Civil Engineering Management of Leeds Metropolitan - Case Study Example

Construction management Health and safety management system Leeds Metropolitan Health and Safety management system is premised on a commitment to provision of a safe and healthy study and work environment. The system is structured such that statutory health and safety responsibilities lie within an extensive range of staff and students and extends beyond minimum achievement of legal compliance. The safety, health and wellbeing policy is at the center of achieving compliance. The policy is founded on multiple strategic values derived from legislation, guidance, and recognition of good practice. The values are entrenched in the institution’s policy statement and reflected in responsibilities assigned to all stakeholders. Stakeholder involvement Health and safety management system is structured such that each and every individual as a role to play in ensuring safe work and study environment. Ranging from the Board of Governors to the student body, all are charged with a responsibility of ensuring the work place is safe and free from any forms of hazard. The Board of Governors is responsible for creation of policies for safety, health and wellbeing, in addition to maintaining oversight of the policy’s effectiveness. On the other hand, the Corporate Management Team have a responsibility of implementing Safety, Health and Well-being Policy, in addition to ensuring accountability in management of health and safety across all the university’s levels. The line managers are on the other and found at all of the university’s levels and are responsible for management of management of safety, health and wellbeing of staff and where applicable, students, visitors, contractors as well as the general public. The staff on the other and have a responsibility for their individual safety, health and wellbeing, in addition to liaising and cooperating with line managers to ensure health and wellbeing. Students are not spared off responsibilities; rather they have a responsibility for their own safety, health as well as wellbeing, in addition to cooperating with academic supervisors with regard to their safety, health and well-being. This is reflected in the diagram below: Figure 1: Stakeholder Responsibilities Implementation and assessment Implementation and assessment of Leeds University’s health and safety system is based on individual assessment of individual cases as well as the extent to which health and safety is integrated, health and safety responsibilities are assigned and applied, extent of employee involvement, nature and operations of specific health and safety program elements and indicators of safe person and safe place control strategies. Classification of the twenty cases into four system types provides the basis for assessment of the linkages between health and safety management system type and performance. Depreciation Methods Depreciation is defined as a systematic and rational process through which an asset’s costs are distributed throughout its life cycle. Typical, depreciation depends on the costs of the asset, its salvage value and the useful life of the asset. Based on this, a number of depreciation methods have been proposed three of which are discussed for purposes of this project. These include Straight line method, reducing-balance method, and the sum-of-the-years-digits method. Straight-line method Typically, straight-line method is represented by the equation, Depreciation = (Cost - Residual value) / Useful life The method is simple and most common. It is calculated by deducting the salvage value of the asset from its purchase value and dividing the resulting value by its useful life. Reducing balance method Depreciation using this method is calculated by the formula, Depreciation = Book value x Depreciation rate Whereby, the book value is given as, Book value = Cost - Accumulated depreciation In this method, applies percentage depreciation on the un-depreciated amount in subsequent years. It is conventionally referred to as an accelerated method due to the fact that it results into more depreciation expense being incurred in the early years of an asset’s life and lesser depreciation in the latter years of the asset’s life. Units-of-Production Method This approach records different amounts of depreciation based on the usage of the asset. The depreciation using this method is done using two-steps. Calculate depreciation cost for every unit. This is given as the cost-salvage Value divided by total units of production. The value is then multiplied by the number of units. Depreciation calculations The six pumps and back up generating units cost £18,000,000 in total and it is anticipated that the useful life of each unit will be eight years. Resale values indicate that the units will be worth £500 000 after this time. Straight-line method Cost = £18,000,000 * 6 = £108,000,000 Residual value (Total) = £ 500,000*6 = £ 3,000,000 Depreciation = (108,000,000 – 3,000,000) / 8 Depreciation = £ 13,125,000 annually Depreciation for Year 1 13,125,000.00 Depreciation for Year 2 13,125,000.00 Depreciation for Year 3 13,125,000.00 Depreciation for Year 4 13,125,000.00 Depreciation for Year 5 13,125,000.00 Depreciation for Year 6 13,125,000.00 Depreciation for Year 7 13,125,000.00 Depreciation for Year 8 13,125,000.00 Double Declining balance method Useful life = 8 years --> Straight line depreciation rate = 1/8 = 12.5% per year        Depreciation rate for double-declining balance method              = 12.5% x 200% = 12.5% x 2 = 25% per year Depreciation for Year 1 20,250,000.00 Depreciation for Year 2 21,937,500.00 Depreciation for Year 3 16,453,125.00 Depreciation for Year 4 12,339,843.75 Depreciation for Year 5 9,254,882.81 Depreciation for Year 6 6,941,162.11 Depreciation for Year 7 5,205,871.58 Depreciation for Year 8 3,904,403.69 Sum-of-the-years-digits method In this method, depreciation is given by the formulae, Depreciation expense = (Cost - Salvage value) x Fraction Where the fraction values are given as follows,          Fraction for 1st year = n / (1+2+3+………...+ n)          Fraction for 2nd year = (n-1) / (1+2+3+……...+ n)          Fraction for 3rd year = (n-2) / (1+2+3+……..+ n) Fraction for final year = 1 / (1+2+3+……...+ n) n in this case, is the number of years for useful life. Depreciation for Year 1 2916666.67 Depreciation for Year 2 5833333.33 Depreciation for Year 3 8750000.00 Depreciation for Year 4 11666666.67 Depreciation for Year 5 14583333.33 Depreciation for Year 6 17500000.00 Depreciation for Year 7 20416666.67 Depreciation for Year 8 23333333.33 Discussion of the depreciation methods used The three depreciation methods used present different scenarios and results as summarized below, Straight-line method Double-declining method Sum-of-the-years-digits method Depreciation for Year 1 13,125,000 20,250,000 2,916,667 Depreciation for Year 2 13,125,000 21,937,500 5,833,333 Depreciation for Year 3 13,125,000 16,453,125 8,750,000 Depreciation for Year 4 13,125,000 12,339,844 11,666,667 Depreciation for Year 5 13,125,000 9,254,883 14,583,333 Depreciation for Year 6 13,125,000 6,941,162 17,500,000 Depreciation for Year 7 13,125,000 5,205,872 20,416,667 Depreciation for Year 8 13,125,000 3,904,404 23,333,333 End value 3,000,000 11,713,211 3,000,000 The straight line method and the Sum-of-the-years-digits method returns a value equivalent to the salvage value provided. However, the marginally differ in terms of approach. While straight-line method assumes that an asset will undergo same rate of depreciation during its lifetime, Sum-of-the-years-digits method presumes that an asset will initially depreciate at a slower pace and eventually depreciate at a higher rate towards the end of its useful years. This is actually the reverse of double declining method which assumes that an asset will undergo rapid depreciation during its early life, slowing down as it ages. Straight-line method is therefore recommended where the asset is expected to depreciate at a uniform rate through its lifetime. On the other hand, double declining balance method is more applicable where the asset is expected to initially depreciate at a fast rate before eventually taking a slow pace. On the other hand, the Sum-of-the-years-digits method is more applicable for assets which deteriorate slowly until such time that they are close to the end of their useful and begin depreciating much faster. Relevance of depreciation in infrastructure assets Infrastructure assets form part of huge investments and are often an effort of both the public and private sector. Conventionally, depreciation is defined as a reduction in value of the asset due to usage, elapsing of time, wear and tear, depletion as well as a myriad other factors. Depreciation allows for allocation of the cost of a capital asset over the asset’s useful life. Depreciation takes into account decrease in service potential of infrastructure capital assets invested in a venture, resulting from acts such as physical wear and tear in use, deterioration through natural elements or obsolescence as a result of technological changes. As a matter of factor, it is useful in reflection of the loss in value. Allan, N. (2006). Strategic risks: thinking about them differently. Proceedings of ICE Civil Engineering 159, p. 10–14 Arditti, F.D. (1996). Derivatives: A Comprehensive Resource for Options, Futures, Interest Rate Swaps and Mortgage Securities. United States of America: Harvard Business School Press Baker & M. (1996).Infrastructure project: The Guide to Financing Power Projects. Playhouse Yard: Euromoney. Banks, E. (2007). Credit Risk of Complex Derivatives. Basingstoke: Macmillan. Bing, L., Akintoye, A., Edwards, P. J., & Hardcastle, C. (2005). The allocation of risk in PPP/PFI construction projects in the UK. International Journal of Project Management, 23, p. Buckley, A. (2004). Multinational Finance (5th Ed). Essex, United Kingdom: Prentice Hall. Chance, D. M. (2002). An Introduction to Derivatives and Risk Management (5th Ed). Orlando: Harcourt College Publishers. Clifford, C. (2003). Infrastructure project. London: IFR Publishing. Donaldson, T.H. (2006). The Traditional Approach, in Project Lending. Edinburgh: Butterworths. Esty, B. (2003). “The economic motivations for using infrastructure project”, mimeo, Harvard Business School. Hainz, C. & Kleimeier, S. (2003). “Political risk in syndicated lending: theory and empirical evidence regarding the use of infrastructure project”, LIFE working paper 03–014, June. Hoffman, S. L. (2001). The Law and Business of International Infrastructure project (2nd Ed). Ardsley: Transnational Publishers Inc. Lewin, C. (2006). Enterprise risk management and civil engineering. Proceedings of ICE Civil Engineering 159, p. s 4–9 Paper 14895 Nevitt, P. K. (2000). Project Financing (7th Ed). London: Euromoney, 2000. Perry, J. G. & Hayes, R. W. (1985). Risk and its management in construction projects. Proc. Insin Civ. Engrs. Part 1, p. 499—521 Raz, T. & Michael, E. (2001). Use and benefits of tools for project risk management. International Journal of Project Management, 19, p. 9 – 17. Smith, M.R. (2002). Infrastructure project in the Utilities Industries, in Project Lending. London, United Kingdom: Butterworth’s. Smith, N. J. (2003). Appraisal, risk and uncertainty. London: Thomas Telford Publishing, Thomas Telford Ltd. Smith, V. (2007). Infrastructure project Review, International Infrastructure project Lecture Note, CEPMLP, Unit 1. Tinsley, R. (2005). Infrastructure project: Infrastructure project Risks, Structures and Finance ability (2nd Ed). London: Euromoney. Vinter, G. D. (2006). Infrastructure project (3rd Ed). London: Sweet and Maxwell. Wilson, R. (1982). “Risk measurement of public projects”, in Discounting for time and risk in energy policy, Resources for the Future, Washington DC. Civil engineering project, like other projects undergo typical phases from the time they are initiated to their time of completion. More often than not, a project has to go through all the phases in order to achieve successful completion. A typical project will go through appraisal stage, planning stage, implementation stage and project view. These are highlighted in the table below, Stage What takes place Appraisal The needs are identified, broad parameters of a solution are agreed upon, and an Approval-in-Principle is granted. Planning The needs are quantified and the assumptions verified, desired outputs are specified, and a solution is designed. Implementation The solution is constructed. Project review An assessment is carried out as to how successfully delivered solution addresses pre-defined needs. However, other typical civil engineering project cycles have been discussed widely by bot researchers, policymakers, and many other stakeholders. The figure below provides a widely embraced step by step illustration of the phases involved in a civil engineering project cycle. Figure 2: Civil Engineering Project Phases The framework forms the basis for this paper’s discussion of the phases involved in civil engineering projects. The figure displays sequence of major phases through which the development of the project passes, alongside the main activities that Sponsoring Agency or personnel and/or consultants must undertake during every stage and project reviews which take place at major project development points. The phases considered are listed below; Phase 1: Concept and Feasibility Studies This is the stage where a project is proposed to solve a problem or address a need. Such could be the conception of an idea to construct a dam to solve water problems of a community, construct a bridge to improve accessibility of an area or to construct a tower to address office needs of a particular organization. The organization then submits the evaluation and selection process. Evaluation is a vital step in the life cycle of any given project. More often than not, project failures are a product of inappropriate evaluation measures and hence lack of appropriate controls. Generally, evaluation of a project takes the form of formative assessment and evaluation. All the aspects are dependent on collected data. As earlier mentioned, data differ in importance as well as importance to a program evaluation process. This without a doubt highlights the importance of selecting data that are not only relevant to the areas of the project being evaluated, but also offer reliable information to aid the process. Kaufman et al (2006) notes that validity and reliability of data are key to a successful evaluation of any given project proposal. Data offers the basis upon which factual conclusions are drawn. They offer a basis upon which evaluators able to evaluate and make adjustments to various aspects of the proposed project. Amongst the areas addressed during this phase include; Forecasted Future Demand Location Resources’ availability Transportation access Political and Institutional Challenges Sociological as well as Economic Impact on the host Community Environmental Impacts Overall Technical and Economic feasibility Its accomplishment brings together not just engineers but a team of specialists including economists, geologist and environmentalists, among others. Phase 2: Project initiation This is the phase where a project manager is assigned. The project manager works and in hand with the Project Sponsor in order to establish resource requirements as well as the needed team members to help in further development of the projects parameters. Such parameters include project costs, scope, schedule, as well as quality. These are all documented in form of a project charter whose preparation is largely based on the proposed project. The sponsor’s approval of the Project Charter marks authorization of the designated team to start initial planning effort. The initial Project Plan arising from project initiation differs in terms of detail’s levels as well as validity of estimates from the first phase and hence need to attain sufficient levels to get additional resources required for the progress to proceed. This phase of the project also includes plans for involvement and communication with all the stakeholders, in addition to, identification of an initial set of foreseeable risks which pose threat to the project’s successful continuity. At the end of this process, based on initial evaluation, the case is revised and re-assessed and a decision arrived at, whether to halt the project, or proceed to the next phase. Phase 3: Engineering and design This is the phase where the real experts including engineers, architects, geologists, and economists, among others are brought on board. Information on client’s needs is translated into three dimensional physical solutions including buildings, roads, and bridges, among others. Design activities take place at all stages. The phase can be categorized into preliminary and detailed design sub-components. Among the major activities included in the preliminary stage include; Architectural concepts Technological process alternatives assessment Size and capacity assessment Comparative economic evaluation Regulatory compliance assessment Zoning regulations Building codes and standards Licensing procedures Safety standards Environmental impact assessment  On the other hand, the detailed engineering design stage involves the following: Design of Architectural Elements Design of Structural Elements Site Investigation Foundation Design Electrical and Mechanical Design Preparation of Specifications and Drawings Preparation of Contract Documents Tender documents are also prepared in this phase. These include; Project Charter Project Scope Statement Project Management Plan General Conditions Supplementary Conditions Technical Specifications Full and Detailed Drawings Amongst the likely contracts are; A101 Standard Form of Agreement between Owner and Contractor – Stipulated Sum A111 Standard Form of Agreement between Owner and Contractor – Cost of the Work plus a Fee A201 General Conditions of the Contract for Construction B141 Standard form of Agreement between Owner and Architect A132 Performance Bond and Payment Bond The stage paves way for procurement. Procurement involves two major tasks, that is, contracting and sub-contracting of services, both for general and specialty works and the other is obtaining of materials and equipment required for the project’s construction. These are best summarized in the figure hereafter; Phase 4: Project Execution and Control This is the phase at which lots of resources are put to use in advancement of the project. A significant number of team members join the project at the start of the phase. The primary task of Project Manager during this phase is enabling execution of tasks on defined Project Schedule and development of the product/service expected to deliver. The Project Manager puts to use processes and plans prepared during Project Initiation and Planning to manage the entire project, while preparing the respective organization for implementation of product/service and transitioning of the product/service responsibility to the organization. In general, the project manager coordinates of all resources to complete the project on schedule, on budget, and according to Specified Standard of Quality and Performance. Phase 5: Project Closure and hand-over In this phase, the team assesses outcome of the project, and their as well as performance of the contracting organization. It also involves testing of components and giving a warranty period. Based on the contract, this may extend to regular maintenance of the project. Read More