MBA641 Strategic Project Management

Your current business project is to successfully complete, within a nine month timeframe, a small residential development in a regional centre (a place that is not a suburb in a capital city) in the state that you reside in. This will require you to locate:

A regional centre in your state with a growing population that currently has more than 10,000 residents;
A block of land for sale that is large enough to construct a duplex (two attached residences) based on the minimum land allotment size prescribed by the local council and that is selling for a price you can afford;
A builder that will construct a duplex on your chosen block of land for a price you can afford.

Your primary objective is to create as much equity as possible (value of your constructed duplex less all project costs) and as much income as possible (rent collected from tenanted duplex less all holding costs).

Macro-environment business drivers (such as economic, competitive, resourcing and demographic factors taken into account when determining feasibility)

Strategic planning characteristics applied to project management.

Answer:

Introduction

Feasibility study of a project is defined as an analysis that is conducted in order to ensure the project is doable based on a certain set of parameters set previously. Commonly, the feasibility of a project is judged using time or budget as the standard but some other macro-environment and micro-environment factors are also considered. In this particular case project, a residential duplex will be constructed in the Queensland Town of Tara in order to promote the growth and development of the population of that particular region. The total budget of the project is set at $800,000 and a total time period of 9 months has been said for the execution of the project.

This paper is mainly based on feasibility study of the overall case project in addition to the development of a suitable timeline and cost feasibility analysis.

Feasibility Study on the Case Project

Project feasibility is the analysis of project based on certain criteria in order to determine whether the project will be successful or not. Different types of project have different criteria for success and the feasibility is reached only when all the factors are suitable for the organization to fulfill.

This particular project is based on the development of a residential duplex and the feasibility of the project will depend on the following factors.

Planning Permission – Construction of any concrete structure requires approval from a relevant authority. For buildings and other large concrete structures, prior approval must be received from the government in the form of construction permit. In some cases, permit is also required regarding the use of land for construction or receiving construction license for proceeding with the work (Kerzner and Kerzner 2017). In certain projects, the permission for construction is not received due to various factors like dispute over land, overlapping on the neighbor’s land and others. In these cases, the project is not considered as feasible. In this chosen case, there are no such disputes or issues and the permit for

construction has also been received from the local council of the government.

Environmental Impact Assessment – Building constructions should also seriously take into consideration the environmental impact during the project work. In many cases, during the construction process, the surrounding environment is negatively affected and polluted. Hence, construction projects must be executed with great caution and ensuring the environment is not impacted (Shakir and Nørbjerg 2015). This includes dumping of residual construction materials at suitable places, fly dirt and ash, noise and others. There are certain standards available regarding the use of construction materials and execution of the construction process that must be followed closely during the entire project.

Legal / Statutory Approvals – In many cases, it has been seen that the selected piece of land has some legal problems due to dispute or multiple claims on a single piece of land. In these cases, permissions are generally not allowed to conduct construction on the land unless the disputes are settled properly (Vukomanovi? 2016). Hence, before purchasing the land and proceeding with the construction, it must be ensured that there are no disputes over the land and permit can be earned easily for the initiation of construction.

Budget and Client Requirements – Budget is often on the primary criteria based on which, the feasibility of the project is judged. When a client books a project for execution, it must be feasible with the budget or else it may fail at the later stages. In order to ensure sufficient budget is available for the project, a feasibility test needs to be conducted to determine whether the proposed budget is sufficient. In the case of this residential duplex project, a total budget of $800,000 is proposed and it needs to be ensured that this budget will be sufficient for the construction of the residential duplex.

Operational and Maintenance Issues – Feasibility of building construction also depends significantly on the operational and maintenance issues that may arise due to several factors. One major factor behind the occurrence of the issue is the landscape. Buildings in hilly landscape will require more maintenance than the buildings on the plain land (Andersson and Chapman 2017). The location of the building in this project case is on a plain landscape and hence, chances of occurrence of operational and maintenance issues are less although they might be encountered due to some unforeseen incidents. However, they will be manageable and the project can be considered as feasible in terms of this particular factor.

Procurement Options – The final feasibility factor chosen for construction of building is the procurement option. For the designs of technically advanced and ultramodern approach to the buildings, procurement options for the materials are often limited as there are huge varieties of requirements for such buildings. Again, if the building site is located at a remote area, the procurement options are significantly limited.

Constraints and Goals of the Project

Project Constraints

The constraints of the project are determined as follows.

Location – The location of the construction site is on the outskirts of the city and hence, it will not be convenient for the suppliers to provide resources and materials as well as the workers to travel long distances every day for working on the construction site. Moreover, due to the location, the transportation costs for the construction materials will be extremely high.

Budget – The overall budget of the project is $800,000, which might be a constraint as various factors like transportation of materials, extra costs, penalties and others have not been considered.

Time Period – The overall time period of the project is set at 9 months that may or may not be sufficient. It has been automatically assumed that this time period will be sufficient for the construction. However, while making this assumption, it has also been considered there will be no unforeseen incidents like accidents or natural calamities. In these cases, if there is significant damage to the project, the overall time period will also increase significantly.

Project Goals

The goals of the project are as follows.

To select a piece of land in the Queensland town of Tara for the construction of the duplex
To receive permit from the government for the construction
To construct the duplex on the selected piece of land

Project Economic Considerations

Project Feasibility Study


1. Land Information			2. Purchase Information

Land Address:	30, Smith Road, Tara Town, Queensland		Land Price:	500,000

Suburb/Town:	Tara		Stamp Duty:	$10,000

Land Size:	12,000 square feet		Conveyancing Fees:	$8,000



3. Local Council Information			4. Construction Information

Local Council Name:	Tara Town Regional Council		Builder Name:	ABCD construction

Minimum Land Allotment Size:	10,000 square feet		Duplex Construction Costs:	$800,000

Development Planning Fees:	$100,000

Monthly Council Rates:	$5,000



5. Duplex Information

Duplex Estimated Value:	$1,200,000

Monthly Rental Income:	$100,000

Monthly Agent Fees:	$5,000

Monthly Landlord Insurance:	$4,000



6. Project Results

Equity Value =$100,000	Duplex Value of $1200000	less	Total Outgoings of $1418000	equals $-218000

Net Monthly Rental Income = 70,000	Gross Monthly Rent of $100000	less	Holding Costs of $14000	equals $86000

Project Timeline, Resources, Budget

Task Name	Duration	Start	Finish	Resource Names	Cost
Construction of Residential Duplex	197 days	Mon 8/27/18	Tue 5/28/19		$800,000.00
Preliminary Planning and Discussion	17 days	Mon 8/27/18	Tue 9/18/18		$26,520.00
Meeting of the Project Management Team	17 days	Mon 8/27/18	Tue 9/18/18		$26,520.00
Decision on the Building of Residential Duplex	2 days	Mon 8/27/18	Tue 8/28/18	Construction Manager,Finance Manager,Project Manager,Site Supervisor	$3,120.00
Submit Proposal for Project	2 days	Wed 8/29/18	Thu 8/30/18	Construction Manager,Finance Manager,Project Manager,Site Supervisor	$3,120.00
Present Proposal to Client	2 days	Fri 8/31/18	Mon 9/3/18	Construction Manager,Finance Manager,Project Manager,Site Supervisor	$3,120.00
Propose Overall Budget for the Project	1 day	Tue 9/4/18	Tue 9/4/18	Construction Manager,Finance Manager,Project Manager,Site Supervisor	$1,560.00
Feasibility Testing of the Project	10 days	Wed 9/5/18	Tue 9/18/18	Construction Manager,Finance Manager,Project Manager,Site Supervisor	$15,600.00
Approval of the Project	0 days	Tue 9/18/18	Tue 9/18/18	Project Manager	$0.00
Project Planning Phase	28 days	Wed 9/19/18	Fri 10/26/18		$14,920.00
Develop Team for Project	2 days	Wed 9/19/18	Thu 9/20/18	Project Manager	$1,200.00
Determine Project Roadmap	3 days	Fri 9/21/18	Tue 9/25/18	Construction Manager	$840.00
Prepare Project Charter	13 days	Wed 9/26/18	Fri 10/12/18		$7,280.00
Determine Project Scope	2 days	Wed 9/26/18	Thu 9/27/18	Construction Manager,Site Supervisor	$1,120.00
Determine Project Schedule	0.5 days	Fri 9/28/18	Fri 9/28/18	Construction Manager,Site Supervisor	$280.00
Determine Project Budget	0.5 days	Fri 9/28/18	Fri 9/28/18	Construction Manager,Site Supervisor	$280.00
Determine the Overall Feasibility of the Project	10 days	Mon 10/1/18	Fri 10/12/18	Construction Manager,Site Supervisor	$5,600.00
Print Tender for Contract	2 days	Mon 10/15/18	Tue 10/16/18	Construction Manager,Site Supervisor	$1,120.00
Hire Suitable Contractor	2 days	Wed 10/17/18	Thu 10/18/18	Construction Manager,Site Supervisor	$1,120.00
Discuss the Project	4 days	Fri 10/19/18	Wed 10/24/18	Construction Manager,Site Supervisor	$2,240.00
Discuss Required Human Resources	1 day	Thu 10/25/18	Thu 10/25/18	Construction Manager,Site Supervisor	$560.00
Discuss Time Frame and Material Resources	1 day	Fri 10/26/18	Fri 10/26/18	Construction Manager,Site Supervisor	$560.00
Finalize the Project	0 days	Fri 10/26/18	Fri 10/26/18	Construction Manager,Site Supervisor	$0.00
Project Initiation	39 days	Mon 10/29/18	Thu 12/20/18		$668,600.00
Receive Building Permit	5 days	Mon 10/29/18	Fri 11/2/18	Construction Manager	$1,400.00
Receive Construction License	4 days	Mon 11/5/18	Thu 11/8/18	Construction Manager	$1,120.00
Develop Blueprint of the Duplex	10 days	Fri 11/9/18	Thu 11/22/18	Construction Manager	$2,800.00
Review Duplex Blueprint	2 days	Fri 11/23/18	Mon 11/26/18	Construction Manager	$560.00
Recruit Construction Workers	5 days	Tue 11/27/18	Mon 12/3/18	Construction Manager	$1,400.00
Procure Materials for the Construction	10 days	Tue 12/4/18	Mon 12/17/18	Construction Manager,Construction Materials and Other Costs[1]	$660,480.00
Hire Construction Vehicles	3 days	Tue 12/18/18	Thu 12/20/18	Construction Manager	$840.00
Initiate the Project	0 days	Thu 12/20/18	Thu 12/20/18	Construction Manager,Site Supervisor	$0.00
Project Execution	106 days	Fri 12/21/18	Fri 5/17/19		$84,800.00
Clear the Site for Construction	4 days	Fri 12/21/18	Wed 12/26/18	Workers	$3,200.00
Excavate the Site	4 days	Thu 12/27/18	Tue 1/1/19	Workers	$3,200.00
Build Foundation on the Site	4 days	Wed 1/2/19	Mon 1/7/19	Workers	$3,200.00
Prepare Building Framework	35 days	Tue 1/8/19	Mon 2/25/19	Workers	$28,000.00
Install Structural Materials	10 days	Tue 2/26/19	Mon 3/11/19	Workers	$8,000.00
Divide Apartments inside the Duplex Framework	5 days	Tue 3/12/19	Mon 3/18/19	Workers	$4,000.00
Clear Openings for Doors and Windows	2 days	Tue 3/19/19	Wed 3/20/19	Workers	$1,600.00
Install Electrical Wirings	2 days	Thu 3/21/19	Fri 3/22/19	Workers	$1,600.00
Install Water Connections	2 days	Mon 3/25/19	Tue 3/26/19	Workers	$1,600.00
Apply Mortar and Concrete on Framework	10 days	Wed 3/27/19	Tue 4/9/19	Workers	$8,000.00
Plumbing	5 days	Wed 4/10/19	Tue 4/16/19	Workers	$4,000.00
Plastering of the Buidling	2 days	Wed 4/17/19	Thu 4/18/19	Workers	$1,600.00
Finishing Electrical Connections	2 days	Fri 4/19/19	Mon 4/22/19	Workers	$1,600.00
Installation of Doors and Windows	2 days	Tue 4/23/19	Wed 4/24/19	Workers	$1,600.00
Installation of Equipments and Utilities	2 days	Thu 4/25/19	Fri 4/26/19	Workers	$1,600.00
Additional Works	10 days	Mon 4/29/19	Fri 5/10/19		$8,000.00
Add Colors to Building Interior	2 days	Mon 4/29/19	Tue 4/30/19	Workers	$1,600.00
Add Colors to Building Exterior	2 days	Wed 5/1/19	Thu 5/2/19	Workers	$1,600.00
Installation of Basic Domestic Equipments	2 days	Fri 5/3/19	Mon 5/6/19	Workers	$1,600.00
Installation of Apartment Requirements like Taps, Bells, etc.	2 days	Tue 5/7/19	Wed 5/8/19	Workers	$1,600.00
Safety Installations in Each Apartment	2 days	Thu 5/9/19	Fri 5/10/19	Workers	$1,600.00
Completion of the Duplex Building	5 days	Mon 5/13/19	Fri 5/17/19	Workers	$4,000.00
Project Handover	0 days	Fri 5/17/19	Fri 5/17/19	Workers	$0.00
Project Closure	7 days	Mon 5/20/19	Tue 5/28/19		$5,160.00
Review of the Project	2 days	Mon 5/20/19	Tue 5/21/19	Project Manager	$1,200.00
Project Appraisal	2 days	Wed 5/22/19	Thu 5/23/19	Project Manager	$1,200.00
Pay All Wages	2 days	Fri 5/24/19	Mon 5/27/19	Project Manager	$1,200.00
Stakeholder Sign Off	1 day	Tue 5/28/19	Tue 5/28/19	Construction Manager,Finance Manager,Project Manager,Site Supervisor	$1,560.00
Project Closed	0 days	Tue 5/28/19	Tue 5/28/19	Project Manager	$0.00

Macro-Environment Business Drivers

Macro-environment business drivers are different national scale factors that have significant impact on the project. These drivers are generally considered during the consideration of feasibility of the project. The macro-environment drivers for this particular project are discussed below.

Economic Factor – Australia as a country is sufficiently stable in terms of economy and hence, construction of the residential duplex on the selected land will not be any problem. Moreover, the future residents of the duplex will be able to afford apartments if they choose to live in the city outskirts.

Competitive Factor – Competitive factor comes into play when several similar organizations run similar types of project at the same time with the same goal or objective. However, unlike product manufacturing, the competitive factor in this case will be beneficial to the community as it will help the growth of population and economy of the selected region as well as the nation as a whole.

Resourcing Factor – Australia has sufficient resources to supply for construction and other similar projects. Hence, for the construction of the duplex, it will not be hard for the project manager to procure sufficient resources for the project. However, due to the location of the project, the costs of transport and supply of the materials may increase significantly.

Demographic Factor – Demographic factor will play a significant role in the feasibility of the project. While the main objective of the project is to develop an outskirt of the city and promote the growth of population in this area, it is not sure whether the people will agree to relocate to such an inconvenient location in the city outskirts. Some detailed survey is required in order to determine whether the project will be feasible in terms of the demographic factors.

Micro-Environment Business Drivers

The micro-environment business drivers of the project are discussed below.

Technical / Internal Expertise – The main micro-environment factor of the project involves the technical / internal expertise related to the workers working on the project. It is often seen that due to lack of technical expertise, the project outcome is not satisfactory. Hence, for the project, selection of appropriate and technically skilled personnel is necessary.

Time Pressure – Time pressure for the project is a significant constraint due to the limitation of the overall time period within just 9 months that may or may not be sufficient. While preparing the time schedule, it has been assumed that this time period will be sufficient for the construction. However, while making this assumption, considerations for unforeseen incidents like accidents or natural calamities were not made. In these cases, if there is significant damage to the project, the overall time period will also increase significantly.

People Related Considerations – The people involved in the project must be sufficiently committed to the project and follow all ethical and other rules and guideline in order to ensure the project is completed on time and within budget.

Conclusion

In this report, a feasibility study has been conducted on the proposed construction of residential duplex in a city outskirt. As per the case of the project, a residential duplex will be constructed in the Queensland Town of Tara in order to promote the growth and development of the population of that particular region. This particular project is based on the development of a residential duplex and the feasibility of the project will depend on a number of micro and macro business drivers.

References

Andersson, T. and Chapman, R., 2017. Project strategy for product innovation: the strategic project management framework. International Journal of Project Organisation and Management, 9(4), pp.328-349.

Barclay, C. and Barclay, C., 2015. Introduction to the Project Performance Scorecard as a Technique in Determining Project Success. Strategic Project Management: Contemporary Issues and Strategies for Developing Economies, pp.293-304.

Eskerod, P. and Jepsen, A.L., 2016. Project stakeholder management. Routledge.

Kerzner, H. and Kerzner, H.R., 2017. Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.

Marcelino-Sádaba, S., Pérez-Ezcurdia, A., Lazcano, A.M.E. and Villanueva, P., 2014. Project risk management methodology for small firms. International journal of project management, 32(2), pp.327-340.

Martinelli, R.J. and Milosevic, D.Z., 2016. Project management toolbox: tools and techniques for the practicing project manager. John Wiley & Sons.

Martinsuo, M. and Killen, C.P., 2014. Value management in project portfolios: Identifying and assessing strategic value. Project Management Journal, 45(5), pp.56-70.

Mir, F.A. and Pinnington, A.H., 2014. Exploring the value of project management: linking project management performance and project success. International journal of project management, 32(2), pp.202-217.

Papke-Shields, K.E. and Boyer-Wright, K.M., 2017. Strategic planning characteristics applied to project management. International Journal of Project Management, 35(2), pp.169-179.

Samset, K. and Volden, G.H., 2016. Front-end definition of projects: Ten paradoxes and some reflections regarding project management and project governance. International Journal of Project Management, 34(2), pp.297-313.

Shakir, S.N. and Nørbjerg, J., 2015. The End of the Line: Project Management Challenges in Small Software Shops in Pakistan. In Strategic Project Management (pp. 124-149). Routledge.

Too, E.G. and Weaver, P., 2014. The management of project management: A conceptual framework for project governance. International Journal of Project Management, 32(8), pp.1382-1394.

Vukomanovi?, M., 2016, January. Strategic Project Management. In Future Trends in Project, Programme and Portfolio Management 2016.

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