Shop Fit-Out Sports Retail Construction - Case Study Example

Table of Contents Assumptions 2 Scope 2 In-scope 2 Out-of-scope 3 Work Breakdown structure 3 Cost estimation 4 Analogous estimation 4 Parametric estimation 5 Bottom-up estimate 7 Cost Baseline and S Curve 8 Cash Flow 9 Project Schedule/Gantt Chart 9 Critical Path 11 Critical Chain Scheduling 12 Risk Analysis 14 References 17 Introduction The project is the construction of Shop Fit-Out Sport outlet retail. It consists of an area along with a small garden to showcase the out-door equipments. This report includes planning activities of project along with a MS Project file having Work Breakdown Structure (WBS), Gantt chart and network diagram and a Excel Spreadsheet for cash flow and cost estimation. These files are named as: Shop Fit-Out Sport Retail Construction (Excel) Shop Fit-Out Sport Retail Construction (Project) The project is expected to start from 1st May 2017 and ends on 20th July 2017 Assumptions Following are key assumptions exist in the project plan: The mayor of the city shall will not reject the proposal for construction of shop. Figure 1 shows the resources along with their respective per hour rate. These costs are not their finalized salaries and specialized resources of them may cost even more than the mentioned depending upon their usage in the project. Figure 1: Rates of resources (per Hour) Payment – The timeframe in which the payment has to be done by the customers for foods as supplied by the supplier is named as payment term. There are two payment terms: Customer and supplier payment terms. Customer payments are required to be paid only at the completion. Supplier terms for the project are done on the receiving of invoice from the supplier. The invoice is expected on fortnightly basis from the date of order. Scope In-scope Following items are in the scope of project: Site inspection of the shop. Take permission for the construction. Selection of material for the shop. Out-of-scope Following items are out of scope of the project: Marketing of shop is not included in the project plan. Additional resource recruitment is not included. Work Breakdown structure Work Breakdown Structure is a family tree sub-divisions of the project tasks which are required to complete a project. It is prepared in the way in which the work will be carried out. The preparation of WBS also considers the areas such as configuration management, scheduling and contract funding. The Work Breakdown Structure for construction project of Shop Fit-Out Sport follows the hierarchical structure where there are activity and sub-activity. Each activity is given an unique id. For instance: The highest element is Shop Fit-Out Sports retail outlet has been given an id 0. Then it has three child elements: 1.0 Contractual Process 2.0 Fit-Out Works 3.0 Completion These activities are also termed as summary activities. Each of these activities has their children and these children have their own children. It becomes like a hierarchical family tree. 1.0 Contractual Process 1.1. Award Contract //Child element of 1.0 1.2. Secure the Building Permit //Child element of 1.0 1.3. Pre-start meeting //Child element of 1.0 1.3.1. Organise Meeting // Child element of 1.3 1.3.2. Notify all stakeholders // Child element of 1.3 1.3.3 Hold meeting // Child element of 1.3 It can be noticed that all related tasks are grouped under a parent. This is so because all these tasks are related to each other and hence placed them under a summary task. For instance: Organizing meeting with stakeholders, notifying all the stakeholders and conducting meeting are related elements under parent “Pre-start meeting”. There can be a chance that all stakeholders are not available at the same day and time, hence considerable time can be invested in gathering them which has not been catered at the time of project beginning. Hence, a time contingency has been taken into consideration in case all stakeholders do not turn out o for same day. These are outcomes of scheduling so that project does not overshoot the deadline. Cost estimation Before developing a cost estimation for the project, the monetary resources are required to be finalized. Cost estimations are predicted based on the estimations done at a particular point of time. In other words, cost estimation can also be defined as the process of identifying and considering the cost alternatives to start and finish the project. Estimation of accurate cost is an important part of project planning. This is because they are the measures of project control. If the organization does not have the monitoring tracking of the project, then it is unable to identify where and when the project got deviated from the cost and time estimation. An appropriate estimation depends on the amount of information available. In case, there is very little information available, then cost estimation may be in itself be highly unpredictable. Besides this, there is a Rough Order of Magnitude (ROM estimate) which is a ranged variance of the estimate cost required for a project completion. The ROM is identified out at a very early stage in the project life cycle that is during project selection and approval. Project manager makes certain assumptions during project planning stage. The aim of ROM estimate is to provide information to the decision makers to take appropriate decisions such as whether the project should be continued. The accuracy of ROM depends on the expertise of project manager, how it was developed and so on. Following are three types of cost estimation identified for the proposed project: Analogous estimation Analogous estimation uses the cost estimation of a similar previous project as base for cost estimation of current project. This technique is used when the amount of information of current project is very limited. Analogous estimation is less costly as compare to other techniques and less time consuming. It can be applied to entire project or on a part of the project. Then the project manager makes certain assumptions about the cost. This results in high degree of uncertainty in the final cost because the estimation has been developed by a person who does not possess much knowledge on the current project. It can provide reliable data when the past projects have similar facts like that of the current project. The ROM estimate has range of - 50% and +50%. This means the cost estimation can be of value +-50%. Since the projects do not complete on cheaper due to variety of reason such as non-availability of resources, the total cost of project tends to deviate the planned cost structure. For this, project ROM can be estimated to be around -25% to +75%. 1. Contractual Process Cost 1.1. Award contract 5000 1.2. Secure building permit 3000 1.3. Pre-start meeting 1000 1.4. Safety Training 1000 1.5. Install Construction Fence 1000 1.6. Mobilise Materials and equipment to site 1500 2. Fit-Out Works 2.1. Ceiling Works 2000 2.2. Partition Wall (Storage) 1500 2.3. Service (Lighting, Electronic Points Of Sale) 1000 2.4. Shopfront 1800 2.5. Shelving 10,000 2.6. Flooring 10,800 2.7. Brand Signage 1200 2.8. Sales Facility installation 1200 3. Completion 3.1. Clean site 1000 3.2. Services testing 1000 3.3. Final Inspection 1000 3.4. Completion 1000 Total 46,400 Parametric estimation This technique uses the historical data of very similar projects taking scale differences into consideration. Frist of all, it identifies the unit cost or duration from previous similar projects or activities. Then it scales the estimation to the number of units for the current project or activity. This technique is highly reliable and employed only when there is a statistical relationship between the past data and current work or activity. To conduct parametric estimation, the company should have knowledge base for specific parameters. Together, they form category to build left side of the estimate calculation. Following table shows an example of knowledge base for parametric calculation: Parameter Cost Lobby: Type A $12 Lobby: Type B $150 Lobby: Type C $170 Steel Framing $48 Gyprock $68 Window frames Tile Category B $65 Door Frames, Tile Category C $154 Door Frames, Tile Category D $197 Door Frames, Frame Category A $157 Door Frames, Frame Category B $100 Paint, Category C $357 Paint, Category D $457 TV, Category A $1,500 TV, Category B $92 Pool Tiled Area, Tile Category C $146 Pool Tiled Area, Tile Category D $191 Parameter Area (m2) Cost Area: 5 * 10m wide 50.00 $1,000 Area: 5 * 12 wide 60.00 $1,200 Area: 25 * 2 m wide 50.00 $2,000 Area: 10 * 5m wide 50.00 $1,000 Area: 12 * 5 m wide 60.00 $1,200 Area: 10 * 6m wide 60.00 $1,400 Area: 5 * 10m wide 50.00 $1,000 Following calculation of each component has been done using the above knowledge base: Item Size (m2) Category of Cost Cost per m2/3 Total Cost Area 50 Area: 5 * 10m wide 1,000 50,000 TV - TV, Category A 1,500 1,500 Paint 8.00 Door Frames, Frame Category B 100 800 Frame 4.00 Window frames Tile Category B 65 260 Garden (Section A) 18.00 Electrical system 20 360 Metal (Section B) 20.00 Suspended metal system, Type A 20 400 Vinyl (Section C) 15.00 Vinyl flooring Type A 20 300 Hoarding (Section D) 100.00 Garden: Type A 20 2,000 Steel (Section A) 47.25 Steel Framing 48 2,268 Steel (Section B) 3.00 Steel Framing 48 144 Estimate: 58,032 Contingency 5% 2,902 Weather 3% 1,741 Final Estimate: 62,675 This is the construction project hence optimal and middle range value has been chosen for most of the components. Area of 50 sqm is the given area. It has been assumed that there will be a small garden because it’s a fit-out retail outlet so most of the equipments can be demonstrated in the garden. ROM for this estimation has been taken around -20% to + 50%. The above-mentioned table are present in the excel sheet – “Shop Fit-Out Sport Retail Construction” Bottom-up estimate The bottom-up estimation starts with the basic components of the project. They are usually the lower-level activities. This results in creating a collective budget for the project. This estimation is conducted on the work packages of Work Breakdown Structure (WBS). First of all, a cost is assigned to each of the work packages and then theses costs are summed up and this total is assigned to the respective summary activity. Then these summary activities are summed up to form the total cost of the project. Please find the work breakdown structure in the excel file – “Shop Fit-Out Sport Retail Construction” under sheet name “Bottom-up estimate”. Column 6 shows the cumulative total cost of the project on per week basis. The total cost for the project is estimated in the last week of the project. Costs are categorized into following categories: Labour Materials Equipment Contingency The roll-up structure is depicted by using grey and blue colours. Grey colour is used for lower-level activities and blue colour is used for high-level activities. Analysis of activities can be found in column T. There are two rows depicting the additional costs which are not included in the cost breakdown structure. These costs include: skip bin and on-site toilet hire. The approval of owner of the outlet is required for them. They are required to be ready before the project works begins. ROM estimate has been taken around -5% to + 10%. Cost Baseline and S Curve The cost baseline and S-curve have been prepared in the excel spreadsheet – “Shop Fit-Out Sport Retail Construction” under sheet name – “Cost Baseline, S-Curve, CF”. Cost budgeting is defined as a technique od assigning costs to work packages over a period of time which covers the lifecycle of the project. Project manager and high-level management use the cost baseline to compare the cost performance of project against the actual expenditure of the project as it proceeds further. The S-curve can be derived from the cumulative cost of the project. Variances can be shown on the curve using additional lines. S-Curve shows that costs occurs on those places where project manager expect them to arise. Id the beginning the line is bit flat because not much activity happens in the beginning except for meetings and project plan finalization. There can be a slight raise which is because of the contingency costs in case the stakeholders are not available for the meeting and approval of the project plan. Once the contractual formalities are done then the major cash flow is done and after that small amounts are sent till the completion of project. Cash Flow Cash flow is defined as the process of funds in-coming and out-going of the project. The project should have enough funds in the form of positive balance cash flow. The cash flow is present in the excel spreadsheet “Shop Fit-Out Sport Retail Construction” under sheet name – “Cost Baseline, S-Curve, CF” . Cash flow out-going is calculated in terms of labour, materials, contingencies and other related costs for every week. They can be shown in red colour. During the initial phase of the project, an initial amount of $10,000 is fed into the project for all the contractual process related activities. It includes awarding contract, securing building permit and pre-start stakeholder meeting. In case all stakeholders are not available, then project manager has to re-arrange the meeting. Milestones play a critical role in a project as these are those events where payment should be done immediately once they are completed. The first milestone was the approval of the contractual process. It is in this week that site permit is achieved and contractual process has been done. Second milestone is the event where Fit-out work has been completed and third milestone is sales facility installation. Project Schedule/Gantt Chart Microsoft Project file (.mpp) is the file that illustrates the schedule that has been designed and estimated for the project of shop fit-out sport retail outlet. The schedule has been displayed in the form of a calendar in which the details around the completion date for the project along with the start date, dates of every activity and likewise has been showcased (Antikainen, 2010). A Gantt chart that has been illustrated below shows a graphical representation of the schedule of the project. The relationship that exists between the work packages along with the actions that are required to be executed have been displayed in the Gantt chart (Leger, 2013). The shortest time that will be taken in order to complete all the project activities will be 59 days as displayed in the Gantt chart. There are several complex activities that are associated with the project and the Gantt chart will provide the Project Manager to execute controls for the management of such activities. The project activities have been divided in to three broad phases with sub-activities under each phase. There are resources that have been assigned to each of the activity. There is a lot of information that can be obtained from the Gantt chart as depicted above as the progress and the status of the project can be calculated and understood from the same (Menesi, 2010). Critical Path The project network is like a flow chart that represents all the work packages that are associated with a project in a proper sequence and with the dependencies and relationships that exist. Critical path in a project is a workflow that shows certain tasks and activities from the work breakdown structure that include the longest path from the network that will take least amount of time to complete all of the project activities. There are two primary factors that determine the end date of the project viz. time and resources and the delays that are caused are accordingly adjusted and incorporated. It is not certain that all the work packages will be displayed on the critical path as there are certain activities that have slack time involved. Slack time is the duration associated with an activity for which it can be delayed without causing any impact on the start date of the subsequent activity. There may also be built in buffers associated with certain activities in case of delays. There will not be any buffers or slack time involved with the activities in the critical path as it will have an impact on the end date of the project. If there is an activity that involves slack time and there is some sort of a delay that is caused then the changed will be required to be accommodated on the critical path along with the delay (Makar, 2009). The matter of concern is not that the importance and significance of the activities on the critical path is less or more. However, what matters is that the activities on the critical path do not suffer any delay so that there is no impact on the subsequent tasks and their start and finish dates. The critical path has been illustrated in red in the Gantt chart that has been displayed above for the project (Millan, 2016). Standalone activities that are involved in the project can also have certain delays and estimation of time that is greater than the requirement. The finish date of the project is delayed because of this reason and can be picked up for the completion of the activity. For instance, allocation of wall frames has been allocated with the total duration of four days in this case which may be completed in duration of 3 days only. The extra one day may be utilized in the rest of the activities that may take a longer time that the one that has been estimated and in this manner the overall dates and finish date will not be impacted. There are some of the additional tasks and activities that have also been included in the project in order to delay the finish date of the same. Contingency time lags which are also termed as padding make up for the estimated delays in the project. These activities cause the overall project schedule a little longer; however, there may be other activities that may also impact the project start and finish dates such as change in the project scope etc (Turbit, 2017). Critical Chain Scheduling Critical tasks are the ones that are present on the critical path of the project and cannot be delayed without causing delay to the completion date of the project. Resource availability is not considered in these cases as the critical paths are already created and the associated dates are confirmed as well which means that the schedule revision will be necessary if a resource will be required to accomplish two tasks simultaneously. Critical chain scheduling is a process that is completed once the determination of the critical path is done and a buffer is added to the entire project rather than the individual activities. In the example that was discussed previously for the erection of wall frames, 3 days may be necessary instead of 4 days for the task (Baras, 2006). A buffer time of one day has been allocated as the contingency in the project. Critical chain scheduling is a process that changes the method in which estimates are given shape for certain tasks but planning for an adequate project length modifies the way and probability that completion will be done on time. Multi-tasking of the activities is removed through critical chain scheduling along with the necessity for the resources to execute more than one project at the same time. Efficiency of the resources is increased by providing them with the ability to focus on the same project. Risk Analysis Project risks are defined as the occurrences that are uncertain in nature and their execution can have either a positive or a negative impact on the objectives of the project. There are several reasons due to which these events can come up such as technical factors, political or economic factors, operations situations and many more. Risk Register is a document that records the project risks that occur during the entire lifecycle of the project. The primary objective of the risk register is to allow the projects to have a proactive approach for the management of risks and enhance the chances of success of the project. It is extremely important to make sure that risk analysis is carried out in the early stages so that the mitigation strategies can be applied in a timely manner. It will result in reduction of the costs that will be involved in fixing of the issues with the progress of the project. In association with every risk, the probability along with the impact that is associated with it is graded on the individual scale. The scores that are allocated are then multiplied for the creation of a priority which provides an idea to the Project Manager to execute and carry out the required levels of preparation so that the impact on the project is least. The risks that are evaluated to have the highest priority are treated and paid attention accordingly (Green, 2011). It is also necessary to keep track of the events that are catastrophic in nature but do have a little bit of probability associated with them. An earthquake may be a general example of such a risk. The impact resulting out from such a risk is devastating and can cause significant delays as well; however, there is least probability associated with such events (Santiago and Magallon, 2009). The risk register depicted below illustrates some of the risks that are associated with the project of the shop fit-out sport retail outlet. Source Probability Impact Priority Strategy Responsibility Review Scope Inflation 3 5 15 Risk Acceptance – Addition of contingency buffers to the project schedule Steering Committee of the Project Weekly basis Delays in the delivery of the materials 2 5 10 Risk transfer – To another supplier Re-conformation of the delivery dates Inclusion of the clause in the contract Procurement Officer Daily basis Inadequate funding from the client 1 5 5 Completion of due-diligence up-front Factoring of the debts may be possible Steering Committee of the Project Monthly basis Severe injury on the site 2 5 10 Allocation of the duties to the dependants eligible to take up the responsibility Free care and first-aid Enhanced trainings for risk avoidance Health Safety Officer Daily basis Change in the cost of materials 4 4 16 Risk Acceptance – Contracts with new suppliers Procurement Officer Weekly basis Operational errors 4 3 12 Risk Acceptance – Addition of contingency buffers to the project schedule Project Manager/Leader Weekly basis Damage to the property 3 3 9 Insurance to make sure that the damages are covered Steering Committee of the project Monthly basis Key and frequent supplier does not supply 2 5 10 Contact with the alternate suppliers Inclusion of the clause and associated penalties in the contract Project Manager Monthly basis Uncertainties with weather 2 3 6 Risk Acceptance – Addition of contingency buffers to the project schedule Project Manager Weekly basis References Antikainen, J. (2010). Relevance of Scope Management and Organizational Change Management in IT Deployment Projects. [online] Jyx.jyu.fi. Available at: https://jyx.jyu.fi/dspace/bitstream/handle/123456789/24854/URN:NBN:fi:jyu-201008132460.pdf?sequence=1 [Accessed 11 May 2017]. Baars, W. (2006). Project Management Handbook. [online] Available at: https://textbookequity.org/Textbooks/Baars_book_project_management.pdf [Accessed 11 May 2017]. Green, C. (2011). Scope management technique using Sizing process. [online] Available at: http://www.ifpug.org/ISMA6/Green-Scope%20Management%20Sizing-Sept14.pdf [Accessed 11 May 2017]. Leger, P. (2013). Scope Management: A Core Information System Implementation Project Pedagogy. [online] Available at: http://files.eric.ed.gov/fulltext/EJ1067751.pdf [Accessed 11 May 2017]. Menesi, W. (2010). Construction Scheduling Using Critical Path Analysis with Separate Time Segments. [online] Uwspace.uwaterloo.ca. Available at: https://uwspace.uwaterloo.ca/bitstream/handle/10012/5327/Wail%20Menesi-PhD%20Thesis.pdf;sequence=1 [Accessed 12 May 2017]. Millan, R. (2016). The Effects of Scope Definition and Planning on Creativity Management. [online] Available at: http://skemman.is/stream/get/1946/25639/54740/1/The_Effects_of_Scope_Definition_and_Planning_on_Creativity_Management-2016.pdf [Accessed 11 May 2017]. Santiago, J. and Magallon, D. (2009). Critical Path Method. [online] Available at: http://web.stanford.edu/class/cee320/CEE320B/CPM.pdf [Accessed 12 May 2017]. Turbit, N. (2017). Defining the Scope of a Project. [online] Available at: http://kahuna.clayton.edu/knagel/itfn2123/resources/info_define_the_scope.pdf [Accessed 11 May 2017]. Read More