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Fluor Australia Sustainable Home Construction Case Study

Question

Task: The assignment is designed as an imaginary case study for students to practice procurement and risk

management concepts.
The individual assignment has the following major deliverables:
1. Select a project at your target company
2. Provide background of the case project
3. Recommend the best project delivery method for your project based on the criteria that YOU think
is most crucial to this project. Be mindful that the types of delivery methods that need to be evaluated
are Design-Bid-Build, Design-Build and CM@Risk. You must document all your assumptions and
rationale for the selection of the project delivery system. All yours suggested grading (the criteria,
weights, and scores) should come with justifications and explain why you gave such grade to each
element of the selection matrix.
4. Evaluate and recommend the best financial contract type for your project based on the criteria that

YOU think are crucial to this project. The types of contract that need to be evaluated are Lump sum
contract, Guaranteed Maximum Price Contract and Cost-Plus Fixed Fee Contract. All grading must be

justified and explained.
5. Evaluate and recommend the best procurement method for your project based on the criteria that
are crucial to this project. The types of procurement that need to be evaluated are Competitive,
Negotiated and Best Value. All grading must be justified and explained.

6. Develop Risk Management Plan including Risk Register, Risk Quadrant Analysis, and risk mitigation plan

Answer

Introduction 
In project management of the scenario discussed in the sustainable home construction case study, planning is the most necessary step which is effective for guiding and helping the stakeholders, project team and sponsor team as well as the project manager. With the help of the planning phase, it becomes easier to identify the objective and goals, lessening risks, avoid missed deadlines and the outcome of the products and services involved in the project management. Herein, this sustainable home construction case study, the selected organization is Fluor Australia Pty Ltd, an organization which provides maintenance of buildings, dams, tunnels, bridges, construction, and other management services. The sustainable home construction case study also provides a sheer focus on the selection of project topics, sustainable home construction projects. For this, appropriate recommendations of best project delivery method, procurement method, financial contract type, and risk management plan have been considered. 

1. Selecting a project at the targeted company
The selected company, Fluor Australia has provided its clients with comprehensive transform project execution with greater capital efficiency, cost, and schedule certainty. The services of the company are related to procurement, engineering, fabrication, construction and maintenance services, the company has also developed a platform to deliver complex and logistically challenged program with the help of workforce over 47,000 working 24/7 across the globe, and also ensure the delivery and the quality of the projects they have delivered. It has been observed that the company has provided a sheer focus in providing the services regarding making sustainable home construction projects, with the help of this project, there would be a least negative impact on the environment. This signifies that energy efficiency, avoiding environmental toxins, possibly using resources and positivelyusing materials adds up to the efficiency of the housing (Huston & Baines, 2019). These types of housing in recent times are effective for meeting the needs of the future generation and for the present time; it is effective to eradicate the negative aspects associated while making a house. Sustainable housing has the ability to produce good quality housing that would be provided at an amazing rate and would be useful for short and long term benefits. 

Considering this project in this sustainable home construction case study, the respective company is cautious regarding the five different stages of the project management where the project planning phase has to be taken seriously so that this project can be delivered within time and the budget allocated. Fluor Australia has to create a team of experts who would be able to handle the project [properly and be consistent with the deadline and the resources required for the project. The major reason for the company to undertake this project is to analyze the negative impact on the environment due to recent problems that are identified (Moore & Doyon, 2018). The process of project management would inculcate different aspects like energy and the materials required. Impact on the environment, design of the house and use of artificial heating, cooling and lighting demands of the customers. 

2. Background to the sustainable home construction case study
The proposed sustainable home construction case study undertakes the project, sustainable home construction by Fluor Australia Pty Ltd and conduct critical evaluation in detailed manner. The company is inclined towards the following stage of project management so that the project can be completed on a successful basis. For this, the very first state of the stage of project initiation, which has already done, the selection of the project. Then there is the planning process where the company is required to ensure the implementation of the resources available for the project. The most significant task mentioned herein sustainable home construction case study is to make a team of experts who would be the project team and each of the project team would have a separate project head or project manager, to avoid the issue of miscommunication and misinterpretation between different departments of the company (Jack, Coles & Piterou, 2017). 

For the construction of the sustainable home, insulation of walls and floors with ceiling board, installation of windows with double-glazed, choosing appliance which are energy efficient, selection of non-toxic building materials, usage of local materials and lessening the wastage of the resources are certain aspects which are required to be implemented in order to acquire better results. Along with this, the construction is not enough; the project team members must make the construction more innovative to make the customers attracted to the house (Melles, 2018). There are certain elements which are required to be considered in this sustainable home construction case study while making a sustainable housing, this involves using enough insulation, designing airtightness (ventilation), using thermal mass for best effects, making use of natural light, structural systems (right design process) and deploying renewable technologies for the shell design are used for enhancing the design of the buildings. Along with the design, different principles are also followed by the project team, the principles include performance, comfort, quality of the services provided. For the construction purpose, brick is considered one of the largest sustainable elements used for building sustainable products and is also considered as the most-efficient and eco-friendly product available (Aarseth et al., 2017). 

sustainable home construction case study

Figure 1: Elements of sustainable housing
(Source: Aarseth et al., 2017)

3.Recommending best project delivery method for the project 
Within the project management stages, the most important is the project delivery process where the project can be delivered in any way. It is paramount for the project team to ensure which service is delivered, the real value against the business opportunity. However, every client has a strategic goal and requirements to be met regarding the goals of the projects that are to be delivered. There are different ways through which a project can be delivered, underlaid are the methods through which a project can be delivered.

Design-Bid-Build
Herein sustainable home construction case study, the owner contracts separately with a design firm where the documents necessary for the construction documents are produced and the builders build the buildings on their own. This can be signified as a traditional method where there is a sequence of design, construction documents, bidding, and construction.  In this delivery system, the project designer and construction of the project have different identities. This system can be used for well-suited and fast-track construction and this makes the project more efficient and cost-effective (Silvester et al., 2017). The greatest advantage of this system is that the owner only looks for one party of th4e design and the construction. 

Design-Build 
With the help of this method described in the sustainable home construction case study, the design and the construction service is delivered by a single entity only, which can be stated as the design-build contractor. Herein, this type of the delivery system, the designer is responsible for the activities on the project and the customers are also able to seek legal assistance if there is any fault from one side of the party. 

CM@Risk
Construction manager at risk (CMAR) entails a commitment by the construction manager (CM) with a Guaranteed Maximum Price (GMP) along with all the necessary construction documents and specifications required. 

As per the above analysis on sustainable home construction case study, it can be analyzed that Design-Build is the most appropriate project delivery system as this is effective for single point of responsibility, teamwork, avoiding adversarial conditions, transparent communication and most importantly fast delivery of the project (Hew et al., 2019).

4. Recommending best financial contract type for the project
The best financial contract types for the Sustainable home construction project are listed below within the sustainable home construction case study;

Lump-sum contract
In a lump sum financial contract, construction contractors bid an individual fixed cost for all functions as per the project scope. This contract is specifically applied for large constructions or building projects and is a fundamental but valuable kind of the contract. According to Lu, Won & Cheng (2016), contractors bear the risks related to this type of contract and should be responsible for calculating project expenses from diagrams involving overhead and contractors’ profits to underline the cost of the project. It should be mentioned lump sum construction contracts is considered as one of the most efficient ways of decreasing construction costs and is effective during projects as well as its operations are well identified (Lu, Won & Cheng, 2016). This type of financial contract is the most broadly accepted contract among the construction owner and the contractor due to its common predictability, easy control, and assured maximum cost arrangements.

Guaranteed Maximum price contract
In this, the construction works could be considered as a form of contract with the contractor including this is agreed that the agreement sum would not develop a particular maximum (Tran et al., 2018). This type of construction agreement generally features an assured maximum cost. Importantly that puts protection on the overall project expenses. With all building project topics, there is more than meets the eye with a financial contract containing an assured maximum cost contract. The GMP financial contracts are quite interesting and valuable to consumers as they change an important level of risk to the party doing operations.

Cost-plus Fixed Fee Contract
As per the information collected to prepare this sustainable home construction case study, the cost-plus-fixed-fee contract is known for a specific kind of contract where the contractors are paid for the normal costs for their projects; additionally, a fixed fee for their services. These permit the contractors to achieve a profit on their construction works, and they help to motivate financial productions in different sectors (Hoff et al., 2016). Expense plus fixed fee financial contracts could be applied when both the contractors as well as the owners agree that the contractors are entitled to a fee added to the actual project cost. It should be remembered that there might be different causes for this type of contract; however, cost-plus contracts must define fundamental causes, which the contractors are allowed to the fee.

What is the suitable financial contract for the project examined in the sustainable home construction case study?
The sustainable home construction project will include or maintain a Guaranteed Maximum price contract as per their financial requirement with the contractors. This type of contract as noted in the sustainable home construction case study will be implemented by preparing a proposal for a certain maximum cost contract that would involve a time of values. To identify the GMP for this project examined in the sustainable home construction case study, the time plan of values would be applied to divide every operation into line items, for instance, the roofing, siding ad foundation functions (Tran et al., 2018). The consumer and project management group would they set a calculated cost for every one of these lines, frequently with input from their contractor and sub-contractor.

5. Evaluating and recommending the best procurement method in the present sustainable home construction case study

Procurement methods

Evaluation

Competitive

The competitive procurement includes a buyer receiving bids from the sellers or any contractors and analyzing those bids before selecting a supplier. In this type of procurement method, Fluor Australia Pty Ltd can offer the service, which is capable of submitting a bid (Naoum, & Egbu, 2016). This helps in promoting competition as well as ensures the procurement procedure more clear. On the other hand, this type of procurement process could be time-consuming and include lots of critical paperwork.

Negotiated

 The negotiated procurement process could be identified as a way of choosing a contractor without any official promotional cost competition (Perera et al., 2019). The negotiators included in this process evaluate, search, explore and bargain concerning expense calculated for the project, performance needs, delivery time and further changes.

Best Value

The BVP is developed to uplift construction project values through eliminating risks as well as developing the transparency through under sourcing the previously award stages (Wang et al., 2018). This type of change in paradigm is attained with the help of following a pattern of factors with the principles of transparency, operations data evaluating and contractor clarification.

Table 1: Evaluating and recommending the best procurement method
(Source: Created by the Learner)

Identification of best and suitable procurement method
For the sustainable building construction project identified in the sustainable home construction case study, the selection of the best value procurement method would be beneficial. It could be said that this method will need low decision-making preparations, help the contractors for the future as well as decrease the risks rates (Storteboom et al., 2017). Even if the risks happen in the construction works, they could be efficiently managed through this procurement method. It is the most significant aspect of this type of procurement method is looking at the previous preference levels.

6. Developing a risk management plan

Risk Register

Risk Documentation

Valuation

Response

Management and Control

Reference

Event

Cause

Effect

Probability

Impact

P x L

(Out of 5)

Strategy

Trigger

Action

Responsible person/s

Review

1

High level of investment-related risks

3

Selection of right financial contractor contract with the management and suppliers and evaluation of the project capabilities for return of investment

Financial contractor

2

Lack of control and strategic management in the supply chain

2

Efficient communication with experts and personnel involved in construction and building projects regarding sustainable benefits of green buildings

Project executive 

3

Lack of communicable information on sustainable bundling and green buildings

2

Efficient communication with experts and personnel involved in construction and building projects regarding sustainable benefits of green buildings

Project executive 

4

Extra costs in services, and lack of proficiency in sustainable housing.

4

Enabling the financial and project management team to consult on variable costs and fixed costs of the project

Financial contractor and main project contractor

Table 2: Risk registered for the project
(Source: Created by the learner)

sustainable home construction case study

Table 3: Risk quadrant analysis
(Source: Created by the learner)

Risk mitigation plan for the project explored in the sustainable home construction case study

Planning Quality

Management of quality and

quality Assurance

Controlling quality

Examining the level of quality and its accomplishment

The project management team in this construction work need to ensure whether the right process is followed and the administration is obeying with the quality of the produces and the services offered

The project manager should measure and manage checking procedures whether the compulsory level of quality is met or not

Preparation

Performance

Observing and Controlling

In the preparation time of the sustainable project, the project manager has made labors to examine the resources essential for the accomplishment of the project. This generally involves the issues of ensuring quality productivities, handling risks and creating acceptance.

Here, the mandatory project deliverables are evaluated with the assistance of which the project team members’ skills and expertise level. They should be able to recognize the essential factors to be met recycled for satisfying the clientele.

This stage is the most vital stage among all as the operations in progress should be measured and documentation of any risk is done at this stage.

Table 4: Risk mitigation plan
(Source: Created by the learner)

Conclusion
From the above sustainable home construction case study, deliverables, strategies and the basic structure of a construction project (building a house) has been accounted for. This study has evaluated potential delivery methods and suggesting a suitable one with the financial contract models in detail. Along with it, this study has effectively developed understanding regarding the risk registering steps with risk quadrant analysis, risk register, risk mitigation plan. This information is crucial and important for managing construction work and could be considered as the basic steps that need to be implemented effectively. Apart from this, this sustainable home construction case study has elaborated on the procurement methods relevant to the project with a supportive analysis of their importance.

References
Aarseth, W., Ahola, T., Aaltonen, K., Økland, A., & Andersen, B. (2017). Project sustainability strategies: A systematic literature review. International Journal of Project Management, 35(6), 1071-1

Hew, W. W. L., Lau, S. H., Goh, G. G. G., & Low, B. Y. (2019). Managing crime for urban wellbeing and sustainable housing delivery: Through the lens of residents and housing developers in Malaysia. Sustainable home construction case study Geografia-Malaysian Journal of Society and Space, 15(4).

Hoff, R., Hammond, G., Feng, P., & White, E. (2016). Wartime construction project outcomes as a function of contract type. 628th Civil Engineer Squadron Joint Base Charleston United States.

Huston, S., & Baines, R. (2019). Sustainable Management of Affordable Housing. Greening Affordable Housing: An Interactive Approach, 18.

Jack, M. W., Coles, A. M., & Piterou, A. (2017). Sustainable project management in urban development projects: a case study of the Greater Port Harcourt City Development Project in Rivers State, Nigeria. WIT Transactions on Ecology and the Environment, 210, 209-219.

Lu, Q., Won, J., & Cheng, J. C. (2016). A financial decision making framework for construction projects based on 5D Building Information Modeling (BIM). International Journal of Project Management, 34(1), 3-21.

Melles, G. (2018). Sustainable Community Development or Voluntourism: Sustainable Housing in Rural Maharashtra. Social Sciences, 7(12), 247.

Moore, T., & Doyon, A. (2018). The uncommon nightingale: sustainable housing innovation in Australia. Sustainability, 10(10), 3469.

Naoum, S. G., & Egbu, C. (2016). Modern selection criteria for procurement methods in construction. Sustainable home construction case study International Journal of Managing Projects in Business.

Perera, G. P. P. S., Tennakoon, T. M. M. P., Kulatunga, U., Jayasena, H. S., Wijewickrama, M. K. C. S., Sandanayake, Y. G., ... & Waidyasekara, A. (2019). Factors affecting the selection of a procurement method for steel building construction.

Silvester, S., Hooijer, B., van Oosterhout, R., & van der Kemp, F. (2017). Concept House Village; A Next Step in the Development of Sustainable Housing in the Netherlands. In Living labs (pp. 371-384). Springer, Cham.

Storteboom, A., Wondimu, P., Lohne, J., & Lædre, O. (2017). Best Value Procurement-The Practical Approach In The Netherlands. Procedia computer science, 121, 398-406.

Tran, D. Q., Brihac, A., Nguyen, L. D., & Hoon Kwak, Y. (2018). Project cost implications of competitive guaranteed maximum price contracts. Sustainable home construction case study Journal of Management in Engineering, 34(2), 05018001.

Wang, K. W., Hsu, Y. Y., Yu, W. D., & Cheng, S. T. (2018). Determination of Project Procurement Method with a Graphical Analytic Model. Sustainability, 10(10), 3583.

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