Skydome Arena: Value and Risk Management - Assignment Example

Skydome Arena – Value and Risk Management. Part a: Design and Cost Plan review in comparison to Dundee Ice Arena An overview of the projected plan of Skydome arena has activities that have been overestimated. Though the two Arenas do not cover the same site area, the percentage of each activity is given as a percentage to the total sum of money to be expended for the entire project. In this case scenario five aspects are clearly overestimated. These are: I. The substructure of Skydome is 7.6% at £142.02 per m2 compared to 5% at £45.4 per m2 of Dundee arena. A difference of 2.6% or £96.98 per m2 is way too high. This has resulted from the additional permanent ice floor that is proposed for this project. Dundee arena has its substructure done as aggregate and isolated foundations but no permanency of the ice floor. As a result the concrete used is more in order to hold the weight of the ice floor. II. The frame work for Skydome arena is 9.4% of total cost and at £176.44 per m2 compared to 9% of Dundee Arena and £73.2 per m2. This gives a difference of 7.6% i.e. £103.24 per m2. The two arenas both adopt steel frames for the construction. The difference in cost per m2 has resulted from the large roof being constructed and which lacks intermediate columns. These types of roof spans are quite expensive to put up. The span for Skydome arena is therefore in excess of 60m as a result requiring more quantities of steel in the roof trusses. Therefore the basic estimate of 80kg per m2 of the gross floor area is projected. The amount of steel applied in Dundee arena is less kilograms per metre squared. This is highly unlikely to jeopardize the quality of the stadium. However, adjustment can be made as necessary bearing in mind the total weight of the whole arena. The 80kg steel per m2 can be reduced to 60kg per m2 or even less if intermediate columns are used instead for support. III. The Roofing is 8.6% for Skydome arena at £161.46 per m2 as compared to 3% for Dundee Arena at £22.5 per m2. An overestimate of 5.4% on roofing at £139 per m2 is determined here. The roofing material and structure has deployed very expensive methods and materials. The roof for Skydome is intended to have partial composite construction with mastic asphalt for the plant area and clad with profiled metal decks on purlins. For the insulation a PVC single-ply membrane and a vapor barrier is adopted plus a plywood base. All these materials are very expensive and should be substituted with cheaper materials while maintaining quality of the roof structure. Dundee arena has adopted steel plates and metal cladding other than plywood and vapor barrier. IV. External walls have been projected at 2.9% for Skydome at £53.54 per m2 compared to 5% of Dundee Arena plan at £43.01 per m2. A very significant difference of £11.53 per m2 is seen in this case. The major reason underlying these high costs is due to the insulation needed to maintain the ice temperatures. The permanency of the ice floors must come along with proper insulating materials as well as refrigeration facilities. V. Finally the installations costs for Skydome are way too high of the total cost in comparison Dundee Arena. This is because the maintenance of ice floor at the temperatures will mandate more materials to conserve the cold. Ventilation and heating of such a large building is also a challenge with the factoring of the ice sports being undertaken here. In light to these cited overestimates, the major concern would be to alter design related process with an aim of reducing costs as well as maintaining the quality of the structure. The superstructure alone should take up to 28% as the case for Dundee Arena compared to 35% for Skydome arena. The roof design The lack of intermediate columns in the planned building increases the costs of amount of steel to be used in this Arena. The design can be made simpler by incorporating these columns in the initial plan. The Skydome should thus be removed and replaced with a simpler design e.g. fully enclosed design. Though the Arena’s area coverage is big, beams can be used here with steel and concrete materials for extra weight support of the roofing. The excess 60m of roof span can be done away with in order to reduce the quantity of steel to be used. If this is not the case the material used can be changed. There is a robust of materials that can be supplemented for steel. Use of Aluminum or even copper coated metals can be used instead of steel. The durability of this should be analysed first as a fundamental aspect of quality of the entire project. The need for a retractable roof or the Skydome results to an extra £139 per m2 in comparison to BCIS arena cost plans. This is way too high notwithstanding the fact that the multiplier effect for sports is less than that of the other facilities in the entertainment section. The cost underlying the new building is way too high to break even on the least of the worries. Therefore the roofing can be subsidized to a lower cost and more emphasis laid on other sectors of entertainment. Much of the income generated from sports has been found to be used for paying players, coaches and the likes. Therefore this arena is for revenue generation and as such should follow the rule of cost benefit analysis. In this case a closed roof will be enough and probably future plans made for a Skydome later on. The functionality of the roofing is not jeopardized but probably the name of the arena that can be changed. Materials to be supplemented here is steel and vapor barriers with more cost effective materials e.g. carbon steel, mild steel for this arena. Part b: design and configuration of the Arena and outline any issues that could result in potential loss of revenue for the Arena The configurations of the small night club adjacent to the large night club as well as a public house are all drinking areas. As a result the public will attract more customers for drinks especially the passersby. The question in mind is who is targeted for these three joints. First I consider the large night club that can move a clubbing group to come have fun without need for watching movies or even ball games. Second, the drinking joints are social places hence people coming for movies may drop in for some drinks after the movies. This would be in the public house or the large night club with hopes of getting a social partner or a ‘date’. The essence of putting a small night club is not felt in this manner. However we often find that people drop by the café and buy snacks to munch while the movies or ball games are going on. In this light, there would be need for a tack shop instead of the small night club or an extension of the café to have a big snacks area. Nonetheless, the lack of such shops will result to a huge loss of fans for movies and games. The small night club should be redesigned in that manner. The entrance to the social place should definitely have a great deal of snacks area here. People leaving the adjacent multisport arena usually stop for drinks. This would highly attract a large group in the public house and the large night club. The restaurant on the other hand, is strategically placed since people come in early to catch a match or a movie and often not opt to eat first or eat later after the match. This is highly likely to capture a good number of customers. However the lack of a substantive parking lot will indeed lead to losses being felt in this arena. To attract such a great crowd in all these recreational places notwithstanding the fact that this is a city lacks ample parking spaces. The capacity of the multisport arena is 7000 seats and this can be achieved overnight. The cinema complex has not been considered as well as the social joints in the ground floor. This aspect highly limits people to come in the arena. The most effective consideration to be made in this case is to purchase land near by e.g. the rundown garages and workshops area, to build a parking space. The number of parking spaces for such an arena should be increased to at least 2000 spaces. This will ensure a minimum number of customers at any one given point in the arena facilities. Part c: A life cycle costing exercise for the complex In this case study, life cycle costing is deemed as a tool for assessing the total performance of the complex over a period of time. This include the acquisition, operating, maintenance and finally to disposal aspects. Among the notable uses of this tool is that it aids in future expenditure forecasts, allocation of resources, assessing the value for money for the arena, transparency measures as well as determine competing options (Kotaji et al, 45). The cinema complex is going to be analysed in this case: The arena has nine cinema halls in its first floor. The information needed in this case is the initial cost of the cinema, number of staffs hired here and their pay; the operating costs of the cinema; the maintenance of the cinema; heating and ventilation aspects i.e. electricity; life of the cinema complex; disposable value of the cinema complex. These will be analysed from the books of similar cinema management as wells looking for the value survey to assess the life of the building. Annual Costs Associated with Skydome arena – cinema complex Item or influencing factors Cost 1. Total Installed Cost for cinema £3,996,678:60 £ 66,611 2. Operation costs per annum inclusive of heating and ventilation aspects, licenses, environmental aspects, products used. – these are the overhead costs £ 360,000 3. Major maintenance costs – refinishing done after five years £100,000:5 £ 20,000 4. Daily Maintenance costs – dust mopping, repair @ 1700 hours per year @ £10/hour £17500 5. Annual maintenance - Screening and recoating £ 100,000 6. Wages and salaries @ £60,000 per month £ 720,000 7. Disposable value (£ 1,500,000 : 60) (£25,000) 8. Total £1,259,111 Assumptions made: Life expectancy is 60 years The disposal value is given on the assumption that the cinema will be in good condition hence a high figure. The above LCC shows that the cost per annum to run the cinema complex is £1,259,111. In order to earn profits, the management should look into ways to offset this amount. The number of customers attracted to such a place should be high. For example if a customer spends £50 for tickets and the cinemas have half capacity i.e.960, then for a given day £48,000 or 576,000 per annum is earned as revenue. The management should look into such big numbers in order to sustain the running of the entire complex. This is because a small number cannot maintain the complex. The snacks sold to these customers should offset the costs of the cinema on a low turnout period. The management may also increase the sale of tickets. Part d: Value Management services for the above complex Value management in this case will follow the below steps: a) Defining what value is to the client b) Clearly outlining the objectives of the complex c) Establishing these objectives. Value for the complex in this scenario is profit based. The location of the arena complex is strategically placed to lure customers into the recreational facilities for entertainment. These are not offered for free. In that manner the business endevours is a profit making organisation. To get value for the funds invested in this business, the revenues must be more than the expenses. As outlined in part c, the life cycle costing shows the costs put in the business for an entire year. To get value for this investment, the revenue earned should be at least 2,000,000 pounds per annum for the cinema complex alone. The objective of running this complex is to establish value for the stakeholders as well as deliver services i.e. entertainment to the customers. This objective should be achieved without being detrimental to quality, performance and reliability of the complex (Kelly et al, 89). To establish the above objective, workshops should be organized; team working encouraged and end user buying. A one week value management workshop should be organized comprising the client representatives and the consultants.an experienced value management facilitator independent from the project team should be outsourced. Value engineers should be brought in this case and the designing team and the quantity surveyor. This workshop should engaged information exchange, a lot of brainstorming, function analysis of the complex, analysis of alternatives obtained, acceptance and implementation. The workshop should run for 25hours at a cost of £20,000. This can save the stakeholders a great deal of money for the arena complex. This allows for solutions for maintenance and raising standards of the entire complex. In this case the value for the money invested in the project is obtained since maintenance can be cut down as well removed unnecessary features and improve on delivery of services. The aim is to improve functionability of the complex and achieve value for money. Work cited Kelly John, Male Steven & Graham Drummond. Value management of construction projects, 2nd Ed., Chichester: John Wiley & Sons, 2004. Kotaji Shpresa, Schuurmans Agnes & Edwards Suzy. Life-cycle assessment in building and construction: a state-of-the-art report. Canada: SETAC, 2003. Read More