2016/17 D31VR: Value and Risk Management of Hotel Development Project

This report presents a comprehensive analysis of value and risk management within a hotel development project. It begins with a value review, employing a pairs-comparison matrix to define project value based on RIBA PoW Stage 1. The report then delves into value engineering, assessing the impact of budget cuts and increases on project functionality and value, including adjustments to the project value system matrix. Furthermore, it assesses the project's risk profile using Baccarini and Archer's risk factors, culminating in an assessment of management and technical risks. Finally, the report identifies the top five priority risk areas and proposes control measures in a risk register format, providing a strategic framework for effective project management and mitigation of potential challenges within the hotel development venture.

2016/17 academic session
D31VR Value and Risk Management ASSIGNMENT
Value and Risk Management of hotel development project
Part 2 80% - Individual submission: Value and Risk report
VALUE
1 Value review of project brief
Prepare a representation of the client project value system for the hotel project relevant to
RIBA PoW Stage 1 using a pairs-comparison matrix to reflect the priorities and measures of
success for the project.
2 Value Engineering the design
The client has commissioned a review on options for value engineering the design based on
the following scenarios for a change to the budget:
a) A cut in the budget
Prepare a report on the extent to which VE can achieve a cut to the budget in a way
which minimises impact on the quality and integrity of the hotel project. Your report
should include VE proposals which identify element(s) of the design to be targeted
from the hotel cost plan explaining how the specification would be adjusted. Your
report should highlight implications of the cost cut on the project value system
matrix
b) An increase in the budget
The client is considering increasing the budget if they can be convinced that it would
lead to substantial improvement in functionality and value of the project that would
justify the increased investment. Identify the element(s) where the specification and
cost could be enhanced and explain how this would improve project functionality
and value. Your report should also highlight how this would be reflected in the
project value system matrix.
RISK
3 Project risk profile
Prepare a report for the client on the risk profile of the project based on the risk factors
presented in Table 3 of Baccarini, D and Archer, R. The risk ranking of projects: a
methodology, International Journal of Project Management V19(2001) 139-145. (also
covered in week 6 of the course). Making any necessary assumptions, your report should
rate the range of risk factors identified and conclude with an assessment of the level of
management and technical risk associated with the project.

2016/17 academic session
High
Risk
Rating Low
Factor 5 4 3 2 1
Uniqueness of
project
Prototype
incorporating new
techniques
Unusual project Conventional
project
Modifications to an
existing design
One of a series of
repetitions
Complexity of
deliverable
Outcome based
contract (e.g. PFI)
Coordination of
services (e.g FM)
Design and
construct
Supply and
installation
Supply only
Financing Private sector
funding or joint
venture
Capital works not
yet approved or
requested
Capital works in
forward estimates
Capital works
already allocated
Recurrent funds in
current year
Adequacy of funds Very likely to be
inadequate
Likely to be
adequate
Tight budget,
achievable with
control
Adequate with
some contingency
Adequate with
generous
contingency
Project location Remote,
inaccessible
Remote, accessible Regional but distant Regional Metropolitan
Project
surroundings
Activities in
occupied areas
Staging within
occupied areas
Additions to
occupied areas
Well clear of
occupied areas
Greenfield site
Hazardous
materials
Working with
hazardous
materials
Possibly involves
hazardous materials
Hazardous
materials exist, but
not part of works
Unlikely to
encounter
hazardous
materials
No known
hazardous materials
Definition of
project
No project
information
available
Brief project
description
Generic project
brief available
Feasibility study
completed
Detailed project
brief available
Site availability Site not identified Several sites
identified
Site identified but
not yet purchased
New site purchased Existing site
Project
justification
Need has not been
justified
Justification is
questionable
Needs justified but
may change
through project
Need justified
based on historical
information
Need fully justified
through recognized
process
Project approvals Unidentified
approvals required
Potential approval
delays have been
identified
Required approvals
are known and
documented
Few approvals
required or most
obtained
No approval
required or already
obtained
Clients experience Inexperienced
multiple clients
Mixed experience
amongst clients
Inexperienced
single client
Experienced
multiple clients
Experienced single
client
Client
relationships
Multiple reluctant
clients or
relationship not
established
Mixed relationship
with clients
Reluctant client or
relationship not
established
Good working
relationship
(multiple clients)
Good working
relationship
Assessment of
contractors
Unknown
contractors
Limited number of
unproven
contractors
Limited number of
competent
contractors
Adequate number
of competent
contractors
Abundance of
competent
contractors
Procurement
method
No tendering and
involving
sponsorship
Negotiated tender Tendered outside
agency
Public open tender Selected tenderers
Consultant
selection
Selection without
approved
processes
Design competition Full EOI and RFP Period panel
consultant
Consultant selected
using approved
process
Stakeholder
interest
High level of
political, community
or media sensitivity
High profile client or
project
Stakeholder groups
involved
Project may attract
stakeholder or
media interest
Project unlikely to
attract stakeholder
or media interest
4 Risk treatment
The final section of your report should identify the top 5 priority risk areas for the project
and propose control measures to deal with them. You can present this section in the form of
a risk register.

2016/17 academic session
Indicative word count: 5500 - 6000