The Procurement Of Construction Project Construction Essay

The Procurement Of Construction Project Construction Essay The procurement of construction project is vast in scope because it involves the gathering and organizing of myriads of separate individuals, firms and companies to design manage and build construction products such as houses, office buildings, hotels, shopping complex, roads, bridges etc. for specific clients or customers. Procurement comes the word procure which literally means to obtain by care or effort, to bring about and to acquire. System is about organized method, approach, technique, process or procedure. In this context, project procurement is very much concerned with the organized methods or process and procurements of obtaining or acquiring a construction product such as a house, hotels and shopping complex or road and jetty. It also involves arranging and coordinating people to achieve prescribed goals or objectives. In some instances the procurement method will have already been decided before an architect is appointed, either as the result of company or authority laid down policy because the choice has already been made by the client advised by a lead consultant who is not the architect. There are many different procurement routes, it is appropriate for the mainly common routes are the traditional procurement route, the design and build procurement route and the management procurement route. Which procurement method is likely to prove the most appropriate in a given situation will depend upon the nature and scope of the work proposed, how the risks are to be apportioned, how and where responsibility for design is to be placed, how the work is to be coordinated, and on what price basis the contract is to be awarded. An important point to remember is that the choice of form of contract cannot usually be settled until the procurement method and the type of contract have been established. This will mean considering of Design responsibility, Coordination responsibility, Price basis, Plan of Work and Assessing the risks. Client Profile Cinnamon Grand is a privately owned large hotel chain in the UK. They offer comfortable accommodation across the UK and are committed to preserving the rich heritage therefore they are very passionate about the outlook of their hotel buildings. Cinnamon Grand have a strategy of adopting neglected landmark buildings and bringing them back to their former magnificent look. Subsequently, the hotel management board (client) is experienced at renovation of buildings. Although Cinnamon Grand is use to dealing with the construction of hotel buildings, they do not have an in-house executive who is either experienced enough or is able to devote sufficient time to advise the reconstruction of their properties. Project Background A recent period of bad weather and severe storms has resulted in three Cinnamon Grand hotels being significantly destroyed in the South East of the UK. All destroyed hotel buildings are located in prime locations in town settings. In August 2012, the hotel management board agreed to reconstruct the destroyed buildings to create a vibrant and attractive environment that can be enjoyed by all. The hotel management is keen on taking this unexpected event as an opportunity to improve the quality of buildings and facilities provided. The design solutions will be developed along similar lines adopted for previous hotel buildings, but the intention is to reconstruct the three hotels to match an existing hotel or even better quality than they were before the severe storm. Although the nature of damage significantly varies from one building to another, all sites will require the demolition of a number of existing structures that are not structurally sound enough to retain and reconstruct. The Client decides to undertake the three buildings under two phases. Phase 1 include roofs, guest rooms, restaurant and swimming pools. Phase 2 include dance studios, health and fitness centre and conference and meeting rooms. Clients Policy Cinnamon Grand have to invest a great deal of time, money and effort to ensure that reconstruction is always sensitive and does not compromise the dignity of the buildings and services provided. Project Budget/ Cost The Client has decided to obtain finance from a Commercial Bank which is estimated at  £120million. Project Schedule/ Time The completion date of Phase 1and 2 are critical, as the buildings require handover by 28thFeb2015 at the very latest, due to the opportunity cost of closing down business following the storm damage. The planned start date on site is 1stMarch2014. Therefore the priority should be given to rapid reconstruction of following key areas of the hotels which makes them re-open to business on 1stApril 2015. Quality (functionality and performance) Quality of the buildings is very important to the Client, as their reputation was founded on quality of accommodation and service. Reconstruction works would have to match an existing hotel or even better. Comparison of Procurement Route Type of route Speed Complexity Quality Flexibility Traditional procurement route Not the fastest of methods. Desirable to have all information at tender stage and consider two stage or negotiated tendering Basically straightforward, but complications can arise if client requires that certain sub-contractors are used. Client requires certain standards to be shown or described. Contractor is wholly responsible for achieving the stated quality on site. Client controls design and variations to a large extent Design and Build procurement route Relatively fast method. Pre-tender time largely depends on the amount of detail in the clients requirements. Construction time reduced because design and building proceed in parallel. An efficient single contractual arrangement integrating design and construction expertise within one accountable organisation. Client has no direct control over the contractors performance. Contractors design expertise may be limited. Client has little say in the choice of specialist sub-contractors. Virtually none for the client once the contract is signed, without heavy cost penalties. Flexibility in developing details or making substitutions is to the contractors advantage. Management procurement route Early start on site is possible, long before tenders have even been invited for some of the works packages. Design and construction skills integrated at an early stage. Complex management operation requiring sophisticated techniques. Client requires certain standards to be shown or described. Managing contractor responsible for quality of work and materials on site. Client can modify or develop design requirements during construction. Managing contractor can adjust programme and costs. Type of method Certainty Competition Responsibility Risk Summary Traditional procurement route Certainty in cost and time before commitment to build. Clear accountability and cost monitoring at all stages. Competitive tenders are possible for all items. Negotiated tenders reduce competitive element. Can be clear-cut division of design and construction. Confusion possible where there is some design input from contractor or sub-contractor or suppliers. Generally fair and balanced between the parties. Benefits in cost and quality but at the expense of time. Design and Build procurement route There is a guaranteed cost and completion date. Difficult for the client to compare proposals which include for both price and design. Direct design and build very difficult to evaluate for competitiveness. No benefit passes to client if contractor seeks greater competitiveness for specialist work and materials. Can be a clear division, but confused where the clients requirements are detailed as this reduces reliance on the contractor for design or performance. Limited role for the clients representative during construction. Can lie almost wholly with the contractor. Benefits in cost and time but at the expense of quality. Management procurement route Client is committed to start building on a cost plan, project drawings and specification only. Management contractor is appointed because of management expertise rather than because his fee is competitive. However competition can be retained for the works packages. Success depends on the management contractors skills. An element of trust is essential. The professional team must be well coordinated through all the stages. Lies mainly with the client almost wholly in the case of construction management. Benefits in time and quality but at the expense of cost. Recommendation to Client We would like to advise client to use design and build procurement route for hotel construction because you do not have in house executive experience in reconstruction of this project. So risk avoidance/allocation is very important for your management. According design and build procurement route, Risk can lie almost wholly with the contractor. Secondly you are concerning about possible project delays and overrun of costs beyond projects budgeted allowances. That why design and build procurement route is fast method because design and building proceed in parallel and reduced the construction time. Also there have guaranteed cost certainty and completion date. So design and procurement route is the most suitable method for this project because this route is benefits in cost and time but at the expense of quality. In this method you have no direct control over the contractors performance and contractors design expertise may be limited. But for quality, your agent or consultant may supervise the works and ensure that the contractors proposals of materials and workmanship are complied with and the work is of the required standard. Based on above reasons, we highly recommend you to use the method of design and build procurement.

Case Study on Golf Equipment Industry

The industry overview The retail sales of golf equipment industry, which includes golf clubs, bags, balls, gloves and footwear, declined from approximately $4 billion to about $3 billion in 2003 and then rebounded to around $3. 8 billion in 2007 with many threats remaining. The changes in the retail value of golf equipment industry are closely related to the total number of golf players and total rounds of golf played in the country. The participation rate of golf has dropped approximately 21% from 27. 5 million in 1998 to 22. million in 2007, being the largest decrease rate during the same period among selected sports and recreational activities including bicycle riding, fishing, hunting, running, swimming, tennis and workout at fitness club (Source: National Sporting Goods Association in Gamble 2008, C-80,). The total rounds of golf played in the United States had rarely changed in the last decades, it is especially flat from 2004 to 2007, with less than 1% changes recorded (Source : National Golf Foundation in Gamble 2008, C-80). 7% of golf equipment sales are from core golfers-those playing at least 8 times a year and averaging 37 rounds a year (Gamble 2008, C-80). Although, there are less players and less rounds played then before, manufacturers are compelled to go ahead with their innovation and development schedule and even boost their spending in marketing (Stogel 2009). There are two types of manufacturers in the golf equipment industry. High-end leading brands, which include well known name such as TaylorMade-Adidas, Fortune Brand (parent of Titleist and Cobra), Callaway, Ping, Cleveland and Nike spent huge amount of resources on R&D for innovative designs and distributed their product through on and off-course pro shops and major online golf equipment retailers. The low-end manufacturers such as Adam Golf and Dunlop Golf with less developed technological capabilities sold their products at attractively lower prices. They mainly focus on beginner and occasional golfers through department store, large sporting goods stores and discounters. The three defining characteristics of the golf equipment industry are the number of golfers, gear design innovations and brand recognition. The United States Golf Association (USGA) and the Royal & Ancient Golf Club (R&A) had started placing more and more performance regulations to limit the manufacturers’ ability to develop equipments, clubs and balls, with advanced technological innovations, because USGA officials believed that it’s an effective way of protecting historic golf courses that could not be lengthened due to space limitations, but also ensuring that the skill is the dominant element in determining game’s success. It is believed that such performance regulations had two impacts to the golf industry. Firstly, it discourages new golfers from taking up the game. Secondly, it equalises the technological differences between the high-end market leaders and the low-end producers. In all, the golf equipment industry is a fix-sized marketing driven market with current manufacturers, each trying to capture a bigger market share by growing reliance on price competitions. The competition in this industry for market share is fierce. The five-forces analysis We take the five-forces model of competition to analyse the competitive forces in five areas that affects the industry attractiveness. 1. The competitive pressures created by the rivalry among competing manufacturers are very strong and have the greatest effect on the industry attractiveness, mainly due to: a. All leading brand manufacturers are active in delivering advanced products with design innovations in order to improve their market standing, b. All leading brand manufacturers are quite equal in size and capability. They can hardly be differentiated in overall product performances. . There are fewer buyers with less demand. d. Equalization of technological capabilities due to regulatory limitation has shortened the differences in equipment performance between low-end and high-end products. e. There is growing reliance on price competitions. The competitive weapons used by companies to outmaneuver one another include: a. Most brands started the battle of price cutting. The aver age unit selling price of most golf equipments dropped. For example: a. Drivers and woods dropped from $231 in 1997 to $174 in 2007. b. Irons dropped from $75 in 1997 to $71 in 2007. c. Footwear dropped from $86 in 1997 to $81 in 2007. d. Golf bags dropped from $126 in 1997 to $116 in 2007. (Source: Golf Datatech in Gamble 2008, C79,) b. All brands are spending huge amount on R&D for technological advancement to give a better and easier swing, they also providing a boarder range of equipments to suit golfer with different needs (Rynecki 2001). In addition, some had added adjustable features such as the TaylorMade r7 drivers, which allow golfers to move tungsten weight plugs among a series of slots located in the rear of the driver to adjust launch angle and left/right dispersion. c. Manufacturers were relying on winning endorsements contracts with touring professionals to enhance their image. For example, Nike paid Tiger Wood nearly $100 million endorsement contract in 2007. d. Custom fitting was offered by most manufacturers and pro shops. It became important to gain market share as most manufacturers introduced shaft flex options in early 2000s. 2. The competitive pressures associated with the threat of new entrants were weak mainly due to: a. The market demand does not show any increase since the number of golfers and the total rounds played are decreasing year after year b. Most golfers have a very high degree of loyalty. They are highly likely to stick to the brand that they were using and normally have strongly believes to their favourite touring professionals’ choices. Along with the high technological product designs that influence most buyers’ purchasing decisions, it has made the entry barriers very high for this industry. c. Almost all existing manufactures are experiencing unpleasant profit grows in recent years. However, opportunities for new entrants still exist for low-end golf gears market under the current regulatory conditions. The new comer may be rofitable only if it completes the following goals: a. Become a fast & exact copy cat and compete on a low price. b. Be able to find reliable & low cost suppliers overseas. c. Originally has or be able to build good distribution channels, imaging Kmart or Target to have their â€Å"home brand† golf gears. 3. The competitive pressures from the sellers of substitute product ra ises from: a. The raising number of counterfeit equipments produced in China, selling online at attractive prices and ship to the world. b. The overall difficulty of the game, time consuming issues and the high golf fees are the three main barriers for recreational golfers. The current economic crisis had forced many families to cut their spending on leisure activities. As presented in Exhibit 2 of Gamble’s original case, while the participation rate for golf was decreasing, the rate for running and workout at a fitness club showed significant increase of approximately 37% and 50% from 1996 to 2007. On the other hand, in December 2003, six leading brand has created an alliance to against counterfeiters and had recorded some successes with Chinese government’s willingness of taking severe measures against rampant counterfeiting. Golf, also known as the perfect couple with business, is a challenging sport that suits all age and sex groups. Its ability of improving social networks, expanding business opportunities and harmonise domestic conflicts was perceived by its players. The remaining golfers are more likely to be the core golfers those are loyal to the game. Moreover, various governing bodies had successfully brought golf back into Olympics, starting 2016 Summer Olympics. Thus, the pressures from substitutes are moderate to normal. 4. The competitive pressures stemming from suppliers bargaining power were quite weak since: a. The clubheads were made by casting houses in Asia, where rarely union power was exercised. The design is owned by those leading brands manufacturers and they are being selective in establishing contracts with surplus offshore casting houses. b. Most brands manufacturers co-develop shafts with suppliers that specializing in shaft design and manufacturing. The collaboration had provided attractive win-win opportunities, but weakens the suppliers’ bargaining power and feasibility. . Both clubheads and shafts suppliers had rarely chance to integrate themselves and become official club manufacturer due to the high entry barriers, as discussed in force No. 2-new entrants. Golf manufactures need to pay more attention to background check to casting houses offshore. It is important to initiate effective controls on production and shipping procedures to prevent suppliers selling the same product on black market. 5. The competitive pressure stemming from creational golfers’ bargaining power were moderate to normal because: a. Buyers are the end users, in another word, golfers, who purchase the equipment infrequently and in small quantities. b. The manufacturers’ brand reputation and images are important to core golfers. c. Most golfers are very loyal to specific leading brand and has strong believes in its product performances. However, d. The demand was declining due to the number of golfers and total rounds played are declining. e. The USGA and R&A performance regulations had limited and equalized the technological capabilities of different manufacturers. The competitive pressure stemming from touring professional golfers are strong because their choices have strong influence to core golfers who watches the tournaments. The driving forces analysis The overall golf equipment market is downsizing. There are 3 major driving forces in this industry. Firstly, the regulatory design limitations adopted by USGA and R&A had driven the competitive changes. As a result, some leading brands’ capabilities of developing a sweeter swing were limited. Lower-end manufacturers got opportunities to catch up on technological capabilities and had gained more market shares and made more profits than before. In addition, it had lowered the overall profit margins in the industry. Secondly, product innovation is another key driving forces. Although the battle on developing the most advanced clubs and balls to the market has never stopped, the battle had been upgraded by calling design innovations within golf’s governing organizations’ regulatory limitations. Thirdly, the whole market trends are to be marketing driven. To play a better market mix such as understanding buyer interests, increasing product differentiations, appropriate pricing and use effective promotion tools is the key task for every manufacturer. Leading brand like Callaway used heavy TV schedule, plus print and radio for mass advertising in order to bring its Big Bertha Steelhead Plus metalwoods and irons to market (Stogel, 2000). Winning endorsement contracts with top tour professionals improves images of the brand and influences core golfers’ purchasing decision. The above driving forces are inter-related and together influencing this mature industry by making the competitions fiercer than ever. The strategic group map The strategic group map below shows the comparative market positions of selected golf equipment manufacturers using price and design innovations/advancement. Note: Circles are drawn roughly proportional to the total revenues of each manufacturer. ) The map provides some indication of brand positioning in general. It shows that Callaway, Ping and TaylorMade are likely to struggle more with market share competitions. On the other hand, the governing organizations’ regulation driving force will fa vour strategic groups like Adam and Nike as the design limitation smoothes the differences among their innovation capabilities to the high-end ones. However, this map may not mean much as most of the product brands have their own advantages and have significant market share in some specific golf equipment. For example, Nike with a very successful record in golf apparel and footwear sales, where it was the second leading golf shoes manufacturers, had never grown to 3 percents market shares of golf clubs. In all, Nike is best positioned in this map with almost no overlapping with another other brands. Key success factors The key factors determine the success of company competing in the golf equipment industry should be closely linked to the industry’s dominant economic characteristics, driving forces and market positions (Thompson, Strickland III and Gamble 2010, p. 92). There are several factors that could affect the competition, three of them outranked in importance from three different areas. First of all, in regards to product marketing, a well-known and well-respected brand name influences buyers purchasing decision. Therefore, clever advertising using the appropriate media to gain effective contact with the potential buyers is every golf equipment manufacturers’ market focus. Over the years, winning endorsement contract with top touring professionals with respective social image had been approved to be the most effective way of creating and enhancing brand image. Nike Golf as a late comer was a star in using endorsement contract to improve brand recognition and boost sales. The company has recorded notable success in golf apparel, footwear and ball market since its 1996 endorsement contract with Tiger Wood. (Gamble 2008, C-96) Product innovation capabilities come next in this competition pool. The overall market is still very sensitive to first-to-market new attributes and features to be added on, even though the industry is considered as mature with knowledge-customers. All leading brands in the industry had put huge amount of resources on R&D and had delivered several remarkable models to market over the years, although Callaway and TaylorMade seem to be more internationally recognised by their innovation power. Thus, there is no overall market leader in innovation, but leading models in different product group (Woods, Irons, Putters, Golf balls & Accessories) for a specific time period. Another key success factor is product distribution related. As we mentioned before, leading manufactures sell their product mainly through on-course and off-course pro shops and most large pro shops have made variety of brands and models available in stock. The retailers/sales’ preferences will more or less influence buyers’ final decision at point of purchasing. Therefore, the relationship with these retailers is important, especially for brands like TaylorMade-adidas Golf that does not offer consumers the option of purchasing clubs or apparel on its website (Gamble 2008, C-92). Callaway Vs. TaylorMade-adidas, financially The financial performance of a company is usually a good indicator of how well its competitive strategy works in the market. However, the way of translating and comparing companies’ financial result has never been easy. we take the growth rate as an example by looking at the manufactures’ 2007 total sales revenue, Callaway Golf increased its sales (rounded to the nearest million) by $107M =10% from $1,018M in 2006 to $1,125M in 2007. Callaway’s net income was more than doubled from $23M to $55M during the same time. That makes the earning per share (EPS) increased from $0. 34 to $ 0. 82. In contrast, TaylorMade-adidas’ net sales experienced a 52M = 6% decrease from 856M its peak 2006 to 804M in 2007. The company’s operating profit has also gone down from 73M to 65M during the same time. It seems that Callaway performed much better than TaylorMade-adidas in 2007. But if we compare the same figures over a 4-year period from 2004 to 2007, Callaway’s increase in net sales was $109M=20%, comparing to TaylorMade-adidas’s 171M=27% increase, the result is obviously different. Therefore, both Callaway and TaylorMade-adidas had successfully coped the key competitive forces and gained comparatively healthy financial performances between 2004 and 2007, under the given economic condition. In addition, the growth rates for each product category are also different mainly stem from the differences in innovation capabilities and buyers’ perception. From the financial data given in the case study, Callaway Golf was easier to achieve growth in manufacturing woods/drivers and iron clubs, shown 28. 2% and 19% growth during 2004 to 2007. The company had struggled with its golf sales and was unable to make any positive growth on it. TaylorMade-adidas Golf found it was easier to obtain growth and maintained the market leader position in the driver category as well as hybrid clubs. Although, TaylorMade’s irons have a very wide price range from $600 to $1300 per set, with a total market share of 15. 2%, it had never challenged Callaway’s market lead position in irons. Moreover, TaylorMade-adidas also gained significant sales increases in golf apparel and footwear, shown 107% and 63% during 2004 and 2007. Note: All calculations are based on Exhibit 1, 2, 3, 4, 5, 6 from Gamble’s original case. ) Recommendations In order to improve its competitive position, Callaway should continue invest large amount in R&D to maintain its innovation capability and maintain its leading position in iron sets and putter. It should also spend more efforts on marketing issues such as collecting different customer requirem ents to help develop new equipments and bring the product line to a wider range that suits every player. More money should be spent on advertising to improve its image as a full-line golf gear manufacturer. To frequently advertise on selected fashion and life style magazines can not only increase its overall brand recognition, but also boost apparel, footwear and other accessories sales. In addition, it is also important to build good relationship with major retailers. This normally includes higher retail outlets supporting funds, sufficient professional trainings to sales representatives and more sales incentives. The improvement opportunities are all related to the main driving forces in the industry. This case analysis recommend Callaway to maintain its current strategy of being the market lead in product performance and innovation, but do not shifting its focus to price wars. Similar to Callaway, TaylorMade-adidas should also keep investing in R&D to maintain its leading position in drivers and hybrid clubs. They will also need to spend more dollars on advertising of its market share winning apparel and footwear. Find another ‘Tiger’ and lock him/her into an endorsement contract like what competitor Nike did before is always a simple but effective idea. Finally, the company will be benefit from 2 ways from offering the customer with the option of purchasing clubs and apparel by visiting its website. One is increase sales and avoid changing of mind when visiting retailers that has several competitive brands available. The other one is to do business with end customers will help the company collect first-hand information regarding the customer needs and product performance feedback. In all, unlike Callaway who aims to be the all-round manufacturer, TaylorMade-adidas should focus on winning buyers recognition of being specialised in drivers and hybrid club and the No. 1 in golf fashion industry. This analysis recommends Fortune brands to better differentiate its sub-brands and each one’s target market. Their advertising effort should then be separated in regards to different target groups. In addition, the company should also work on cost reduction opportunities in order to cut their prices to be better positioned in the market, its ZB line of iron sets is a good example.

All About the Characters in Things Fall Apart by Chinua...

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Ethnic And Racial Discrimination Of Special Education

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