Construction Site Operations: Project Management and Analysis

This assignment solution provides a comprehensive analysis of construction site operations, addressing key aspects of project management. It begins with a Communication Management Plan, outlining communication protocols between the client, consultant, and contractor. The solution then delves into project risk management, presenting a risk matrix that identifies potential risks, their probabilities, consequences, and mitigation strategies. The assignment further explores the application of AS4000, specifically focusing on progress payments, certificate issuance, and claim communication. It also examines the Security of Payments Act and addresses ambiguities and errors, including variations, object of antiquity, and material changes. The solution includes an Earned Value Analysis, calculating planned value, actual cost, earned value, and various performance indices, as well as different methods for estimating the cost of completion. Finally, the assignment includes a draft monthly report and an estimate of the Value of Work Done (VOWD) and accruals, providing a detailed breakdown of the project's financial and operational status.

CONSTRUCTION SITE OPERATIONS
ANSWER – 1:
PROJECT RISK AND COMMUNICATION
(a) Communication Management Plan
Three parties, the Client, the Consultant and the Contractor are involved in a project. A
Communication Management Plan is the communication platform between these three
and is used for communicating, sharing and implementing the specifically required
information. The format of the communication channel may consist of meetings,
intranet calls or emails depending on the information to be shared and people involved.
The table below is the communication plan which shall be followed in this project,
assert Barnes & Doidge, (2010).
Communication Management Plan
Communication Format Objective Frequency Conveyo
r Distributed To
Team Briefing Conference
calling on
Restricted
Intranet
 Reviewing aims,
scope and
objectives of the
project
 Launching the
project
At the
beginning
of the
project
Project
Manager
 Team managing
the site
 Client team
 Stakeholders
Meetings of the
Project Team
Conference
calling on
Restricted
Intranet
 Assigning Weekly
Duties
 Checking Project
status
 Discussing &
Solving problems
First
working
Day of the
Week
Project
Manager
Team managing the
site
Meetings of the
Technical Team
Conference
calling on
Restricted
Intranet
 Discussing &
Planning changes
 Clearing Doubts, if
any
As per
Need
Technical
Manager
 Team managing
the site
 Client team
 Stakeholders
Meetings for
Project Status
Conference
calling on
Restricted
Intranet
By e-mail
 Reviewing progress
of the project
First Week
of the
month
Project
Manager
 Team managing
the site
 Client team
 Stakeholders
Report
Submission
By e-mail Monthly Report First Week
of the
month
Project
Manager
 Team managing
the site
 Client team
 Stakeholders

(b)Project Risk Matrix
Any Project can be adversely affected by the risk factors, which vary from project to
project. The areas most affected are completion time, project cost, construction quality
and worker’s safety. AS/NZS ISO 31000:2009 specifies guidelines to be followed for
risk management in a project. Mitigation of the risks in a project can be done by
identifying the risk, followed by analysis and finally controlling the risk through an
affective methodology, as per Gruis & Nieboer (ed), (2013).
Project Risk Matrix
Risk Factor Probability Consequences Mitigation
Responsibilities of Client
and the Stakeholder: Lack
of Interest
Low Moderate Through effective
communication skills
between stakeholders
and client
Budget: Possibilities of
contingencies
Moderate High Adequate provision for
contingencies in the
budget combined with
strict monitoring of
expenditure
Schedule: Project overrun
due to contingencies
Low High Allowing extra time for
contingencies in the
project schedule
Labour: skilled, semi-skilled
and non-skilled workers
availability
Low High By providing adequate
remuneration as per
stipulated standards
Quality: Unforeseen errors
in design or practical
implementation
Low High Regular monitoring of
quality control through
Reports and sharing of
information
Weather Conditions:
Unsuitable or unpredictable
situations
Low High By continuous
monitoring of weather
updates and planning
according to it
Safety: Accidents or health
issues concerning workers
Moderate High Strictly implementing
safety rules and
insurance standards

ANSWER – 2:
APPLICATION OF AS 4000
(a) Progress Payments
Clause 37.1 of AS4000 is the relevant clause for monitoring of Progress Payments. The
percentage of work completed has to be notified in each Progress Payment and the
Superintendent is responsible for submitting the details which should be as stated in the
Terms and Conditions of the Contract, says Emerald Gems (ed), (2015).
Clause 37.2 of AS4000 is the relevant clause for issuing of relevant certificates. The
Superintendent is responsible for issuing certificates to this effect to the contractor and
the City of Whittlesea within 14 days of receiving the progress claim, as per Kaganova
& McKellar (ed), (2006).
Clause 37.4 of AS4000 is the relevant clause for issuing Final Payment Claim and
Certificate by the superintendent within 28 days of ending of defect liability period. A
written ‘final payment claim’ has to be endorsed by the contractor to the superintendent.
Within 42 days of ending of the defect liability period, the Superintendent is required to
issue a final certificate to the contractor and City of Whittlesea mentioning the amount
due and payable as per the terms of the contract, say Mathew (ed) et al, (2012).
Clause 41.1 of AS4000 is the relevant clause for issuing Communication of Claims.
Once a party endorses any claims in connection with the contract, it has to give in
writing a prescribed notice to the superintendent and other concerned parties, says
Parker, (2012).
Security of Payments Act
This Act applies when a payment claim is to be made by the contractor and they must
know their rights for getting the payment for the work completed on the construction
project, details Marsden, (2011).
This Act states and I quote “The Building and Construction Industry Security of
Payment Act, 2002’ act assures that any individual who completes construction work or
supplies related products under a construction work contract gets paid. It is useful to

give a quick as well as economical process to recover payments under the construction
contract, without the requirement for legal advisors such as lawyers (Victorian
Building Authority, 2017).” Unquote.
(b)Ambiguities and Errors - Certificates
Clause 8 of AS4000 is the relevant clause for reporting Ambiguities and Errors which
often occur in a construction project. Our company faced the following issues and dealt
with them under relevant clauses of AS4000 as stated below, as per Spoehr (ed), (2009).
Clause 8.1 – Discrepancies
Under this clause our company shall submit a written notice to the Superintendent with
respect to the ambiguities found in the documents presented to us for execution of work.
Clause 8.2 refers to documents supplied by the City of Whittlesea and Clause 8.3 refers
to documents supplied by the Contractor. As per the terms of the contract, our company
has the responsibility to send the documents to the superintendent for rectification of
any ambiguities and errors found in the documents received, asserts Haidar, (2012).
(c) Claims for Variations
Variations notified to us were as noted below –
 In the third month, the client changed the material for seating in the pavilion. We
had already ordered for the material specified in the original specifications and
drawings. The additional cost for this change will be $100,000. We have quoted
this as per the relevant clauses of AS4000 as below –
 Clause 36.1 – Direction for Variations
We shall not change the WUC unless we are directed to do so in writing. The
superintendent can issue directions under this clause prior to the date of completion.
 Clause 36.2 - Proposed Variations
Under this clause we should be issued a notice of the proposed variation by the
Superintendent. Our company shall then inform the Superintendent when and how
we can bring about the proposed variation.
 Clause 36.4 – Pricing
We shall, under this clause, quote the price of the variation to the Superintendent at
the earliest, as per Gruis & Nieboer (ed), (2013).
(d)Object of Antiquity

Referring to Clause 24.3 of AS4000 which defines ‘minerals, fossil and relics’, we shall
take all precautions for safety of any antiquity object discovered and loss or damage to
it during removal from the site after giving a written notice to the Superintendent. It is
for the superintendent to assess our additional cost and add it to the contract amount.
(e) Material Changes
The relevant clause for this is 36.3 of AS4000, which deals with ‘variations for
convenience of contractor’. We have requested for variation of the bolts to the
Superintendent, from galvanized iron bolts to use of stainless steel bolts. The
Superintendent is to grant us permission for this variation with extra cost, says Haidar,
(2012).
ANSWER – 3:
EARNED VALUE ANALYSIS
(a) Earned Value Analysis
1) Planned Value (PV) = A$50,000 + A$100,000 + A$120,000 + A$120,000 +
A$120,000 + A$130,000 = A$640,000.
2) Actual Cost (AC) = A$60,000+ A$150,000 + A$250,000 + A$120,000 +
A$130,000 + A$130,000 = A$840,000.
3) Earned Value (EV) = (Total planned value) x (Percentage complete of project)
= A$1,290,000 x 40% = A$516,000.
4) Cost Variance (CV) = (Earned value) - (Actual cost) = A$516,000 – A$840,000
= (-) A$324,000.
(The Cost Variance is negative, because it is over-planned cost)
5) Schedule Variance (SV) = (Earned value) - (Planned value) = A$516,000 –
A$640,000 = (-) A$124,000.
(Schedule Variance is negative and this means the project is behind schedule)
6) Cost Performance Index (CPI) = (Earned value) / (Actual cost)
= A$516,000 / A$840,000 = 0.6143
(The result is less than 1, showing that costing is over planned)
7) Schedule Performance Index (SPI) = (Earned value) / (Planned value)
= A$516,000 / A$640,000 = 0.8063
(The result is less than 1, showing that the project is behind schedule)

8) Budget at Completion (BAC)
= The sum of all planned value for entire project duration of 12 months
= A$50,000 + A$100,000 + A$120,000 + A$120,000 + A$120,000 +
A$130,000 + A$130,000 + A$130,000 + A$120,000 + A$120,000 + A$100,000
+ A$50,000
= A$1,290,000.
Estimate Cost of Completion (EAC)
(I) When CPI is same
If the CPI is to remain the same for the remainder duration of the project, then
EAC = (Budget at completion) / (Cost performance index)
= A$1,290,000/0.6143 = A$2,099,951.20
In this method, the project will incur an extra cost of A$2,099,951.20 – A$1,290,000.00
=A$809,951.20.
(II) At the Planned Rate
In case the future work is to be completed at the planned rate, then
EAC = (Actual cost) + (Budget at completion) - (Earned value)
= A$840,000 + A$1,290,000 – A$516,000 = A$1,614,000.
In this method, the project will incur an extra cost of A$1,614,000 – A$1,290,000 =
A$324,000.
(III) When CPI and SPI both Influence
If both CPI and SPI influence the balance work, then
EAC = (Actual cost) + {[(Budget at completion) - (Earned value)] / [(Cost performance
index) x (schedule performance index)]}
= A$840,000 + {(A$1,290,000 – A$516,000) / (0.6143 x 0.8063)} = A$2,402,689.28.
In this method, the project will incur an extra cost of A$2,402,689.28-A$1,290,000
= A$1,112,689.28.
In summary when all the above methods are compared, it is noticed that method-III
shall add the maximum extra cost to the project, assert Kaganova & McKellar (ed),
(2006).

ANSWER – 4
REPORT
(a) Draft Monthly Report
In the first month there were many errors in the plans given by the client which were
notified to the Superintendent. To complete the work, significant redesigning was
required and this duly notified under AS4000 for submission of claims for dealing with
the relevant issues. An additional cost of A$10,000 was added to the contract sum.
In the second month, an object of antiquity was found while working in the tennis
pavilion. It was safely removed and handed over to the client as stated under clause 24.3
of AS4000. This additional work, incurring an additional cost of A$10,000 was notified
to the client to cover the cost of additional 14 days spent for this additional work.
In the third month, a decision by the client was taken to change the material for seating
in the pavilion. The Superintendent, under the guidelines of clause 36 of AS4000, gave
directions for this changes. We incurred an additional cost of A$10,000 which was
added to the contract sum, assert Emerald Gems (ed), (2015).
There were no other incidents of change/alterations during the fourth, fifth and sixth
month. On the basis of the previous weather record of the site area, we had allocated an
additional 10% of time. Since the weather was ideal throughout these six months of
construction activity, no claim was filed by us for Extension of Time (EOT) on account
of adverse weather conditions, as per Barnes & Doidge, (2010).
ANSWER – 5:
ESTIMATING VOWD AND ACCRUALS
(a) Estimate the VOWD
(1) 40% of pipes have been delivered at the end of 4th month of the contract and are
accepted by the Superintendent as complying with the given specifications.

Quantity delivered: 3,000 nos. at US$300 each for total amount of US$900,000.
Value of Work done (VOWD) = 40% x 3,000nos. x US$300
= US$360,000.
(2) 20% of the pipes have been laid by the contractor.
Quantity: 3,000 nos. at Rate of A$120.
Value of Work done (VOWD) = 20% x 3,000nos. x A$120
= A$72,000.
(3) 50% of the 20% laid pipes have been tested.
Quantity: 3,000nos. at Rate of A$30.
Value of Work done (VOWD) = 10% x 3000nos. x A$30
= A$9,000.
(4) Exchange rate to be considered for the paid invoice amount at the end of 3rd
month is 1A$ = 0.75 US$.
Paid invoice amount (30% of total amount of US$900,000) at the end of 3rd
month = US$270,000 = US$270,000 x 1/ 0.75
= A$360,000.
Exchange rate to be considered for the paid invoice amount at the end of 4th
month is 1A$ = 0.80 US$.
Paid invoice amount (10% of total amount of US$900,000) at the end of 4th
month = US90,000 = US$90,000 x 1/ 0.80
= A$112,500.
(5) Estimation of VOWD at end of 4th month in A$
= (Cost of 20% of pipes laid by the contractor) + (Cost of 50% of the 20% pipes
tested) + (Paid invoice amount at end of 3rd month) + (Paid invoice amount at
end of 4th month)
= A$72,000 + A$9,000 + A$360,000 + A$112,500
= A$553,500.
Accrual (accounting) in A$ at the end of 4th month of the pipeline project is –
Value of Work Done (VOWD) only in the 4th month in A$

= (10% of paid invoice from total amount of US$900,000 at exchange rate of 1A$ =
0.80US$) + (Cost of 25% of 20% of the pipes laid by the contractor) + (Cost of 50% of
the 20% pipes tested)
= (10% x 3000nos. x US$300/ 0.80) + (5% x 3000nos. x A$120) + (10% x 3000nos. x
A$30)
= A$112,500 + A$18000 + A$9000
= A$139,500
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Press, Kent Town.