Contract and Procurement Management: CQU Melbourne Case Study, 2019

This case study examines the procurement strategies for Central Queensland University's (CQU) Melbourne campus expansion project. The assignment analyzes various procurement routes, including lump sum contracts, construction management, design and build, and design-build-finance-operate, assessing their advantages, disadvantages, and associated risks. The student recommends the lump sum contract route, providing a detailed justification based on its suitability for the project's objectives, particularly for developing a new campus. The case study includes a project timeline, budget breakdown, and a methodology section, providing a comprehensive overview of the procurement process. The analysis focuses on the project elements such as lecture halls, laboratories, and a motel, essential for accommodating the increasing student population and providing a comprehensive campus experience. The document provides a comprehensive overview of the project, the different procurement methods, and the student's recommendation for the best approach to the project.

Running head: PPMP20011 Contract and Procurement management
PPMP20011 CONTRACT AND PROCUREMENT MANAGEMENT
TERM1-2019 ASSESSMENT2: CASE STUDY
Name of the Student
Name of the University
Author Note

1Term1-2019 Assessment2: Case Study
Table of Contents
Procurement route suggested by PPMP20011 towards Central Queensland..................................2
Time and cost associated with the project.......................................................................................3
Advantages of procurement routes..................................................................................................8
Risks associated with the routes....................................................................................................10
Methodology behind the procurement routes................................................................................11
Reason behind choosing the Lump sum contract route.................................................................12
Recommendation for the CQU......................................................................................................12
Bibliography..................................................................................................................................14

2Term1-2019 Assessment2: Case Study
Procurement route suggested by PPMP20011 towards Central Queensland
Procurement is basically referred to the term that is used for describing the activities that
is taking place with the help of client for making better construction within the building or the
organization. Central Queensland University has developed a plan for the purpose of meeting the
increment in Melbourne. The university has purchase new land for the purpose of constructing
own campus so that they can meet the demand of increasing students. The construction includes
developing a main lecture’s building for the purpose of accommodating 300 students,
laboratories for computer and engineering department, conference hall with all facilities for 250
people and will construct a motel where accommodation will be provided towards the staffs and
other visitors coming from other campuses. As one of the best consultancy management it
becomes essential to outline the procurement strategies that will help in successful development
of the campus. The main reason behind having a proper procurement plan is to focus on the
project finishing time, determining the cost that will get generated with the project, lastly
performance of the design after implemented.
There are four types of procurement options offered to different organizations are
construction management, design and build, design build and operate and lump sum contract.
The lump sum contract is one of the traditional ways of procuring construction. This includes
working on a fixed lump sum price that is agreed by the workers before starting the work. On the
other hand construction management is one of the procurement routes that mainly work by
appointing different trade contractors for the purpose of constructing. The trade contractors are
mainly contracted to their clients with the help of construction manager. Design and build route
includes appointing a main contractor for the purpose of designing and constructing the work.

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This can follow either a single or two stage tender processes. The design build finance and
operate process includes a single contractor for designing and building up the project that helps
in performing the operation for a period of time.
Time and cost associated with the project
Task Name Duration
Construction and procrument 132 days
Initiation 20 days
Developing organizational structure
and management
5 days
Hiring subcontractor 6 days
Risk management plan 6 days
Contingency planning 3 days
Considering requirements for legal 40 days
Planning 17 days
Purchase of new land 2 days
floor planning 5 days
Contract with interior designer 6 days

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Estimating budget for interior 4 days
Execution 23 days
Designing furniture and layout of the
rooms
2 days
Labrotary staffing 6 days
selecting appropriate furnitures 5 days
Defining additional equipments for
the project
4 days
Monitoring development 10 days
Other project consideration 58 days
Building structuring (steel and
basement)
2 days
Development of main buidling 2 days
preparing Motel 5 days
campus for 200 6 days
Lab elements 5 days
Development of marketing plan 6 days

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Project implementation 5 days
Payment system implementation 7 days
Recommendations for work force plan 8 days
Implementing recruitment project plan 8 days
Implementation of policies and
procedures
6 days
Closure 14 days
Stakeholder signoff 5 days
Final project documentation 4 days
Post maintenance 5 days
Budget
Resource Names Cost
$85,720.00
$5,000.00
contractor $800.00
contractor $1,920.00

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contractor,sub contractor $1,680.00
labour,contractor $600.00
contractor,sub contractor $69,920.00
$54,120.00
Purchase of new land [1] $50,000.00
labour, $1,000.00
contractor,sub contractor $1,680.00
contractor $1,440.00
$4,600.00
sub contractor $240.00
$960.00
labour,contractor $1,000.00
$800.00
$1,600.00
$8,560.00

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labour,sub contractor $320.00
$0.00
$1,000.00
contractor $960.00
labour,sub contractor $800.00
$960.00
sub contractor $600.00
contractor $1,120.00
labour $320.00
$1,280.00
$1,200.00
$2,240.00
$1,000.00
contractor $640.00
sub contractor $600.00

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Advantages of procurement routes
Procurement method is basically used for the purpose of deter mining the activities that
are undertaken by client in order to bring proper construction within the building. In the given
case study of Central Queensland University it is of served that there is a high need to expand the
campus in Melbourne so that it becomes easy to accommodate huge number of students at a
time. Thus the project needs to be analysed based on the procurement methodologies.
Advantages of lump sum route:
The main advantage of using lump sum contract is that it can help in reducing client risk
by fixing the price. This can provide a huge amount of profit margin towards the contractor. The
chances of changing orders get minimized in this type of procurement route. Lump sum
payments are made in a predictable installment so that they can simplify the financing method.
This certainty of the project increase is immensely with this method.
Disadvantages
The disadvantage is that are identified within this route includes disputes can arise in case
of designing changes. It is observed that tender preparation turns to be costliest activity to
perform. In order to maintain proper documentation regarding the construction project it is
important to invest huge amount of time
Advantages of construction management:
The major advantage of construction management is that it offers better predictability
towards the activities that are taking place between the construction projects. This also improves
the relationship between the contractor and the owner that helps in maintaining a proper

9Term1-2019 Assessment2: Case Study
flexibility throughout the project. In addition to this the quality and cost associated with the
project gets improved with the help of this route.
Disadvantages
The main disadvantaged that is achieved with construction management is that the cost
increases with the project development. There are potential cost increases with the development
of the project in future. In addition to this it becomes difficult to address the risks at early stages.
Advantages of design and build
In design and build approach communication becomes instantaneous and that helps in
scheduling the project. It helps in conducting business without any boundaries. In addition to
these it promotes building teamwork and faster delivery of the project. Is it advantage of these
route is that it offered best transparent communication with the client.
Disadvantages
The major disadvantage is that are associated with this route includes there is less control
over the design and hence it can lead to arise in several risks, there are high need for earlier
requirement definition so that the project can be completed within the time.
Advantages of design build and finance operate
This route insures that the project is delivered within the given delivery time. The price
associated with the development of the project remains constant. The payment is made to words
the contractors only once the service are provided towards the client. This brings new ideas from
outside public sectors for the purpose of developing the project.

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Disadvantages
Risk arises with lengthy procurement process. The procurement process becomes
expensive and sometimes it is been observed that the outputs may not be affordable.
Risks associated with the routes
The major risk that comes along with the procurement methods is that once the control is
lost over the project it becomes difficult to manage the activities. This really becomes difficult to
make a decision at critical situations. In addition to this the operational decision also gets
complicated and this leads to impacting the performance of the contract us. As soon as the
project gets difficult manage the reputation of the organisation also comes in danger. In addition
to these it has been observed that due to different stakeholder’s conflicts regarding interest tends
to occur among themselves. This leads to impacting the development process of the project. In
addition to this it has observed that there is a huge risk that comes along with each procurement
method is related to the cost. The main risk that comes along with the build and finance operate
route is with lengthy procurement process. It becomes expensive to handle and sometimes the
resource allocation also becomes difficult. The risk that is associated with the design and build
route is that there is less control over the design. The risk that arises with construction
management is that the cost associated with the project tends to increases with the project
development. Lastly the risk that arises with the use of lump sum route is that it becomes
difficult to handle the cost behind preparing the tender.

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Methodology behind the procurement routes
Procurement routes are basically based upon appointing a consultant who will be
responsible for preparing the media needs for the project. This entirely focuses on preparing a
proper contract for tender and interviews the need of the customers for developing a better
project. In that case study of Central Queensland University the meet the needs of the university
are main lectures building that will be able to accommodate 300 students at a time. The campus
will also include Laboratories for computer and engineering department. The campus will also
include a motel where it can accommodate stops and visitors that are coming from different
campuses of the University. Lastly the main requirement of the project is a conference hall that
will be able to accommodate 250 people at a time. The design and build procurement method
involves better flexibility and design towards the project and also insures that construction is
being performed by following the requirements of the client. Thus the above described four
routes possess a great flexibility and offers better result towards the clients. This also focuses on
developing the project based on the schedule made by the contractor. In addition to this it can be
stated that the construction management offers a better way of managing the activities within the
construction site and also ensures that proper contractors are being assigned. The four routes that
are described within the report possess great potential to make a project successful and are
considered as the best procurement routes.
Lump sum route is considered to be one of the low financial risks from the perspective of
management contract. This is the most commonly used standard for managing the project as it
offers better flexibility toward the organization and also insures that the project is being carried
out without any defect. However it is observed that this methodology offers the minimum risk
towards the contractors and a huge amount of risk remains towards the clients. The main reason

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behind choosing this methodology is that it offers better flexibility and support towards the
project based on the schedule.
Reason behind choosing the Lump sum contract route
The main reason behind choosing this method is that it is suitable for developing a new
site or a building. In the given case study Central Queensland University aims at developing a
new campus for Melbourne students. Thus it can be stated that with the help of this method it
will become easy to manage the tasks. The lump sum contract is suitable for small and large-
scale projects. The work gets started only when the workers agree on the terms and conditions
set by the clients. This mainly performs its work by deciding a lump sum amount of price for the
workers before starting the work. Thus this will be the best method for performing the
construction within the Melbourne. In addition to this the main reason behind choosing this
method is that it does not only carries the construction work but also manages the project on the
behalf of clients and ensures that the project is being executed based on the fixed price. It also
focuses on preparing the time, schedule, budget and the stakeholders that are going to be
important for the development of the project. Hence it can be stated that the lump sum contract
method is the best procurement methodology for the given case study.
Recommendation for the CQU
The main purpose of Central Queensland University is to develop a new campus for the
students of Melbourne. Hence it becomes essential to analyze the needs of students associated
with that campus. However while developing the project it becomes essential to ensure that the
organization has proper control over the stakeholders so that the project can be completed within

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the time with fewer impacts. In addition to this it becomes an essential to focus on developing a
proper time based on which the project will be developed. In addition to this it can be
recommended toward the university that there is a high need to have a proper supervisor who
will be able to monitor all the activities that are taking place within the project. In addition to this
it is important to follow the budget set by the consultancy so that the project can be completed
smoothly within the given cost. It is expected that with the implementation of lump sum contract
project it will become easy to manage the tasks at the time of construction.

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