Perceived Risk Management:594059

Question:

What you have to do

Refer to the following to help you complete the questions below:

• Project 1 on the OLS
• Subcontractor/supplier spreadsheet attached – One (1)
• Subcontractor quotations attached– Two (2)

Scenario

You are a small builder and you have decided to tender for the construction of a residential dwelling (referred to as Project 1). The documentation you have received includes a specification, architectural drawings and a site plan.

You have perused the documents and have decided to produce your own cost estimates for some trades and to request quotes for others, as noted below. Some of the trades have been assigned a provisional sum.

Task 1                                                      (40 marks)

From the tender documents and other information provided:

• Complete the Subcontractor/supplier spreadsheet for the trades for which you are requesting quotes, and for the supply of bricks, and aluminium windows and doors. You may use fictitious names and contact numbers for subcontractors and suppliers.

Note that you must complete the columns ‘Trade’, ‘Subcontractor’ (or Supplier), ‘Contact’, ‘Relevant Drawing Numbers’, ‘Relevant Specification Pages’ and ‘Date Sent’, for each of these. Ensure that you include all relevant documentation for each of the trades/suppliers to enable them to give you an accurate and complete quotation.

• You would include a covering letter to accompany the documentation that you send; a separate letter format for each trade and supply product.

Prepare a sample covering letter to accompany the documentation that you are sending: prepare a letter for one of the trades and another for one of the supply products.
Task 2                                                      (30 marks)

Included in this assignment are two (2) sample quotations from wallboard fixers to complete the lining of the dwelling detailed on the plans. The quotations are for the same project and the parties have done their own measure during a site inspection. The extent of the works was verbally communicated to both potential sub-contractors by you, the builder, so no variation to the work is anticipated.

The quotations are ‘lump sum’ and contain a number of conditions which will need to be assessed before you make your decision on which quotation to accept.

West Coast Plasterboard is not known to you but Sound Interiors P/L has come highly recommended.

You are to analyse these quotations and choose your preferred subcontractor for this trade. Provide a justification for your decision detailing your concerns by comparing these quotations.

Task 3                                                      (40 marks)

There are many risks involved in preparing a tender.

• Identify the main risks that should be considered prior to tendering for a construction project. The risks can be those applicable to all building projects and some will be specific to the nature of this job and the contract documents.
• Identify the main risks involved with engaging sub-contractors and suppliers who are not known to you.

Checklist

I have:

• Completed ALL questions of this assignment
• Included my name, student number, unit number, assignment number
• Reviewed and spell checked my document

Saved a copy of the assignment on my own computer

Answer:

Task 1

Requests for quotes and supplies

• covering letter

Jackson Enterprises,

P.O.BOX 4532-09000

MAYWATHERIS

21^ST DECEMBER 2017

WILLIAMS CONSTRUCTION LTD,

P.O. BOX 324-10902

MICELLESS

RE: TRADES OF THE REQUESTED MATERIALS

With reference to the understated trade, we request the supply of the stated materials. This is in connection with the project one which we are undertaking and need these materials to ensure that the commencement of the works is made possible. This letter is then send to help analyse whether your firm will be able to supply the materials in the stated quality and quantity. In reference to this, we have to state that we have analysed your capability to supply and wish to state that we have picked your firm for the stated purpose.

With regards to this, we request you to provide the different details concerning the trade of the mentioned parts.
Yours faithfully

Jackson

Jackson Enterprises,

P.O.BOX 4532-09000

MAYWATHERIS

21^ST DECEMBER 2017

KACKIMS CONSTRUCTION LTD,

P.O. BOX 353-109022

MIDDLEHAM

RE: TRADES OF THE SUPPLY OF THE ATTACHED PRODUCTS

With regards to the send details, we are requesting for the supply of the mentioned items. This letter is therefore send to you in request for the supply of the details concerning the supply, which has to involve the cost in the current market.

We look forward for your response concerning the supplies of the materials to enhance the working for the project.

Yours faithfully

Jackson

Task 2

Analysis of quotations

With proper analysis, the choice for Sound Interiors P/L is made in order to supply the stated quotation. First, it is clear that the Sound Interiors P/L subcontractor is aware of the specification of the lining of the dwelling plans and therefore included key details which are needed to complete the project. The understanding of the project is a key to ensure that the subcontractor will be able to deliver on what is needed. Sound Interiors P/L was able to provide ley information of similar works in the review, which they have carried before. This experience will be key in implementation of this project and is highly needed. From the inspection details, it is clear that Sound Interiors P/L is able to understand the key details of this project and this is a clear indication that they can deliver as required in the project. On the other hand, West Coast Plasterboard was unable to state the scope of work and the different elements which will be involved in the project. This is a key step to ensure that the selected subcontractor will be able to deliver on the key requirements and specification of this project. The previous experience which is highlighted on the quotation is a key indicator that the subcontractor will be able to deliver on what is required on this part. Therefore, with this view it is reasonable to award the contractor the tender to be able to commence the work on the specified items as soon as possible.

In addition, as stated, the project is under tight schedule and the duration was a key specification for the different activities. With this requirement needed, Sound Interiors P/L was able to deliver the best timeline which will be able suit the different activities and on our schedule. The specified timeline for the different activities stated by Sound Interiors P/L was reasonable and therefore warranted to be able to take such time for the completion of the project. The breakdown of the activities and the duration, which they are able to take, were well done and explained. This led to the choosing of the Sound Interiors P/L to be the subcontractor to supply and implement this part of the project. The timeline stated by West Coast Plasterboard was not able to get accommodated on the project schedule and therefore unable to consider such duration. This will mean that the project will need and extension I the subcontractor sticks to the mentioned timeline.

Additionally, the alignment of the quotation from Sound Interiors P/L was well presentable and able to bear the key details on the specified work and activities. The specified measurement of the work was able to suit the different activities for the work, which was quoted for, and able to meet the specific condition needed for the work. The scope of work was explained well by the subcontractor and this gives the insight of the expectation from Sound Interiors P/L. moreover, the process for the different items on the list was well specified and not exaggeration was done. This is a key point of honesty which means that the subcontractor can be relied on to deliver according to the mandate and scope of work. Moreover, the scope of work was well defined in the case of Sound Interiors P/L. this shows that the subcontractor is experienced on such works and will be able to deliver quality work on the different items. The arrangement of the items needed and the scope of work on the items was a clear indicator that the subcontractor was conversant with the works. The experience of Sound Interiors P/L can be seen from the presentation of the document and its alignment to suit the specific roles. The document were able to show that Sound Interiors P/L is an experienced subcontractor who understands the dynamics of the works in the industry.

Moreover, the details of the subcontractor and their review is a key element to choose the best subcontractor. From the overview and the profile, the Sound Interiors P/L is a more experience subcontractor to work with and enhance the delivery of this project. Being listed on the part of best subcontractor is able to offer confidence that the subcontractor has been able to deliver in the previous projects and therefore we offer the benefit to this one as well. The subcontractor was able to list the different areas, which he has worked, and the certificates of completion of the projects. This is a proof that Sound Interiors P/L can be relied on to complete the specified tasks. Additionally, Sound Interiors P/L was able to attach all the requirement, which included the legal business name, and tax compliance, which were key for the consideration. This is able to show that the subcontractor is known and able to comply with the different legal requirements in the industry. This raises the confidence and trust on this subcontractor to deliver the works. The legal parts are key to ensure that the contractors can deliver within the contract stated. This means that the subcontractor can honour the agreements and contracts, which will be entered unto.

Task 3

There are many risks involved in preparing a tender.

• Main risks that considered prior to tendering for a construction project.

The construction process is able to involve some key risks, which must be resolved since it is a key process in the construction industry before the tendering process. For a construction project, one of the key risk, which may be faced is the lack of clarity of the project, which may lead to uncertainty and misunderstanding (Sauvage & Haouari, 2012). The tender documents must be clear stating the obligations and duties of each stakeholder to ensure that conflict of interests do not happen. The tendering process is able to assume that the timeline and the cost factors are workable. The uncertainty in this process is usually a risk with the information in mind that the different stakeholder will be able to agree to the different specifications and deliver within those parameters. The uncertainty on the outcome on the implementation process is a key risk which is found on the tendering process. The workability of the other processes and the agreements of the parties is a key risk to this process.

Another key risk, which must be considered before the tendering, is the incorrect labour or cost of materials. Wrong calculation of the material and labour cost means that the different work specifications will not be procured and implemented as anticipated. This means that the risks of the costs factors must be addressed and therefore the correct estimated in consideration of the market variations are provided (Strategic Intelligence Process, 2015). This is a key risk, which the whole of construction process in a project is related to and should be addressed during the tendering process. Moreover, the disputes resolution process relating to the payments from the different parties must be considered during the tendering process. This is because many of the construction project usually stall due to the lack of proper payment agreement by the different stakeholders. This risk is related to the finance area and the stakeholders must agree on the terms of payment and the way to resolve such disputes when they arise. This will ensure that all the parties are accommodated and their interests are taken care of during the implementation period.

In addition, prior to the tendering process, the present of a channel to solve the industrial disputes, which may arise due to the misunderstanding on site, must be placed. This ensures that the different differences are resolved within the shortest time possible and ensure that implementation of the project is able to continue. The industrial dispute are able to hinder the implementation of the projects. This means that a proper channel of solving such disputes must be in place before the tendering process is done. Planning g risks are other key risks must be addressed prior to the tendering process. A clear work plan must be developed in order to ensure that the different activities has a sequence which must be done. This will ensure that the planners have a clear map of the way the different activities will be carried out during the implementation period.

In addition, risks, which are related to the breach of the contracts, must be addressed prior to the tendering process. This will help to create an environment where the different tenderers are serious due to the placed mechanism. Moreover, addressing this risk will ensure the tenders will be able to meet the different specification and ensure that the tenders are delivered by the people who have the capacity to deliver (Sauvage & Haouari, 2012). The addressing of these risks will be able to come up with the consequences, which each party will be able to face in case they are able to breach the contract. In addition, it will be able to provide the condition under which one can be able to breach the contract and therefore set the environment where each party will be able to work comfortably.

• main risks involved with engaging unknown sub-contractors and suppliers

Engaging suppliers and sub-contractors unknown to may at times risk the time of completion of the project within the stipulated time (Raydugin, 2017). This is the greatest risks, which the main contractor is able to take by engaging the suppliers and sub-contractors. With the estimate of the work completion, the main contractor has the role to make sure that the work is accomplished within the stipulated timeline. Nevertheless, when the sub-contractor is involved, the risk of failing to meet the deadline is faced in many times. The main contractor is therefore meant to deal with the risks of the timeline and pushing the suppliers and the sub-contractor to deliver within the stipulated timeline. In many cases, the sub-contractor will have lesser workforce for them to make additional profit rather than involving much workforce to finish within the stated time.

In addition, another key risk of involving the unknown sub-contractors and suppliers is the presence of the variations and changes. Many of the unknown subcontractor will get the jobs without being clear on the status of the environment they will work on or the requirements. When they are on the ground, they will be able to meet different situations and turn to the main contractor with variation on the costs and time. These variations will mean that the work plan of the main contractor has to change in order to complete the project within the stated timeline and within the budget (Brandon, 2006). Moreover, the working relationship is another risk, which is involved when one chooses to engage the unknown subcontractors and suppliers. At these moments, the main contractor is able to engage other people who have different working formula and different views. This can hinder the working environment when a lot of differences are involved and need to be resolved. This may lead to a lot of time being used to resolve working disputes rather than working on the project. The main contractor is therefore faced to meet these changes and variation of lose the subcontractors and suppliers. With the time specification this is a risk, which the main contractor has to deal with and therefore seek for proper solution.

If the agreement is not reached or the working environment is not conducive for the subcontractors and suppliers, many of the unknown subcontractors and suppliers are able to quit without even notice to the main contractor (Brandon, 2006). Therefore, the main contractor is able to face the risk of unaccomplished activities when engaging the unknown subcontractors and suppliers. When the suppliers and subcontractors access the situation and find that they will not be able to make enough profit as they anticipated, the quit without the notice and this means that the main contractor has to place more effort and expenses to have the activities accomplished within the required time. Risk on the quality is another risk, which is faced when engaging the subcontractors and suppliers (Dubosson & Fragnière, 2012). Without proper analysis, the subcontractors and supplier will move to make maximum profit even if it means by engaging sub quality work. The main contractor must therefore engage additional supervision to ensure that they provide quality work.

Lastly, many of the unknown subcontractors and supplier will claim to be specialist while they are optimists. This is a risk, which the main contractor has to deal with when engaging the subcontractors and specialist. Some will lack the knowledge to deliver what is required. The main contractor therefore has to rush with time and ensure that they get the best suppliers and subcontractors who can deliver the required specifications.

References

DUBOSSON, M., & FRAGNIÈRE, E. (January 01, 2012). Perceived Risk Management. https://www.scribd.com/document/300077189/Greg-N-Gregoriou-The-Banking-Crisis-Handbook-2009-pdf

RAYDUGIN, Y. (January 01, 2017). Project Risk Management. https://www.buchhaus.ch/detail/ISBN-9781118482438

BRANDON, D. M. (January 01, 2006). Risk Planning and Management. https://www.igi-global.com/chapter/risk-planning-management/28182

Strategic Intelligence Process. (January 01, 2015). https://www.igi-global.com/chapter/strategic-intelligence-process/122929

SAUVAGE, T., & HAOUARI, M. (January 01, 2012). Risk Management. http://docplayer.net/25421720-Risk-analysis-of-the-logistics-outsourcing.html