Question:
Your task is to prepare a report considering the commercial issues that affect projects. These issues include finance, pr
ocurement, contract, supply and legal aspects. You should consider a project of your choosing and evaluate commercial issues. The project may be one that you have been personally involved with in the past, or the project could be a commercial venture that you like to perform in the future. To perform this assignment you will need to:
- Inform the reader of your report what project you have chosen. Undertake an appraisal of the project’s business environment.
- Carry out an investment appraisal for the project. You are to represent a scenario where there is a requirement for investment in the project and a capital budgeting exercise must be performed. Perform an investment appraisal, ensuring you critically analyse the capital budgeting tools available. Make sure you consider differing financial scenarios. Given that you might not be able to access data that will give you exact figures, you may use realistic estimates for this exercise.
- Consider supply chain or procurement issues: explain how the issues can be managed. Elaborate on the role which contracts play in managing supply chain and procurement issues.
- Discuss legal issues that can impact the project. Critically evaluate how legal issues can be managed, avoided or mitigated.
Answer:
Introduction
The Banister Infant and Nursery School Project is one of the significant initiatives taken by the Southampton City Councils with the aim of reducing the cost associated with the education of children in the Southampton area.
This report is aimed at appraising the commercially feasible project thus highlighting the environment of the same and the effect of commercial integrity on the successful achievement of the project objectives.
1.1 Definition of project business
The Banister Infant and Nursery School Project is a part of the Moorland School Project taken up by Southampton City Council, aimed at the development of three educational facilities in the locality (Banister Infant and Nursery school, Wordsworth Infant school, and Moorlands Primary School) within a very limited funding. The Banister Infant and Nursery school would provide the locales with an opportunity to child education at a much less expense than that of the private education institutions that prevail in the region.
1.2 Project rationale
At present, the number of public schools in the Southampton region is much less than that of that of the requirements of the local people. Thus, the residents of the region are compelled to send their children to private institutes, which are far more expensive than the public institutions. Thus, the Southampton City Council has taken up the initiative of developing the new school for providing the public with an opportunity of less expensive child education.
1.3 Project options appraisal
The following appraisal techniques would be utilized for appraising the project:
- Business environment appraisal: would be conducted for the identification of the factors that might affect the commercial aspect of the project.
- Investment appraisal: Investment appraisal techniques would be utilized for estimating the commercial success of the project.
1.4 Preferred options
The preferred options for conducting this project are:
- Producing a core strategy document with the aim of identifying the strategies that could be utilized for addressing the commercial issue associated with a project.
- Consultation reports, along with audit reports to identify the progress of the project and the recommendations made by the experts at different stages of the same.
1.5 Project success factors
The success factors of the project have been highlighted below:
- The project should be completed within the time and budget committed to the Southampton City Council.
- Effective communication and project planning activities should be utilized.
2.0 Business environmental appraisal
The following sections of the report would be utilized for appraising the business environment of the Banister Infant and Nursery School Project.
2.1 PESTLE analysis
| Factors | Description |
| Political | The project has been initiated by the Southampton City Council and would thus have full political support. |
| Economic | The project would be financed by the Southampton City Council and would thus not be affected by the economic conductions of the market. |
| Social | The nature of the project ensures that there would not be any social opposition towards the same. |
| Technological | The technological requirements of the construction work are easily available in the market. |
| Legal | The number of lawsuits that have been pressed against such novel social projects in the past few years is significantly low. |
| Environmental | The number of public schools in the Southampton City Council are is far less compared to the demand of the public, thus creating the perfect environment for conducting the project. |
2.2 Porter five forces
| Factors | Description |
| Supplier power | The supplier power j is high, as the contracts once made with the suppliers cannot be revoked easily. |
| Buyer power | The project is being developed so as to encourage the residents of Southampton City Council (who currently send their children to expensive private schools) in public schooling. Thus, the buyer power is high. |
| Threat of new entrants | Low, as it is very less likely that any private school would be capable of providing educational services at less expenses. |
| Threat of Substitutes | Low, as private schools would not be able to match up with the low cost educational facilities of public schools. |
| Competitive Rivalry | High, as the Banister Infant and Nursery School would have to compete with the standard of services provided by the private school operating in the region. |
3.0 Project investment appraisal
The following section of the report would include the tools that have been utilised for conducting the investment appraisal of the project under consideration. The annual accounts of the project would be included in section 3.1, followed by the details of the project funding, budgeting and cost control and cash flow schedule of the project in the successive sections.
3.1 Annual accounts
The following table indicates the 3-year financial plan of the project under consideration.
| Banister Infant and Nursery School Project | ||||||
| 3 year financial plan | ||||||
| Balance sheet projections | ||||||
| Assets | Initial balance | Year 1 | Year 2 | Year 3 | ||
| Cash in hand | £ 6,000,000.00 | £ 5,890,532.42 | £ 5,573,136.84 | £ 6,768,636.55 | ||
| Accounts receivable | £ 20,000.00 | £ 20,000.00 | £ 20,000.00 | £ 20,000.00 | ||
| Total inventory available | £ 15,000,000.00 | £ 15,000,000.00 | £ 15,000,000.00 | £ 15,000,000.00 | ||
| Expenses paid in advance | £ – | £ – | £ – | £ – | ||
| Deferred taxes | £ – | £ – | £ – | £ – | ||
| Other assets | £ 10,000.00 | £ 10,000.00 | £ 10,000.00 | £ 10,000.00 | ||
| Current assets (Total) | £ 21,030,000.00 | £ 20,920,532.42 | £ 20,603,136.84 | £ 21,798,636.55 | ||
| Estimated cost of Buildings | £ 25,000.00 | £ 25,000.00 | £ 25,000.00 | £ 25,000.00 | ||
| Estimated cost of Land | £ 10,000.00 | £ 10,000.00 | £ 10,000.00 | £ 10,000.00 | ||
| Capital improvements | £ 5,000.00 | £ 5,000.00 | £ 5,000.00 | £ 5,000.00 | ||
| Estimated cost of machineries and equipments in use | £ 100,000.00 | £ 100,000.00 | £ 100,000.00 | £ 100,000.00 | ||
| Less: Accumulated depreciation expense | £ – | £ 26,000.00 | £ 52,520.00 | £ 79,560.00 | ||
| Estimated current cost of properties and equipments | £ 140,000.00 | £ 114,000.00 | £ 87,480.00 | £ 60,440.00 | ||
| Total assets | £ 21,170,000.00 | £ 21,034,532.42 | £ 20,690,616.84 | £ 21,859,076.55 | ||
| Liabilities | Initial balance | Year 1 | Year 2 | Year 3 | ||
| Payable Accounts | £ 50,000.00 | £ 50,000.00 | £ 3,000.00 | £ 3,000.00 | ||
| Accrued expenses | £ – | £ – | £ – | £ – | ||
| Short term debts | £ – | £ – | £ – | £ – | ||
| Leases | £ – | £ – | £ – | £ – | ||
| Other current liabilities | £ 5,000.00 | £ 5,000.00 | £ 5,000.00 | £ 5,000.00 | ||
| Current liabilities (Total ) | £ 55,000.00 | £ 55,000.00 | £ 8,000.00 | £ 8,000.00 | ||
| Loans taken | £ 80,000.00 | £ 65,522.02 | £ 50,320.13 | £ 34,358.16 | ||
| long term debts | £ 20,000.00 | £ 25,000.00 | £ 75,000.00 | £ 100,000.00 | ||
| Total debt | £ 155,000.00 | £ 145,522.02 | £ 133,320.13 | £ 142,358.16 | ||
| Additional liabilities | £ – | £ – | £ – | £ – | ||
| Current liabilities | £ 135,000.00 | £ 120,522.02 | £ 58,320.13 | £ 42,358.16 | ||
| Equity | Initial balance | Year 1 | Year 2 | Year 3 | ||
| The Owner’s equity | £ 1,000,000.00 | £ 1,000,000.00 | £ 1,000,000.00 | £ 1,000,000.00 | ||
| Paid-in capital | £ 4,500,000.00 | £ 4,500,000.00 | £ 4,500,000.00 | £ 4,500,000.00 | ||
| Preferred equity | £ – | £ – | £ – | £ – | ||
| Retained earnings | £ – | -£ 125,989.60 | -£ 457,703.30 | £ 702,718.39 | ||
| Equity (Total ) | £ 5,500,000.00 | £ 5,374,010.40 | £ 5,042,296.70 | £ 6,202,718.39 | ||
| Liabilities and equity (Total ) | £ 5,635,000.00 | £ 5,494,532.42 | £ 5,100,616.84 | £ 6,245,076.55 | ||
3.2 Project funding
The funds allocated to various domain of the project have been depicted below:
| Sl. no | Activity | Allocated Fund |
| 1. | Project Planning Activities | £ 21,500 |
| 2. | Contracts management | £ 36,000 |
| 3. | Developing project documents | £ 14,500 |
| 4. | Construction phase | £ 194,500 |
| 5. | Operations activities of the school starts | £ 75,000 |
| 6. | Project Signoff | £ 7,000 |
| Total fund for Banister Infant and Nursery School Project | £ 348,500 | |
3.3 Financial investment appraisal
3.3.1 Payback period
The payback analysis of the project is being depicted in the table below:
| Payback Analysis | ||||
| Benefits of the project | Year 1 | Year 2 | Year 3 | |
| Reduction in educational cost | 10000000 | 10000000 | 10000000 | |
| Earning from the school | 350000 | 450000 | 500000 | |
| services to the citizens | 150000 | 150000 | 150000 | |
| Total Benefits available from project | 10500000 | 10600000 | 10650000 | £ 31,750,000 |
| Costs of the project | Year 1 | Year 2 | Year 3 | |
| Cost of developing the buildings | £ 200,000 | £ – | £ – | |
| Cost of equipments used in construction work | £ 100,000 | £ – | £ – | |
| Operation costs | 4800000 | £ 4,800,000 | £ 4,800,000 | |
| other costs | £ – | £ – | £ – | |
| Cost of maintenance | £ 2,500,000 | £ 2,500,000 | £ 1,500,000 | |
| Total Costs | 7600000 | £ 7,300,000 | £ 6,300,000 | £ 21,200,000 |
| Net benefits/costs | £ 2,900,000 | £ 3,300,000 | £ 4,350,000 | |
| Cumulative benefits/costs | £ 2,900,000 | £ 6,200,000 | £ 10,550,000 | |
| Payback Period | 2.57236842 | |||
As depicted in the table above, the payback period of the project is 2.6 years approximately.
3.3.2 Net present value
The net present value of the project is being provided below:
| Cost Benefit Analysis using Present Value | |||
| Benefits of the project | Year 1 | Year 2 | Year 3 |
| Reduction in educational cost | £ 10,000,000 | £ 10,000,000 | £ 10,000,000 |
| Earning from the school | £ 350,000 | £ 450,000 | £ 500,000 |
| services to the citizens | £ 150,000 | £ 150,000 | £ 150,000 |
| Total Benefits available from project | £ 10,500,000 | £ 10,600,000 | £ 10,650,000 |
| Costs of the project | Year 1 | Year 2 | Year 3 |
| Cost of developing the buildings | £ 200,000 | £ – | £ – |
| Cost of equipments used in construction work | £ 100,000 | £ – | £ – |
| Operation costs | £ 4,800,000 | £ 4,800,000 | £ 4,800,000 |
| other costs | £ – | £ – | £ – |
| Cost of maintenance | £ 2,500,000 | £ 2,500,000 | £ 1,500,000 |
| Total Costs | £ 7,600,000 | £ 7,300,000 | £ 6,300,000 |
| Net benefits/costs | £ 2,900,000 | £ 3,300,000 | £ 4,350,000 |
| Cumulative benefits/costs | £ 2,900,000 | £ 6,200,000 | £ 10,550,000 |
| Net benefits/cost (NPV @ 5%) | 2761904.762 | £ 2,993,197.28 | £ 3,757,693.55 |
| Cumulative NPV | 2761904.762 | £ 5,755,102.04 | £ 9,512,795.59 |
3.4 Budgeting and cost control
3.4.1 Project WBS
The work break down structure of the project is as follows:
Figure: The work break down structure of the Banister Infant and Nursery School Project
(Source: Developed by author)
3.4.2 Project schedule and budget
The estimated schedule of the project is as follows:
| Outline Number | Task Name | Duration | Start | Finish | Predecessors | Cost |
| 0 | Banister Infant and Nursery School Project | 646 days | Mon 23-01-17 | Mon 15-07-19 | £ 348,500.00 | |
| 1 | start project | 0 days | Mon 23-01-17 | Mon 23-01-17 | £ 0.00 | |
| 2 | stage 1 of the project: Planning phase | 23 days | Mon 23-01-17 | Wed 22-02-17 | £ 21,500.00 | |
| 2.1 | Searching for the property on which the school building built | 13 days | Mon 23-01-17 | Wed 08-02-17 | 1 | £ 20,000.00 |
| 2.2 | Representatives of city council visit sit and approve it | 10 days | Thu 09-02-17 | Wed 22-02-17 | 3 | £ 1,500.00 |
| 2.3 | Site for school finalized | 0 days | Wed 22-02-17 | Wed 22-02-17 | 4 | £ 0.00 |
| 3 | stage 2 of the project: Contracts management | 70 days | Thu 23-02-17 | Wed 31-05-17 | £ 36,000.00 | |
| 3.1 | Communicating with the property owners | 16 days | Thu 23-02-17 | Thu 16-03-17 | 5 | £ 5,000.00 |
| 3.2 | Developing contracts for the procurement of the site | 19 days | Fri 17-03-17 | Wed 12-04-17 | 7 | £ 15,000.00 |
| 3.3 | finalization of terms and conditions of the contract | 15 days | Thu 13-04-17 | Wed 03-05-17 | 8 | £ 10,000.00 |
| 3.4 | finalizing contracts pricing | 15 days | Thu 04-05-17 | Wed 24-05-17 | 9 | £ 5,000.00 |
| 3.5 | Signing contract with the property owner | 5 days | Thu 25-05-17 | Wed 31-05-17 | 10 | £ 1,000.00 |
| 4 | stage 3 of the project: Developing project documents | 92 days | Thu 01-06-17 | Fri 06-10-17 | £ 14,500.00 | |
| 4.1 | Developing the schedule and budget of the project | 20 days | Thu 01-06-17 | Wed 28-06-17 | 11 | £ 3,000.00 |
| 4.2 | developing the project plan | 17 days | Thu 29-06-17 | Fri 21-07-17 | 13 | £ 4,000.00 |
| 4.3 | finalizing the plan | 15 days | Mon 24-07-17 | Fri 11-08-17 | 14 | £ 1,500.00 |
| 4.4 | developing the site plans | 20 days | Mon 14-08-17 | Fri 08-09-17 | 15 | £ 3,000.00 |
| 4.5 | developing the construction plans | 20 days | Mon 11-09-17 | Fri 06-10-17 | 16 | £ 3,000.00 |
| 4.6 | Client approves project plan | 0 days | Fri 06-10-17 | Fri 06-10-17 | 17 | £ 0.00 |
| 5 | stage 4 of the project: Construction phase | 376 days | Mon 09-10-17 | Mon 18-03-19 | £ 194,500.00 | |
| 5.1 | Bidding phase | 61 days | Mon 09-10-17 | Mon 01-01-18 | £ 12,500.00 | |
| 5.1.1 | Develop biding documents | 36 days | Mon 09-10-17 | Mon 27-11-17 | 18 | £ 1,000.00 |
| 5.1.2 | making copies of bidding documents | 7 days | Tue 28-11-17 | Wed 06-12-17 | 21 | £ 500.00 |
| 5.1.3 | Conducting the bidding process | 15 days | Thu 07-12-17 | Wed 27-12-17 | 22 | £ 10,000.00 |
| 5.1.4 | Contractor finalized | 3 days | Thu 28-12-17 | Mon 01-01-18 | 23 | £ 1,000.00 |
| 5.2 | Construction phase | 191 days | Tue 02-01-18 | Tue 25-09-18 | £ 70,500.00 | |
| 5.2.1 | Colleting all permits required for the construction of the school building | 31 days | Tue 02-01-18 | Tue 13-02-18 | 24 | £ 5,000.00 |
| 5.2.2 | Clearing the site | 6 days | Wed 14-02-18 | Wed 21-02-18 | 26 | £ 5,000.00 |
| 5.2.3 | construction work | 150 days | Thu 22-02-18 | Wed 19-09-18 | 27 | £ 60,000.00 |
| 5.2.4 | Representatives of the Southampton city council review the building | 4 days | Thu 20-09-18 | Tue 25-09-18 | 28 | £ 500.00 |
| 5.2.5 | Constructed building approved by the Southampton city council | 0 days | Tue 25-09-18 | Tue 25-09-18 | 29 | £ 0.00 |
| 5.3 | Interior designing | 124 days | Wed 26-09-18 | Mon 18-03-19 | £ 111,500.00 | |
| 5.3.1 | Installing all electronic and electrical equipments | 30 days | Wed 26-09-18 | Tue 06-11-18 | 30 | £ 50,000.00 |
| 5.3.2 | Plumbing work | 20 days | Wed 07-11-18 | Tue 04-12-18 | 32 | £ 20,000.00 |
| 5.3.3 | Flooring work | 36 days | Wed 05-12-18 | Wed 23-01-19 | 33 | £ 20,000.00 |
| 5.3.4 | Painting work | 32 days | Thu 24-01-19 | Fri 08-03-19 | 34 | £ 20,000.00 |
| 5.3.5 | Representatives of the Southampton city council review the finished building | 5 days | Mon 11-03-19 | Fri 15-03-19 | 35 | £ 500.00 |
| 5.3.6 | Constructed building approved by the Southampton city council | 1 day | Mon 18-03-19 | Mon 18-03-19 | 36 | £ 1,000.00 |
| 5.3.7 | Building handed over to the Southampton city council | 0 days | Mon 18-03-19 | Mon 18-03-19 | 37 | £ 0.00 |
| 6 | stage 5 of the project: operations activities of the school starts | 65 days | Tue 19-03-19 | Mon 17-06-19 | £ 75,000.00 | |
| 6.1 | collecting all the permits required for operating the school | 30 days | Tue 19-03-19 | Mon 29-04-19 | 38 | £ 20,000.00 |
| 6.2 | Hiring resources for working in the school | 30 days | Tue 30-04-19 | Mon 10-06-19 | 40 | £ 50,000.00 |
| 6.3 | Admissions start | 5 days | Tue 11-06-19 | Mon 17-06-19 | 41 | £ 5,000.00 |
| 7 | stage 6 of the project: Project Signoff | 20 days | Tue 18-06-19 | Mon 15-07-19 | £ 7,000.00 | |
| 7.1 | signoff with the Southampton city council | 15 days | Tue 18-06-19 | Mon 08-07-19 | 42 | £ 1,000.00 |
| 7.2 | Signoff with construction contractors | 15 days | Tue 18-06-19 | Mon 08-07-19 | 42 | £ 1,000.00 |
| 7.3 | Project documentation completed | 15 days | Tue 18-06-19 | Mon 08-07-19 | 42 | £ 5,000.00 |
| 7.4 | Project resources released | 5 days | Tue 09-07-19 | Mon 15-07-19 | 46,44,45 | £ 0.00 |
| 8 | Project end | 0 days | Mon 15-07-19 | Mon 15-07-19 | 47 | £ 0.00 |
The Gantt chart of the project has been depicted in the following section of the report.
Figure: Gantt chart of the Banister Infant and Nursery School Project
(Source: Developed by author)
The earned value analysis of the project, as conducted on 11th January, 2017 has been depicted in the following diagram:
Fig : Earned value analysis of project
3.5 Cash flow
The cash flow of the project is being outlined in the section below:
| Banister Infant and Nursery School Project | |||||
| 3 year financial plan | |||||
| Cash flow | |||||
| Year 1 | Year 2 | Year 3 | Total | ||
| Operating activities | |||||
| Net income of the project | -£ 125,989.60 | -£ 331,713.70 | £ 1,160,421.69 | £ 702,718.39 | |
| Depreciation cost | £ 26,000.00 | £ 26,520.00 | £ 27,040.00 | £ 79,560.00 | |
| Accounts receivable | £ – | £ – | £ – | £ – | |
| Project Inventories | £ – | £ – | £ – | £ – | |
| Accounts payable | £ – | -£ 47,000.00 | £ – | -£ 47,000.00 | |
| Amortization of assets | £ – | £ – | £ – | £ – | |
| Other liabilities of the project | £ – | £ – | £ – | £ – | |
| Additional cash flow items | £ – | £ – | £ – | £ – | |
| Total expense of all operating activities | -£ 99,989.60 | -£ 352,193.70 | £ 1,187,461.69 | £ 735,278.39 | |
| Investments | |||||
| Capital expenditures of the project | £ – | £ – | £ – | £ – | |
| Cost of business acquisition | £ – | £ – | £ – | £ – | |
| Revenue generated from selling fixed assets | £ – | £ – | -£ 1,000.00 | -£ 1,000.00 | |
| Other investments | £ – | £ – | £ – | £ – | |
| Total investing activities | £ – | £ – | -£ 1,000.00 | -£ 1,000.00 | |
| Financing activities | |||||
| Long term debts | -£ 9,477.98 | £ 34,798.12 | £ 9,038.02 | £ 34,358.16 | |
| Stock | £ – | £ – | £ – | £ – | |
| Sum total of all cash dividends paid | £ – | £ – | £ – | £ – | |
| Stock of the project | £ – | £ – | £ – | £ – | |
| Additional cash flow items | £ – | £ – | £ – | £ – | |
| Total financing activities | -£ 9,477.98 | £ 34,798.12 | £ 9,038.02 | £ 34,358.16 | |
| Cumulative cash flow | -£ 109,467.58 | -£ 317,395.58 | £ 1,195,499.72 | £ 768,636.55 | |
| Beginning cash balance | £ 6,000,000.00 | £ 5,890,532.42 | £ 5,573,136.84 | ||
| Ending cash balance | £ 5,890,532.42 | £ 5,573,136.84 | £ 6,768,636.55 | ||
4.0 Supply chain
Experts in the domain of construction engineering projects define the term supply chain as the sequence of resources, process and people activities that are utilized for the construction of products that fulfills the objectives of a project (Pala et al. 2016). The following section of the report would shed some light on the supply chain issues that might affect the progress of the project.
4.1 Supply chain issues
The progress of the Banister Infant and Nursery School Project might be affected by the following supply chain problems:
- The lack of communication between the building contractors, raw material suppliers, architects, construction workers and the Southampton City Council representatives associated with the project (Zheng, Tong and Sun 2015).
- Any architectural design change requests made by the Southampton City Council after significant progress in the project.
- The quality of products procured through the suppliers being of substandard quality (Brandenburg et al. 2014).
- Lack of proper supply chain planning and control activities.
- Non-utilization of appropriate methods and tool for measuring the performances of the building contractors, raw material suppliers, architects, construction workers, and other resource associated with the project (Pala et al. 2016).
4.2 Procurement route and purchasing
The procurement of the material required for construction would be conducted through the process of bidding and tendering. The tenders for the supply of all raw materials required in the project would released in public, along with the details of the qualities of the materials to be supplied, the legal consequences of not meeting the quality levels and the tools that would be used for performance measurement.
The bidding and tendering process would not only allow the selection of the contractor capable of supplying goods at the lowest level, thus guaranteeing the availability of products at the lowest price. On the other hand, legal contracts developed during the tendering process would also ensure that the contractors remain aware of the penalties that they would have to face in case the term and contracts are not abided by. Thus, it can be said that issues associated with the supply chain process (as identified in section 4.1 ) would be successfully avoided by the selected procurement process.
4.3 Management of supply chain issues: the role of contractors
The supply chain issues that have been highlighted in the section above can be mitigated using the following strategies:
| Sl. No | Issue | Mitigation |
| 1. | Lack of communication | Effective communication plans need to developed and utilized for so as to facilitate the sharing of information in the supply chain (Fewings 2013). |
| 2 | Architectural design change requests made by the Southampton City Council | Effective change management procedures need to be followed during the project life cycle. |
| 3. | Raw materials of substandard quality | The legal contracts should include the details regarding the quality of raw materials to be supplied to the project (Zheng, Tong and Sun 2015). |
| 4. | Lack of planning | Appropriate supply chain planning methodologies should be utilized (Pala et al. 2016). |
| 5. | Performance measurement | Effective performance appraisal tools need to be utilized in the project (Brandenburg et al. 2014). |
The construction and raw material supplier contractors can take up a significant role in the mitigation process. The inclusion of details of the raw materials to be supplied in the supply contract documents would essentially be an effective strategy in avoiding further issues in the (Pala et al. 2016). On the other hand, the same strategy cam be utilized by the building contractors, so as to remain on the same page with the representative of Southampton City Councils regarding the architectural detail of school building (Zhen, Tong and Sun 2015).
4.4 Contract management
The ‘time and cost contract management suite’, as the name implies, emphasis on the core elements any construction contract work, namely the time and cost of the project. This particular contract suite is utilized mainly in case of such project works that scientific approach for the management of the risks associated with a construction work. The project being discussed in this report is essentially of the same nature and thus the time and cost contract management suite’ can be utilized for managing the same.
The utilization of this contract management issue would facilitate the following activities:
- Development of the building according to the designs specified by the Southampton City council
- Development of the building with the raw materials provided by the contractor organization itself
- Any pricing strategy can be utilized along with this particular contract management process.
5.0 Legal issues impacting the project and their management
5.1 Legislative issues
The Banister Infant and Nursery School Project must adhere to the following legislative consents of the Government of the United Kingdom;
- The Building Regulations Approval has to collected from the appropriate ‘building control body’ or BCB of the government (Burr 2016). This particular consent approves the architectural plan of any building and non-adherence to the approved plan often results in prosecution of the construction contractors associated with it and/or fines for the same.
The Building Regulations Approval procedure, as conducted by the Government of the United Kingdom, also mandates the detailed documentation regarding the ventilation techniques utilized in the buildings, along with that of the waste disposal methods, methods for protection from falling, techniques utilized in ensuring the electrical safety of the worker, etc (Holder and O’Brien 2013). Non-submission of these documents and/ or the non-adherence to the approved plans, as mentioned earlier, leads to fines or prosecution.
- The non-adherence to the legislative regulations for the Land Registration Act 2002 (during the procurement of the site for the school might result in the prosecution or monetary fines of the representatives of the Southampton city council (Agapiou 2013).
5.2 Management of legal issues : conflict and dispute resolution methods
Experts in the domain of construction management projects comment that the most construction projects conducted in the United Kingdom’s utilize the mediation technique for resolving any legal dispute associated with the procurement process associated with the project (HuygHe and Chan 2013). Researchers Holder and O’Brien (2013) on the other hand, are of the opinion that the popularity of this particular dispute resolution technique among construction project managers lies in the very fact that the mediation technique is by far the fastest available resolution process; each resolution process takes 1 to 2 days on an average, thus saving significant amount of time. On the other hand, it not only encourage the involved parties to search for solutions acceptable to both the sides, but also ensures that the details of the dispute are not released in public.
It is worth mentioning the mediation process is essentially conducted in the presence of third party. On the other hand, the parties involved in the dispute can also conduct a resolution process by themselves (without the assistance or interference of any third party) thereby making attempts of finding a solution to the dispute . Such dispute resolution processes is known as negotiation (Burr 2016). Besides this, several other dispute resolution techniques can also be utilized, like that of neutral evaluation, expert determination, and litigation.
6.0 Conclusion and Recommendations
The preceding sections of the report provide detailed information regarding the Banister Infant and Nursery School Project, as conducted by the Southampton City Council. The background of the project has been highlighted in section 1.1 of the report, followed by the rationale of conducting the same and the methods to be utilize for appraising the same. The business environment of the project has been appraised in section 2 of the report. The findings of the same indicate that in spite of the legal, political and social support towards the project, the Banister Infant and Nursery School might have a tough time in providing the level of services that the private schools operating in the locality make available to the students. However, the investment appraisal of the project, as discussed in section 3 of the report, encourages the conduction of the same.
In the light of the discussions made in the project, the following recommendations are e being made to the managerial personnel associated with the project:
- Supply chain planning: Effective supply chain planning and control techniques should be utilized by the project management team, so as to avoid the supply and procurement issues discussed in section 4 of the report.
- Adherence to legislative regulations: The legislative regulation highlighted in section 5 of the report should be adhered to, to avoid any disputes in the future.
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