Report: Procurement and Risk Management for Newcastle Railway Station

This report provides a comprehensive analysis of the procurement and risk management strategies for the Newcastle railway station project. It begins by outlining the project's objectives, including addressing pollution and improving transportation in Newcastle, Australia. The report then explores v...Read More

Procurement and Risk
Management Concept

Table of Contents
The need for Launching new railway station at Newcastle.............................................................1
Project Objectives...................................................................................................................1
Project Delivery methods.......................................................................................................1
Selection of financial contract................................................................................................4
Best procurement method................................................................................................................6
RISK MANAGEMENT PLAN.......................................................................................................7
Risk register............................................................................................................................7
Risk quadrant..........................................................................................................................8
Risk mitigation plan...............................................................................................................9
SUMMARY ..................................................................................................................................10
REFERENCES..............................................................................................................................11

The need for Launching new railway station at Newcastle
Newcastle is a city which is situated in Australian state of New South Wales. This is a
beautiful city who is surrounded by plentiful beaches which are linked by Bathers Way. This
region can be explored by utilising any of easily public transport such as cars, motor bikes,
buses, metros or any other form of vehicles (Marija and et. al., 2015). This beautiful city is
visited by many of the tourists which is increasing the crowd in this small place. People here
travel by using various transports such as cars and bikes which are causing pollution to this
place. This pollution is causing harm to environment of this place which is having negative
impact upon its beauty. For this purpose, government has thought about building a new railway
station at Newcastle which will be inter connected within the city.
Project Objectives
This project has been developed for addressing the existing issue which is pollution in
Newcastle City due to increase in crowd and it also extended the capacity of railways network.
The basic objective of this project report are-
 To control the pollution of the city and to extend the transportation facilities all over the
city.
 To be able to bring improvement in transportation experience for the customers and to
provide transportation system which is able to provide satisfaction for long-term
demand .
 To bring improvement in overall cost effectiveness and efficiency of overall public
transportation system and to develop a solution for risks.
Budget
The budget which is required for accomplishing this task in an appropriate manner is $2.2
billion.
Project Delivery methods
Because of certain financial, time and organisational constraints, there are different
methods of project delivery which can be evolved for fitting in the needs of owner and a specific
project (Obwegeser and Müller, 2018). For finding out the bets method for project delivery, there
are certain factors which are considered and their impacts upon functioning of a project.
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This project has been one of the most important project which will help in reducing the
problem of population in Newcastle. It will also help in providing transportation facility to
people which will aims at people not bringing their own vehicles in this city. This project aims to
complete in the year 2023 (Rendon and Snider, 2019). It will need participation of various
organisations which will contribute to this project. These delivery methods are elaborated as
follows-
Time( Speed of delivery) (40%)- The timeline of the project has been set up for the date
of 2023. However, due to project complexities, there are certain factors which can make changes
in the speed of a project. On contrary, this project includes various activities of several
constructors and enterprises. Therefore, for ensuring the speed of a project is an important task to
do.
Communication (12%)- This is a project which is going to be a long-term one and it
includes many enterprises participation. For ensuring effective communication among the
contractors, stakeholders and vendors, other stakeholders requires a lot of efforts of team
members and the project manager. In context of delivery of a project, an adequate
communication can develop a specified working manner.
Establishment of project timeline (12%)- Setting up a project timeline will help in
deciding duration of each and every task. The more research is done, the more appropriate
timeline will be set.
Budget challenges (21%)- This is one of the most important aspect of a project and the
cost that is required is $2.2 billion.
The factors which affects the certain delivery methods are elaborated in following table-
Methods Design Build Design Bid Build CM@risk
Speed of delivery Able to do fast
tracking.
Because of nature of
sequent, this project
delivery method can
take long time.
The overall timing of a
project can reduced by
previously buying
goods and by bidding
packages.
Score( out of 10) 8 6 5
Communication In this method, more There can be In this, the
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contractors are
involved in the whole
procedure and better
communication and
relations can be
maintained.
occurrence of conflicts
between design team
and contractor.
communication can be
formed between
constructor and team
while involving in
design.
Score( out of 10) 9 5 6
Project timeline
establishment
Easy in creating a
timeline
The timeline of a
project is followed by
traditional
development of
project.
Timeline can be
changes because of
this method's
characteristics.
Score( out of 10) 9 6 7
Budget and other
challenges related to
finances.
On designing of a
project, designer and
contractor serves
together the cost
owner, schedule and
its scope and in this
method, cost can be
identified at early
stages which helps in
setting up the budget
in more appropriate
manner.
The owner is involved
in designing and has
control over it. In this
method, there is
requirement of more
control over costs.
Constructor can
provide certain
suggestions for saving
costs and
constructibility.
Score( out of 10) 7 5 5
(Table1: Delivery methods)
Criteria Weight Delivery Method
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DB DBB CM@risk
Score Score Weight Score
Speed of
delivery
40.00% 8 320 6 240 5 200
Commu
nication
12.00% 9 108 5 60 6 72
Project
timeline
establish
ment
12.00% 9 108 6 72 7 84
Budget
and
other
challeng
es
related
to
finances.
21.00% 7 147 5 105 5 105
Total 85 683(1) 477(2) 461(3)
(Table 2: Delivery Method)
Conclusion: By considering all the factors that can affect the overall quality of delivery
method, it has been analysed that the most appropriate method of delivery for formulating this
project is Design Build. The reason is that it can create effective communication between design
team and contractor (Thai, 2017). Also, in this owner has a control over its design and it also
helps in reducing the time of a owner and the risks related to this project.
Selection of financial contract
In this project, selecting any one type of contract is not going to work in each situation
and stage, therefore project must perform under different range of agreements such as Fixed
price, design building and cost-plus contract. There are various financial contract which are
determined as follows and certain factors which can affect their accuracy-
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Financial contract
type
Firm Fixed Price
Contract
Cost plus contract Time and Material
Risk owner (30%) Seller will be able to
finish the job within
the time limits and
agreements of budget.
Seller reimburse
completed work.
The risk is share
between both buyer
and seller.
Score 7 to 230 5 to 140 5 to 170
Speed of deliver
(30%)
Setting up strategy of
delivering project with
specific given time.
In this, speed of
delivery will be
dependent upon the
way in which project
timeline is defined.
Already setted up time
Score 6 to 200 4 to 140 5 to 170
Cost controlling The cost is settled and
estimated, this
financial contract
focus more upon
controlling of cost.
In this, fee can not
estimated accurately.
In this also, the fee is
not able to estimate in
a proper way.
Score 6 to 60 5 to 50 5 to 50
Method of delivery Design building Design building Design building
Score 6 to 60 5 to 50 4 to 40
Total 650(1) 440(3) 510(2)
(Table 3: Various Financial contract)
Conclusion- As per the above table of financial contract types, the most suitable type of
financial contract in this is Fixed Price contract which will help the government in controlling
the cost of contract easily since price is estimated advance. The costs in such case belongs to the
contractor and the government is not required to pay any kind of additional cost which can occur
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during the project (Van Staveren, 2018). With the detail of project, the project manager and
contractor can able to communicate easily that is based upon unified information.
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Best procurement method
While launching railway station at New Castle, there is requirement of proper planning
and taking actions with change in operations, then it is essential that contractors have to evaluate
best ways through which they can get better outcome. In order to select best method of project
procurement time, quality of work, flexibility and number of workers are considered because
with these prospects, it will be easy for mangers to complete the project and achieve assigned
target i.e. launching railway station. With determining and evaluating procurement, it is easy to
understand and evaluate changes properly through which operations can be performed for
achieving aim and objectives (Edler and et. al., 2015). Procurement is important because there is
change in activities because of some factors and it is not easy to understand and estimate it.
Competitive bidding- this is the contract in which there is comparison with other agents
and contractors and best among them is considered. While comparison as well, time, quality of
work, cost, etc. are considered, so final outcome of the project i.e. launching the railway station
is successful.
Negotiated contract- This is the procurement in which negotiation is done with
contractors but there will assurance about quality and time of completing the project. There is
less flexible working conditions because of negotiation. This contract is considered for short time
period and this does not affects changes properly.
Best value- At last, in this procurement, the main focus is on best value which can be
gained under this . This project is best because in this resources are also properly planned and
activities are planned for getting better outcome. This make project through which they can get
positive outcome over it. This makes proper change in operations and makes changes in
operations with getting positive outcomes (Garlick, 2017).
For completing and conducting project for launching railway station at New Castle “Best
value procurement” is best and specific because there is proper change in operations and it is
easy for contractor to understand best deal which can be provided. In this procurement, the main
focus is on quality and best outcome, so there is full flexibility and it is easy to change policies if
there is requirement of modification.
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RISK MANAGEMENT PLAN
While conducting and planning an project, there will probability that it might gets
affected negatively and get positive outcome. Hence there is requirement of evaluation and
manage changes in proper and effective manner. So this is the document which guides to
minimise the risk and get positive outcome of it. For launching new railway station at Newcastle
project has some risk and this plan provides specific criteria to overcome and avoid them
(Handfield, Primo and Oliveira, 2015).
Risk register
Risk Probabi
lity (0-
10)
Impact EMV Rating
(0- 10)
Who is
responsible
for risk
Mitigation strategy
Non
availability of
raw material
5 This
affects
regular
activities
of project
and fault
might
arise.
7 7 Contractors There must be
contract with
organisation from
whom raw material
can be collected.
High labour
rate
7 Labour
might not
available
easily and
lead to
shortage of
work force
8 8 Contractors There must be full
time contract with
labour union, so
there will ease in
launching railway
station.
Inappropriate
contract
3 Cost and
timer for
5 5 Concern party
and
There must be
proper planning and
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method completing
the project
might arise
contractors pros and cons of
different contract
methods has to be
evaluated.
Improper
communicatio
n technique
6 Might
result in
mis use of
resources
or
duplication
of
activities.
6 6 Team leader There must be use
of business phones
among contractors
and team leaders.
Time to time
meeting has to be
planned.
(Table 4: Risk Register)
With the help of EMV, it is easy for researcher to undersatnd and determine the expected
money value which might get back because of it. This is the major challenge and isue which they
are getting with investing similar amount because of it. This makes ease in conducting and
completing project on time and make operations to get proper revert in monetary terms.
Risk quadrant
This is the quadrant which identifies the risk and value associated with it, hence it will be
easy for researcher to understand which risk has to be cured.
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(Source: 7-2.2 Quadrant Analysis Tool — Value and Risk Assessment, 2019)
There are four factors in this risk quadrant which are strategic, bottleneck, leverage and
routine. In strategic complex and tough projects are considered and they have high profits and
revenues. In bottleneck risk of project is high but value is not high, but project manager have to
do it carefully. Leverage component have high value and low risk (7-2.2 Quadrant Analysis Tool
— Value and Risk Assessment, 2019). This type of contracts does not give high returns to
managers. While routine contracts have low risk and low value. Launching railway station
covers under leverage quadrant.
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Illustration 1: Quadrant Analysis Tool — Value and Risk Assessment

Risk mitigation plan
There are many risk which are associated with conducting project and it is important to
understand and evaluate them. There is requirement of understanding and evaluating the changes
arise because of external market factors, then it can be reduced with it. Risk register is important
and crucial because this affects project outcome as it will not complete the activities within
specified time and cost. There are five steps through which risk mitigation plan can be prepared
which are discussed as under-
Identification of risk- Initially, there is requirement of understanding and determining
risks which are associated with conducting and completing the study. With change in activities,
there is change in operations as well (Hopkinson, 2017).
Risk assessment- After evaluating and analysing risk, its assessment will be done. For
instance, labour is available at higher rate, then alternatives or impact on other factors can be
evaluated.
Prioritisation- After risk assessment, prioritisation has to be done. This is the best way
through which dividation of risk can be done. This makes less destruction in launching railway
station in New Castle.
Tracking the risk- After prioritisation, there will be tracking of ways through which it
can be reduced or nullify. There is change in operations as well due to this risk. This provides
other innovative ways to communicate properly.
Implementation and monitoring process- After tracking, regular evaluation and
monitoring in possible. This is the best way to take corrective actions with which they can
evaluate better outcome (Ivanov, 2018).
SUMMARY
As per the conclusion, it has been concluded that for having a project which is successful.
The project manager have to be well prepared well and define plans in details. This should be
regrading the goals of a project, the time which is estimates, resources and the budget required
for the same. The well defined methods of delivery and types of contracts, will increase the
effectiveness of a project. The methods of delivery will helps in determining the way in which
aproject is executed, and the parties that are involved in the project. Moreover, an appropriate
financial type of contract and method of procurement will help in allowing the project manager
to control the quality of work and the budgetary estimates. Though, the activities helps in
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minimising overall risks, maximising the productivity of a work, and in this uncertainties exists
which might affect if not controlled well. The risk register can clarify critical risks that can be
concerned. The mitigation strategy on the contrary will help in providing a solution for
eliminating and mitigating risks and provide an alternative solution if risks takes place.
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REFERENCES
Books and Journals
Edler, J. and et. al., 2015. Risk management in public procurement of innovation: a
conceptualization (pp. 87-109). Cheltenham: Edward Elgar.
Garlick, A., 2017. Estimating risk: a management approach. Routledge.
Handfield, R. B., Primo, M. and Oliveira, M. P. V. D., 2015. The role of effective relationship
management in successful large oil and gas projects: Insights from procurement
executives. Journal of Strategic Contracting and Negotiation. 1(1). pp.15-41.
Hopkinson, M., 2017. The project risk maturity model: Measuring and improving risk
management capability. Routledge.
Ivanov, D., 2018. Structural dynamics and resilience in supply chain risk management (Vol.
265). Springer International Publishing.
Marija, M. and et. al., 2015. Supply chain risk management using software tool. Acta
Polytechnica Hungarica. 12(4). pp.167-182.
Obwegeser, N. and Müller, S. D., 2018. Innovation and public procurement: Terminology,
concepts, and applications. Technovation. 74. pp.1-17.
Rendon, R. G. and Snider, K. F., 2019. Management of defense acquisition projects. American
Institute of Aeronautics and Astronautics, Inc..
Thai, K. V., 2017. International public procurement: Concepts and practices. In International
handbook of public procurement(pp. 33-56). Routledge.
Van Staveren, M., 2018. Uncertainty and ground conditions: a risk management approach. CRC
Press.
Online
7-2.2 Quadrant Analysis Tool — Value and Risk Assessment. 2019. [Online]. Available through:
<https://about.usps.com/manuals/spp/html/spp7_010.htm>.
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