 163 116 114 377,514 64 118 54%
4- Fittings 27 185 48 163 295,800 50 106 47%
5- Services 368 452 296 412 2,243,14
7 412 382 108%
Building Sub-
Total 1,114 1,337 996 1,065 11,630,8
66
1,99
6 1,128 177%
6- External
Works 140 79 93 119 471,836 80 108 74%
7- Preliminaries 154 109 99 210 1,075,75
4 181 143 127%
8- Contingen-
cies 0 10 4 1 0 0 4 0%
9- Design Fees 0 N/A 44 N/A 311,325 53 22 241%
Contract Sum 1,408 1,535 1,236 1,395 13,489,7
81
2,31
0 1,394 166%
As per the table, it is seen that Citizen M Southwark Hotel will require an initial cost of
13,489,781 for the construction at a cost of 2,310/per meter square. However, on the other side,
looking to the other comparable company’s average cost, it is too high, because, for Travelodge,
Shendish, Premier Inn and Robin Hood Airport Hotel determined cost of just 1408/m2, 1535/m2,
1236/m2 and 1395/m2 at an average cost of 1394/m2 only. However, on the other side, SCitizen
M hotel per unit cost is 65.71% greater than mean cost of hotel construction in similar areas.
Considering, subtotal of the building construction work, it is visualized that superstructure
reported very high cost of 1327/m2 while average cost is just 442/m2 only. On the other side,
substructure actual cost is 177% of mean cost, because for Citizen M Hotel, it is found to 143
while taking into account all the comparative hotels, average cost is 81/m2 only.