CSM80001: Construction Project Bidding - Cost, Risk, Schedule

This report provides a comprehensive analysis of project costing, risk assessment, and scheduling for construction bidding, focusing on three major Australian construction projects: Pacific Highway Upgrade, Princes Highway Upgrade, and Aubin Grove Train Station Upgrade. It identifies key contracting risks such as legal, liability, business, and project-specific risks, offering recommendations for mitigation. The report includes a detailed cost estimation for bid preparation, resource allocation across departments, and a project schedule managed via a Gantt chart and WBS. It also examines the project delivery methods used in the case study projects, highlighting the impact of risks on costs and timelines, providing valuable insights for companies expanding into new construction areas. Desklib provides students access to similar solved assignments.

Project costing

Table of Contents
Introduction................................................................................................................................1
Part 1: Executive summary........................................................................................................1
Part 2: Risk assessment and recommendations..........................................................................2
Part 3: Costing............................................................................................................................6
Part 4: Scheduling......................................................................................................................8
Planning of bid preparation....................................................................................................8
Part 6: Background Research and Report................................................................................14
Background analysis of the projects....................................................................................15
Conclusion................................................................................................................................17
References................................................................................................................................19

List of figures
Figure 1: Gantt chart................................................................................................................12
Figure 2: WBS..........................................................................................................................13

List of tables
Table 1: Risk matrix...................................................................................................................5
Table 2: Costing.........................................................................................................................7
Table 3: Schedule.......................................................................................................................8
Table 4: Resources and department.........................................................................................14
Table 5: Background analysis of the project............................................................................16
Table 6: Risk matrix.................................................................................................................17
Table 7: Risk assessment.........................................................................................................18

Introduction
Project costing and estimation of time is essential for managing the project and proper
planning of the operations to meet the specification. According to the given scenario, the
report will find out the information related to the bidding and contracting approach for big
construction projects (Kerzner and Kerzner, 2017, p. 21). The report will analyze risk factors
in bidding and contracting of the construction project and provide the recommendations for
managing the risks properly. Moreover, the report will prepare the plan for the cost of the bid
and scheduled the tasks for managing the operations for the final bidding process for the
identified projects. The cost planning for bidding project will involve the resources, timing
and typical contracting elements that have a significant impact on the decision making for the
expanding the business in new areas.
Part 1: Executive summary
To: CEO of the company
From: Bid coordinator
Date: 31st October 2018
Subject: Proposal for developing new areas of building
The report is mainly intended to explore and evaluate the information related to the
construction projects undertaken in Australia. The three major projects being selected for the
report are Pacific highway upgrade Warrell creek to Nambucca heads, Princes highway
upgrade for foxgroung and berry bypass and Aubin grove train station and Russell road
upgrade. The report would be focusing upon the contracting risks faced within the
construction industry. It would describe the selected projects in detail along with the risk
impacting the projects. The report has identified that there are various risks involved in
contracting in the construction industry. The major risks being identified in contracting are
the Legal risk, Contract language, Project risk, Liability risk, Government contract risk and
business risk which could impact the contracts of construction project between two parties. It
is been found that all the three projects are been initiated after the year 1990 in Australia and
had come across various risks as well.
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The total working time for the project will be around 5 months from 4th March to 5th
August 2019. The total cost of human resources for managing the bidding and contracting
plan for new construction projects would be $404,720.00. The major departments that will
contribute to planning and implementation of scheduled activities are administration,
marketing, construction, engineering and estimating as well as planning. The bidding
production manager will try to manage the tasks according to the Gantt chart which will help
in monitoring and analysis of the performance of the groups and individual to complete the
actions. For the current project of bidding and contracting, the WBS will focus on the
planning, scope management, estimation, review, and submission of the information for the
final bid.
The projects were mainly carried out by using the Single Source Responsibility and
Design-Build Project Delivery method in which the construction companies were the sole
responsibility for the project delivery to their clients. It further identified that these projects
included various risks which impacted their costs and timeframes to the great extent.
Moreover, the major risks being identified within the projects of Pacific highway upgrade
Warrell creek to Nambucca heads was project risk which impacted its cost and time
schedules. The Princes highway upgrade for foxgroung and berry bypass project came across
the safety risk due to the limited availability of resources and safety concerns of the workers
at the road. The report even revealed that operational risk was the major risk which impacted
the project of Aubin grove train station and Russell road upgrade.
Part 2: Risk assessment and recommendations
Risk refers to the possibility of loss and injury in the project that influence and overall
performance and progress of the project. A project risk is an uncertain event or condition that
affects the planning and implementation of project operation and achievement of the project
objectives (Turner, 2014, p. 11). The process of risk management focuses on the
identification and analysis of the potential risks in the particular project and planning of the
mitigation functions. The project manager or authority that handling the project is responsible
for developing the plan for analyzing the risks and look for minimizing the impact of risks on
the project.
Major risk in contracting for construction project:
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For the expansion of business, the organization is focusing on the three major
construction projects such as Pacific highway upgrade Warrell creek to Nambucca heads,
princes highway upgrade for foxgroung and berry bypass and Aubin grove train station and
Russel road upgrade. These are big construction projects in Australia that can help the
organization to expand the business in new areas. The company is looking for bidding and
contracting for these projects. However, the organization has good knowledge of bidding and
contracting of the projects that can help in acquiring these projects but there are some risks in
the contracting process (Lee, Lam, and Lee, 2015, p. 116-127). The lack of consideration of
these risks can influence the approach and actions of the company. In order to develop the
contract for projects, management will face the following risks:
Design risk:
Contract insurance requirements for design professionals like architects, engineers
should include auto and commercial general liability. The limits of design professionals’
professional liability coverage are particularly important. Because a professional liability
policy typically will cover losses arising on all of a design professional’s projects, not just
your project, it is important that the aggregate limit be sufficiently high. Indeed, owners often
consider requiring excess limits for professional liability coverage or requiring that the
coverage be project specific either through a separate project policy or sub-limits applicable
only to the project (Beazer, and Blake, 2017, p. 1372). For large projects, an owner also may
wish to consider obtaining owners protective professional liability insurance coverage, which
indemnifies the owner directly for losses arising out of the design professional’s professional
negligence that exceeds the limits available under the design professional’s own professional
liability policy.
Legal risk
The legal risks mainly include compliance with the regulations, contracts, legal action
risk, and intellectual property rights. It is very important for the project owners to bring these
aspects into considerations so that could manage the risk effectively. The projects could also
face some legal issues concerning when, how and at what price the project would be
delivered, what project is to be delivered, the consequences in case of any defects,
infringements, delays, and issues of coordination among the parties (Duclos-Gosselin,
Rigaux-Bricmont, and Darmon, 2015, p. 1-13).
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Liability risk
This risk in the contract bounds the project owners with various legal accountabilities
which must not be overlooked by the parties. It mainly involves the breach of contract issues,
alleged confidentiality disclosures, warranty problems, disputes, and litigation while
implementing the project practices specifically. Violation of these aspects could lead the
parties towards severe legal actions or penalties out of the contract.
Business risk
This risk arises due to the poor relationships, instability, declining revenue or profits,
failure to achieve the objectives, loss of goodwill, weak brand integrity and bad public
relations. These factors could highly impact the project as well as the contract. The project
owners must consider effective measures to manage the risk and avoid certain consequences
out of the same.
Contract language
This is also one of the risks to the parties which lie in the contract itself. It has been
found that the construction contracts are often flooded with unclear language which makes
complicated to identify reimbursable project costs (Hefetz, Warner, and Vigoda-Gadot, 2014,
p. 365-386). It is important that the contract is drafted with clear and understandable language
so that the parties could identify the scopes, clauses, and provisions related to the contract.
The concise and clear language of the contract would also overcome the risk to owner related
to the possible issues over project costs.
Government contract risk
It is essential for the parties to meet the government contractual regulations like
environmental safety and security, human rights and health and safety measures within the
project. The parties must ensure that the project does not breach any of the contractual
elements throughout the contract.
Ethics risk
This is another riskier aspect where the parties could not overlook the ethical
considerations while commencing the contract for the project. Ethics are the set rules and
standards to be followed by the parties while initiating any of the acts. The reasons for
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breaching a contract could include the ethical issues or considerations which might be evident
in the durability of the contracts are moral relativism and cultural relativism.
Commercial contract risk
This type of risk mainly impacts the work environment of the project to be initiated. It
mainly involves the entities such as licensors, sellers, prime contractors, buyers,
subcontractors and all other parties concerned to the commercial agreement. It is very
important for the entities to manage the risk so that to survive in the current challenging
business environment.
Operational risk
The operational risk differs on the basis of the contract type and the compensation
model of the construction model. It has been found that the degree of this risk is
proportionate to the project size and also depends upon how the risk management is carried
out (Blocher, 2015, p. 27).
Project risk
Project risks are mainly the risk towards the liabilities, scopes, objectives, costs, time
and the outcome of the project. It has been found that many of the owners or parties tend to
shift their project risks to other contracting parties mostly the contractors through disclaimer
clauses. The clauses mainly attempt to transfer the risk of one party which could be a legal
liability to the other party through contractual terms.
The risk matrix below indicates the most significant risk involved in the contracting
of the construction project:
Table 1: Risk matrix
RISK IMPACT SOLUTION
Legal risk
This type of risk could lead the
parties towards legal actions or
penalties out of the
consequences.
Abiding by the regulations and
legislations involved in the
contract would help in reducing
the risks of legal penalties to the
project.
Contract language The unclear or vague language Ensuring to include clear and
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in the contract could result in
conflicts between the parties
and even impact the
construction project extensively
understandable language in the
contract would eradicate the
risk of any misunderstanding or
conflict among the contractual
parties.
Project risk
The risk highly impacts the
scopes and objectives of the
project as the parties’ transfers
the obligation from one another
under the disclaimers (Mouzas
2016, p. 50-62). It even lead to
delays and cost overruns to the
project
The contracting parties must
ensure to meet their liabilities
and avoid transferring the
clauses to one another
Liability risk
Violation of the elements
included contract could lead the
parties towards severe legal
actions or losses out of the
contract.
It is essential to understand the
liability and avoid any of the
breach out of the contract.
Government contract risk
This risk could also impact the
parties by legal actions or fines
out of the breaches.
The rules and regulations must
be met effectively.
Business risk
This risk impacts the outcome
of the proposed project in terms
of either profits or losses.
It is important to maintain
healthy relationship with the
parties, develop positive brand
value and public relations to
manage the risk specifically
(Hou, J. and Neely, A., 2018, p.
2103-2115).
Part 3: Costing
The costing of biding project and contracting will focus on the requirements and
utilization of the resources that have a significant impact on the estimation of the budget.
There are various resources that involve in the planning and implementation of the bidding
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and contracting plan for the organization to achieve the goals and objectives. The estimation
of the cost of the whole plan will involve the salary of the human resources, documentation,
business unit overheads, travelling, and accommodation (Marsh, 2017, p. 32). The total
working time for the project will be around 5 months from 4th March to 5th August 2019.
The salary of the human resource team will be decided by the HR and administrator team to
identify the estimated budget.
Table 2: Costing
Name Position Total
working
hours
Salary per
hour
Total Salary
Chintan Patel Bid coordinator 1352 $70 $94640
Lucy Wang Bid production
manager
1360 $70 $95200
John Cavenor Production assistant 136 $30 $4080
Design Design engineer 920 $50 $46000
Contract Contract 584 $50 $29200
Construction Construction
engineer
800 $50 $40000
John Robinson Scheduler 704 $50 $28160
Annabel Nguyen Planning engineer 304 $40 $12160
Chen Wang Lead estimator 248 $30 $7440
Janice NG Estimator 400 $30 $12000
Andy Akdogan Estimator 552 $30 $16560
Alan Woden Estimator 160 $30 $4800
Joanne Shedden Clerical support 248 $30 $7440
CEO CEO 1624
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Total $404,720.00
The total cost of human resources for managing the bidding and contracting plan for
new construction projects would be $404,720.00. This is between the estimated costs
proposed by the organization $ 400 billion to $1 billion. The organization will provide
estimated salary and benefits to the project team members that will help to keep them
motivated and engaged in working. The costing of the project does not include other
expenses related to the project (Kaya, 2018, p. 18). The human resources and their travelling
and accommodation costing are considered for developing the budget planning of the
contracting and bidding project.
Part 4: Scheduling
In order to bid and develop the contract for the three construction projects from
Australia, the management team will develop and follow a scheduled plan. Scheduling in the
project management refers to a mechanism to communicate what tasks need to be get done
and what organizational resources will be allocated to complete those tasks within a specific
timeframe (Larson et al., 2014, p. 28). The production manager and coordinator will develop
the plan of scheduling of the activities by considering the standards and objectives of the
bidding and contracting plan. The activities that involve in scheduling of the task will based
on the available human resource, time and scope of the project to complete the tasks
according to desired functions.
Planning of bid preparation
Table 3: Schedule
Task
Name
Durati
on
Sta
rt
Fini
sh
Predeces
sors
Resource
Names Cost
Project
106
days
M
on
04-
03-
19
Mo
n
05-
08-
19 CEO
$404,72
0.00
8