Advanced Construction Procurement and Processes Report: Analysis

This report provides a comprehensive analysis of advanced construction procurement and processes. It begins with an introduction outlining the scope, focusing on a case study of the National Children's Hospital in Dublin. The main body delves into the evaluation of pre and post-contract elements impacting project expenses, such as design errors and poorly defined scopes of work. It then examines the efficiency of various expense management approaches, including cost estimation, budgetary control, and earned value management. The report also reviews conflict resolution methods available to the client. Furthermore, it covers methods of financial analysis relevant to construction projects. The report concludes with recommendations based on the analysis.

Advanced Construction Procurement and Processes
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Table of Contents
Table of Contents.............................................................................................................................................
INTRODUCTION..........................................................................................................................................
MAIN BODY..................................................................................................................................................
1. Evaluation of pre and post contract elements which can impact expenses of a venture......................3
2. Analysis of efficiency of expense management approach which can help for project........................5
3. A review of conflict resolution methods available to the client..........................................................7
4. Methods of financial analysis.............................................................................................................8
RECOMMENDATION................................................................................................................................
CONCLUSION.............................................................................................................................................
REFERENCES.............................................................................................................................................
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INTRODUCTION
Advanced Construction Procurement and Processes refers to the use of various types of
methods and techniques through which the construction of the different types of projects can be
done in the right manner without facing problems and issues. It is a method through which
Project Management can be initiated (Rahmani, Maqsood and Khalfan, 2017). Thus in this way
it can be quite helpful for the initiation, development and the completion of the various types of
projects. For this report, National Children's Hospital in Dublin has been considered. The
hospital will be completed in 2022 and will be one of the major centers for the treatment of
children in Dublin. In this assignment, there will be specific focus on Analysis of Pre and Post
Contract factors, a comparison and analysis of the effectiveness of expense management
approach, review of conflict evaluation approach. Additionally, specific focus on worked-out
examples of methods of financial analysis will be covered as a part of this particular project. In
the presented report, evaluation of pre and post contract elements that impact expenses of a
venture are being highlighted. With addition to that, conflict resolution methods and methods of
financial analysis is also being presented in respective meta-analysis.
MAIN BODY
1. Evaluation of pre and post contract elements which can impact expenses of a venture.
Analysis of case study- The case study is based on preparation of a new hospital which is
proposed to prepare in year 2022. The estimated cost of this project is of 1044 Million Euro and
project need to be analyze under different kinds of investment appraisal approaches which are
NPV and PBP etc. In addition to this, in such project there will be preparation of therapeutic
environment which will make project more effective and suitable for patients.
In such case study, there are some other range of factors and elements which have been
covered for better understanding. The project is related to hospital and this is preparing for those
children who are suffering from serious illness. This case study has been used as a framework in
order to determine about efficiency of project for long run.
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There are a range of pre and post contract factors which may lead to increase in spiraling
cost by a huge manner. As in the aspect of above mentioned project of hospital below some pre
and post factors are mentioned which are as follows:
Pre contract factors:
Design error- This is one of the main factor which can affect to spiraling cost in a
negative manner. This is so because if design of a project is inadequate and ineffective than
entire cost or fund will be vain (Dzeng and Wang, 2017). Apart from this, inappropriate design
of a project may lead to issue in projection of project and poor presentation of task under the
project. This overall becomes a cause of additional and wastage of tasks and activities. As in the
context of above project of National Children’s Hospital, their spiraling cost can be higher if
there is any form of error in designing of their project. In addition to this their project is complex
and large so that designing is a key component or factor. Managers of respective firm undertakes
various considerations and follow several policies that helps firm to initiate its growth objectives.
By taking several considerations managers of the firm are able to avoid wastages of resources
and also develops better competitive potential of the firm in given marketplace.
Estimation methodology- Another pre contract factor is related to selection of projection
or estimation method which is used in the project. In the case when estimation method is wrong
or inappropriate than this may become cause of increase in spiralling cost. This is so because if
project managers allocated funds in accordance of wrongly done estimation than it may lead to
error in overall tasks and activities. As in the context of above project of National Children’s
Hospital, their spiralling cost can increase if they use a wrong or inappropriate method of
estimation. This is so because estimation method is used to prepare different kinds of financial
plans and other operations. In the case when there is any error than all tasks and activities may
lead to different kinds of issues like higher cost than expectation and many more. With relation
to chosen firm, concerned departments of the firm by estimating the correct methodology to
govern respective business activities are able to function at its best possible level.
Post contract factors:
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Poorly defined scope of works- Poorly defined scope of works or bad project
specification is the key cause of cost overruns. When comparing the' as designed' scope to the' as
predicted' scope, it is normally discovered later (Davis, Jefferies and Ke, 2017). At the outset, the
architecture project manager must conduct a detailed study of the project scope and obtain
informed approval from the customer. Another cause of project scope cost overrun is not getting
the basic procedure set in the project scope. In addition to this, bad project projects are uncertain,
inapplicable or incomplete project requirements. During the execution stage, constant changes in
requirements are the cause of higher costs in the building business. In the aspect of above project
of National Children’s Hospital, their cost of spiraling can be higher because of ineffective scope
of project. In relation to chosen firm, managers of the firm dedicate operational working of the
firm by clearly defining scope of various job roles in respective organsiational structure. This
allows firm to develop better coordination of work and function effectively in it given
marketplace.
Contract formation defects- Inappropriate, unclear, confusing, one-sided and badly crafted
contracts are another significant explanation for the cost overrun in project. Contracts should
cover all facets of a project job and business arrangement, including conditions of payment, price
and levels of operation, or it can contribute to conflicts, lengthy chains of agreements, arbitration
and/or mitigation, changing of work orders and the search for review (Sawan, Low and
Schiffauerova, 2018). Contract drafting shortcomings such as inconsistent contractual
arrangement with uncertain provisions render the contract unfinished, particularly in the fields of
care transition, ownership, control and start-up, assurances and performance tests. Bad choice of
contractor, dishonest selection parameters, sum of contract price, discrepancy between the bid
winner and the second bid, difference between the bid winner and the engine. Such as in the
aspect of above National Children’s Hospital, this can become cause of increase in the spiraling
cost due to error in the formation of contract with different external parties like suppliers,
employees and many more. In regards to chosen firm, regulatory authorities of the business firm
ensure effective formulation of contracts which enable firm to dedicate their efforts towards
correct path of working.
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2. Analysis of efficiency of expense management approach which can help for project.
There are various types of methods which can be used for the purpose of ensuring Cost
Control within the organizations. Thus in this way it can be said that by making a use of these
particular methods the firms are able to identify and estimate the overall costs and thus can
reduce these particular costs effectively and efficiently. The different types of methods which are
used for the purpose of Cost Control in Project Management are explained as follows-
 Cost Estimation- It is a method through which the overall assessment of the different
types of costs can be made within the organizations (Pawar,Bajad and SHINDE, 2017).
Thus in this way this can help a lot in ensuring that the overall costs of the project of
National Children's Hospital in Dublin can be initiated in the right manner. Therefore, in
this way it can be quite helpful for them to reach a better position in the dynamic world.
 Budgetary Control- It is a method in which the different types of budgets are prepared
within an organization. This can be especially quite helpful to make sure that the
company is able to attain the different types of goals and objectives. The project of
building of National Children's Hospital in Dublin will require making the estimations
through the use of budgets so that the Hospital can be constructed within the set budget
and the actual costs do not exceed the estimated costs of the project.
 Standard Costing- Standard Costing is a particular technique which is quite helpful in
ensuring that the overall estimation of the costs can be made and the comparison of the
actual costs can be done along with the set standards in a highly effective manner
(Agbesi, Fugar and Adjei-Kumi, 2018). Thus in this way it can be said that for the
purpose of building National Children's Hospital in Dublin the use of this particular
technique has to be made which will help a lot in ensuring that the actual costs do not
exceed standards. If deviations and variations are found in the project, then rectifying
actions can be taken so that the costs can be controlled.
 Project Performance measuring- This is a technique through which the overall
performance of the project can be measured and if there are any kind of deviations and
variations which are witnessed in the performance then appropriate rectifying actions can
be taken in a proper manner. Thus in this way it can be said that the Project Management
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of building National Children's Hospital in Dublin will require ensuring that a regular
status report of the project performance is taken which will help in the attainment of the
desired goals and objectives of the project and will also ensure that the costs are
appropriately controlled.
 Project Scheduling- In this technique, the activities which are to take place in a
particular project are identified and a particular schedule is set for the project (Eriksson,
2017). For this purpose, the use of Gantt Chart can be made because by making it the
activities which are related with the project can be scheduled well in right time. This will
be helpful in ensuring that the activities which consume a lot of time and are expensive
for the organization in the terms of cost control are identified and thus the appropriate
actions are taken so that the costs can be reduced by proper scheduling of the projects.
The project of National Children's Hospital in Dublin will require proper scheduling
using a Gantt Chart which will help a lot in ensuring that the activities are allocated
separate budgets which will help in the proper allocation of funds and reducing the costs.
 Earned Value Management- This is a technique through which the measurement of the
actual performance of the project can be done highly effectively and efficiently. Thus in
this way if it is identified that the project costs are increasing and are creating problems
and issues for the organization then appropriate methods can be used so that the excessive
costs can be reduced. Thus for the purpose of project completion of National Children's
Hospital in Dublin it is quite important that this method is used which will be helpful in
ensuring that the goals and objectives of the project can be realized.
 Forecasting- By making the use of Forecasting method, the organizations can make sure
that they are able to forecast the different costs in a proper manner (Ajayi and Oyedele,
2018). In the context of completion of project of National Children's Hospital in Dublin it
will be required that the forecasts are made in the right manner.
3. A review of conflict resolution methods available to the client.
There are numerous methods for conflict resolution. It depends on companies that which
kinds of approach they need to adopt in their operations and activities. As well as nature of
problem also matters that which method will be suitable. In the context of above National
Children’s Hospital project below some methods are described such as:
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Confronting- In this strategy, involved parties in the assertion or with a disagreement come
forward on a quite objective lead to address the issue at hand. Under this client operates on
settling disputes and discovering the team's ideal alternate solution. They stand up when it counts
by setting personal interests aside and doing what is best for the project (Pal, Wang and Liang,
2017). This leads to a sort of win-win result. With relation to above project, this approach can be
useful in order to deal with the issues which may occur during progress of project. Like if there
is issue of higher cost of operation or activity than dealing this issue with confronting method
may lead to better result and solution of problem in quick manner.
Reconciling approach- There'll be times where the people involved must think of a
common path for conflicts in which no side wishes to give up anything and find a resolution. For
both the time being, this sort of approach would've been temporary, but it would not be a long-
term approach. This leads to a lose-lose scenario, when both parties can assume that it has been
compromised. With relation to above project of hospital, this approach of reconciling can be
useful for shorter time period instead of longer time. This is so because under such approach no
long term solution is offered by which issues can be solved. Though, it is used at the time when
there is instant need of solution in a project or contract.
Withdrawing approach— In some situations, one of the disputing parties may start
withdrawing from the dialogue and encourage the other major party point of view to be heard. In
certain situations, one of the parties can attempt to stop a conflict altogether by staying quiet.
This fits best in situations in which one of the sides in the conflict is emotionally charged or
irritated. As a result, refusing to settle a disagreement gives the people involved time to "cool
down" before getting forward with a substantive resolution later. In the theoretical framework,
this approach seems effective and useful but in practical it does not seem effective (Jagtap,
Kamble and Raut, 2017). This is so because if issues will be ignored than this may hamper
growth or progress of a project. In the aspect of above hospital project, such approach can be
useful in order to deal with those issues whose impact on project is lower. As well as those
activities which are leading to an issue, can be removed from above projects’ operations. This
will lead to successful completion of project in an effective manner.
Smoothing approach- This is a tactic that is used because there is a lot of reluctance in the
people involved. And no one appears to be involved in settling the conflict. In those situations,
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one of the party leaders must take over and try to smooth the ambience by using cool terms,
emphasizing the points of negotiation, and trying to play on the points of contention. With
respect to above project, this approach can be used for dealing issues which may occur during
compilation of project. Such approach is too crucial for project because there are a range of
activities and operations which need to be considered and can cause in an issue.
4. Methods of financial analysis.
There are a range of methods and approaches which are used by project managers in order
to determine efficiency of a project (Ozyurek and Erdal, 2018). This is too crucial for companies
because on the grounds of such outcomes managers determine about whether they should make
investment or not. Below financial analysis of above project is done in such manner:
Investment-
Basic cost: €983m
sprinkler system cost: €61m
Total cost: €1044 m
Estimated cash flows:
Year Cash flow (€
million)
1 250
2 300
3 350
4 400
5 550
Payback period: It is known as a form of approach by which estimated time is measured
which may occur in process of recovering cost of investment (Deacon and Smallwood, 2017).
This is a useful method in order to analyses efficiency of a project because by help of it,
managers or investors get an idea of time period in which cost of project will be recovered. In
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order to compute estimated time to cover the cost below a formula is mentioned which will be
used to measure efficiency of cost of hospital project.
Year before recovery + amount to be recover/next years’ cash flow
Year
Cash
flow (€
million)
Cumulative cash
flows
1 250 250
2 300 550
3 350 900
4 400 1300
5 550 1850
Investment: 1044
Payback period: 3+(1044-900)/400
= 3+ 144/400
= 3+0.36
= 3.36 or 3 years and 4 months
Net present value: This can be understood as a form of method or approach which is used
to measure current status of a project for long time period. In order to do so a fixed formula is
applied under which total amount of discounted cash flow is deducted from total value of
investment. Herein, below a formula is mentioned by which value of project of hospital will be
determined in an effective manner:
Discounted cash flow-initial investment
Discounted rate: 10 % (Assumption)
Year
Cash
flow (€
million) PV factor
Discounted
cash flow
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1 250 0.9091 227.28
2 300 0.8264 247.92
3 350 0.7513 262.96
4 400 0.683 273.20
5 550 0.6209 341.50
1352.85
NPV: 1352.85-1044
= €308.85 Million
Analysis- On the basis of above done financial analysis of project of hospital this can be
inferred that it seems suitable and viable for investment. This is so because under payback period
method we can see that cost of project will be recovered in 3 years and 4 months. This shows
that it is a very less time to recover the cost of project. In addition to this, under net present value
approach there is positive value of project which is of €308.85 Million. Hence if investors will
make investment in such project than they will be able to produce higher return in upcoming
time period. Apart from this, herein it is important to note that this financial projection has been
done for few initial five years of project though for long time period this project will definitely
produce more amount of returns and benefits for investors.
RECOMMENDATION
On the basis of above done project report this can be suggested to client that they should
acquire their project of National Children’s Hospital. With considering provided case study, this
is so because it seems suitable in terms of financial perspective as there is higher volume of
return in upcoming time period. As well as there are a range of non-financial factors which are
supporting that above project will be suitable and sustain for long time period.
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CONCLUSION
From the above report, it can be concluded that Advanced Procurement and Processes is a
method through which the overall estimation of the project costs can be made within the
organizations. It helps in conduction of project management smoothly. There are various types of
pre and post contract factors which affect project management. There are various methods of
cost control. Conflict resolution can be done by making the use of appropriate techniques and
methods. Different methods of financial analysis can be used for ensuring the client return on
investment. Therefore, presented report, evaluates pre and post contract elements that impact
expenses of a venture are being highlighted. With addition to that, conflict resolution methods
and methods of financial analysis is also being mentioned in respective meta-analysis.
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