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FACULTY OF SCIENCE AND TECHNOLOGY

SEMESTER MAY 2012

SBFS1103 THINKING SKILLS AND PROBLEM SOLVING

MATRICULATION NO IDENTITY CARD NO. TELEPHONE NO. E-MAIL LEARNING CENTRE

: : : : :

TABLE OF CONTENTS
1. INTRODUCTION ..................................................................................................... 2 Figure 1 Stepwise Conception. .................................................................................. 4 2. IDENTIFICATION 2.1 2.2 2.3
OF APPROPRIATE DECISION MAKING TOOL . ............................... 5

Benchmarking. .................................................................................................... 5 Decision Tree .................................................................................................... 7 SWOT Analysis. ................................................................................................. 9

Figure 2 Benchmarking Results. ................................................................................ 6 Figure 3 Decision Tree Illustrations . ........................................................................ 7 Figure 4 SWOT Analysis Illustration 1 . ................................................................... 9 Figure 5 SWOT Analysis Illustration 2 . ................................................................. 10 2.4 Definition and explanations of SWOT analysis ............................................... 11

3. HOW TO DERIVE TO THE CHOICE OF SUB-CONTRACTOR...................................... 11 Figure 6 Gantt Chart Lai Hock Builders .................................................................. 11 3.1 3.2 Gantt Chart ....................................................................................................... 13 Time Factor - Explanation ............................................................................... 14

4. PROFIT MARGIN CALCULATION AND COST DOWN ACTIVITIES. ........................... 15 Figure 7 4.1 a) b) b) Profit and Loss Statement of Lai Hock Builders .................................... 15 Reduce Indirect Costs ............................................................................. 16 Out Source Jobs ...................................................................................... 16 Safe Working Procedures.................................................................... 16 Cost Down Activities ....................................................................................... 16

5. CONCLUSION ......................................................................................................... 17 6. REFERENCES .......................................................................................................... 18

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INTRODUCTION

Humans are often burdened with life questions which require answers to be decided by a decision. The decision must be made on about love, work, home, children's education, career and common things such as what to eat and what clothes I wear. Sometimes, this decision is easily made in just a blink of the eye only. Sometimes we will be sleepless thinking about what things should be done to overcome the problems ahead moreover if it involves money or love. How can we define Decision making? Decision making can be defined as mental

process that involves a person is acting to select a choice from several options available based on the purpose and specific criteria. Of course we want to avoid the adverse decision. Therefore, we are not able to think in a hurry. We need to use the resource-based information and to consider various options to find the best options. So you need a rational, patient, think long and deep so that the decisions you make is accurate, permanent, and final, without any doubt and loss. Forgarty Robin James Bellanca (1990) Teach Them Thinking categorize thinking skills as critical thinking, decision making and defines it as "making a choice based on reasoned judgment". They give a synonymous word "decision making" with "judging, choosing, and selecting". The decision refers to the choice made by the various alternatives available. Choices is a function of the objectives of decision makers today, then in the assessment of alternatives to choose from, the makers are also interested to know the result of the action, as a result of choices made. Choice also involves elements of uncertainty. Decision-making process is the most important process to perfection in the field of management for all organizations.

Decision-making process not only in management but there is also faced by each individual, the decision about yourself, your family, at home and at work. Sometimes our lives can be felt consists of thousands of decisions, both large and small. The issue that we are going to identify discusses and justify among two shortlisted contractors with from different companies where the construction job that to be offered to. We have to identify a proper problem or issue using identifying tools as so that to enable us to verify it and conceptualized problem. There are various types of mapping tools used in system dynamics of conceptualization processes such as hybrid diagram, stock and flow diagram, sector diagram finally policy structured diagram as classified by Luna-Reyes Luis F (2003). Figure 1 elaborates sector diagram that relates the matters and target of work related to the whole project of construction.

FIGURE 1: STEPWISE CONCEPTION PROCESS

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IDENTIFICATION OF THE APPROPRIATE DECISION MAKING TOOL

Problem solving and decision making tools are basically is same although the time and technology has changed. Maybe the technicality has been modified to suite the application to be computerized or available in soft wares. Normally problems solving tools are used in complicated situation where some common and complex tools such as benchmarking, Decision Tree, Cause and effect diagrams, flow charts, and SWOT analysis and prioritization matrix used. (Kanthilal, Dr. Haresh Kumar, Espira, Dr. Anton, OUM Thinking Skill and Problem Solving, 2008) The tools that we are going to use for problem solving for Lai Hock Builders are: i) Benchmarking. ii) Decision Tree iii) SWOT Analysis. 2.1 Benchmarking

The motive of benchmarking is to verify internal and external organizations continuous improve performance and based to the knowledge received. (Bennett, Catherine D 2004) Benchmarking is the process of comparing one's business processes and performance matrix to industry outstanding practices from other companies where measurement done conventionally based to the quality, time and cost. In the process of benchmarking, management identifies the best in their management as compared to, another company with the same kind of processes, and by comparing the results and processes of those evaluated to the present results and processes. In this way, they learn how well the targets perform and, more importantly, the business processes that explain in Wikipedia, articles on Benchmarking explain why these firms are successful.

No. Targets 1 Determine weaknesses Have interviews to get second opinions. Interview the staffs to get information. Benchmark team result 3 Form team to perform personnel auditing. Investigate the customers who have used the builder.

Raymond Ooi

Ghulam Rasool

Brainstorm potential (voting) Organize voting strategy to accomplish results. Have cause and effect analysis within group members. Information gathered Having the information gathered to derive final conclusion. Plot all the information to create a graph or trend for better image. Information from 3rd party consultant This will be the final test mark to evaluate the candidate particulars. Benchmark result Final results will be clarified to move on to the next move.

4a

4b

Select

FIGURE 2: BENCHMARK RESULTS

FIGURE 3: DECISION TREE

2.2

Decision Tree

Decision trees can be defined as a tool that could help to analyze to identify a strategy that could target on goal achieving. It is also call a model algorithm paralleled by a probability model to take on decisions although there is an incomplete knowledge available. According to Wikipedia article on Decision Tree, elaborates that it is a descriptive model to justify the probabilities. Further to that it has been explained, in some activities where assets and risks are sequential but linked to each other also can derive conclusions by plotting to a decision tree as suggested in the journal probabilistic. The above quoted tree drawing explains on how Lai Hock Builders will gain profit by offering to the lower tender and higher tender to his sub- contractors for partial of his main jobs. Eventually if we could see, the visual profit on papers is when Lai Hock Builders offer his tender to sub-contractor Raymond Ooi where the final balance from the initial contract value is about RM260 to continue with his rest of his work. It is also similar to sub-contractor Ghulam Rasool been offered and will get a balance cash of RM 290,000 in hand where Lai Hock Builders has to complete the rest of his jobs. With the cash in hand of RM 260,000 if Raymond Ooi is proceeding with the jobs with some final jobs on hold, Lai Hock Builders must find other solutions of cost down to enable them to go for higher profit. Whereas if Ghulam Rasool selected for his sub-contract jobs , then Lai Hock Builders will retain cash of RM290,000 in hand to proceed with other final jobs. Although there is a big cash difference between Raymond Ooi and Ghulam Rasools contract offering but the matter here is only time. Time constraint plays a very important role as the difference of forty five days will between Raymond Ooi and Ghulam Rasool can give a big impact to Lai Hock Builders in business line especially matters line such as reputation concern, new business venture and also investment of labours. We can clearly elaborate these facts in the following articles to stress onto itemized job task, material usage and other construction related aspects.

2.3

SWOT Analysis

I N T E R N A L F A C T O R S E X T E R N A L

POSITIVE STRENGTHS Technical Skills Leading Contractor Distribution Channels Customer Loyalty and relationship Finished Quality Management Skill POSITIVE OPPORTUNITIES Changing in customer desire Technology Advance Changes in governmental policies TREATS

NEGATIVE WEAKNESSES Absence of important skills New Contractor Poor access to distribution Low customer retraction Unreliable finishing quality Lacks Management Skill NEGATIVE

Changing in customer desire Technological Advance Change in governmental policies

F A Price increase in material Cheaper material C T Change in plan or structure Change in plan or structure O R FIGURE 5: SWOT ANALYSIS SUB- CONTRACTOR - GHULAM RASOOL New Distribution channels New Distribution Channel S

FIGURE 4:

SWOT ANALYSIS SUB- CONTRACTOR - RAYMOND OOI

I N T E R N A L F A C T O R S

POSITIVE STRENGTHS Technical Skills Leading Contractor Distribution Channels Customer Loyalty and relationship Finished Quality

NEGATIVE WEAKNESSES Absence of important skills New Contractor Poor access to distribution Low customer retraction Unreliable finishing quality Lacks Management Skill

Management Skill

POSITIVE OPPORTUNITIES E X T E R N A L F A C T O R S Changing in customer desire Technology Advance Changes in governmental policies Cheaper material Change in plan or structure New Distribution Channel TREATS

NEGATIVE

Changing in customer desire Technological Advance Change in governmental policies Price increase in material Change in plan or structure New Distribution channels

FIGURE 5:

SWOT ANALYSIS SUB- CONTRACTOR GHULAM RASOOL

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2.4 assess

SWOT analysis can be defined as a method to enhance strategic planning as to the Strengths, Weaknesses or Limitations, Opportunities and Threats

complicated in a mission or in a professional project as illustrated in Figure 4 and 5. It involves specifying the objective of the business risk in finding the internal and external influences that are satisfactory and unsatisfactory to accomplish that purpose according to the Wikipedia, SWOT analysis. SWOT analysis to proceed after setting the target and objective as to the concern of the organization where the actual meanings as follows:
a)

Strengths are defined as the features of the business that contribute an advantage upon the others. Weaknesses (or Limitations) are descriptions that place the group at a weakness comparative to others. Opportunities are the exterior chances to advance operation as to make larger profits comply with the environment. Threats are the exterior features in the environment that could cause problem for the business or project.

b)

c)

d)

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HOW TO DERIVE THE CHOICE OF SUB-CONTRACTOR FIGURE 6: Contract Schedule Table - Gantt chart Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

No Task

Contract writing Anil Kumar (Owner) Contract signing Anil Kumar (Owner) Secure Financing 11

No Task May Aug Nov Aug d 12 Mar Dec Apr Sep Feb Oct Jun b Jan Jul Jul c

Obtain Permits Anil Kumar (Owner) Agreed Construction duration Site Work (Construction) Lai Hock Builders Raymond Ooi Ghulam Rasool

Penalty Durations

Plumbing Lai Hock Builders Raymond Ooi Action: Ghulam Rasool Electrical Lai Hock Builders Raymond Ooi Ghulam Rasool

Roof Lai Hock Builders Raymond Ooi Ghulam Rasool

9 10

Inspection for CF DBKL Move In Anil Kumar

3.1

Gantt chart

A Gantt chart is a horizontal bar chart known as a production control tool founded by and American engineer and social scientist namely Henry L. Gantt. This Gantt chart is very often used in project management with graphical explanations of task and schedule, planning, coordination as to monitor the motive of a project. A Gantt chart also explains a project schedule when it starts and ends with target date, events, project summary, and also breakdown of work structure with the percentage of job done and many other things that relates to the main task of the work planned and update as it goes on.

As to the explanation of the Gantt chart above in Figure 6, it has been elaborated in a breakdown of task of the types of jobs to be carried out by the contractors. As we have derived here and plotted the main contract builder as well as the sub-contractor builder to specify and illustrate their job task as if they were carrying out this project. It has been explained earlier that the objective of Lai Hock builder is to reduce cost without ruin his reputation as classed builder and to sub a certain part of construction to a relevant contractor as to ease his burden of completion the project. The chart explains that a is the actual target agreed between Anil Kumar and Lai Hock Builders, b is the 10% delay if offered to Raymond Ooi, e is the target of completion delayed about 50% is offered to Ghulam Rasool. If we can note here time is the most important factor although both sub-contractors are relevant and capable of completing the job. The difference of price can contribute a RM30, 000 cheaper if job offered to

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Ghulam Rasool but when comes to time constrain it delays about two and half months that will be 75 days in figure. 3.2 Time Factor

The time value of money is the value of money assuming in a given amount of benefit received over a specified amount of time. The time value of money is the

fundamental perception in finance philosophy. The time value of money means for every minute of delay its cost the bank interest, penalty for delay, overhead expenses and labour costs. Completion of project earlier 45 days if offered to the experience contractor will enable to build up good reputation, recommendation from the customer Anil Kumar to his fellow friends and family members in KL regarding the efficiency of Lai Hock Builders and also Lai Hock Builders can move forward utilizing the 45 days in advance to new building contract. As mentioned in Figure 6 Gantt chart, a is the initial agreed time line of completion of project, b is the time line of completion if offered to sub-contractor Raymond Ooi and c and d are completion and moving in time line if offered to Ghulam Rasool.

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4.0

PROFIT MARGIN CALCULATION AND COST DOWN ACTIVITIES

FIGURE 7: Profit and Loss Summary of LAI HOCK BUIDERS LAI HOCK Builders 260,000 44,600 25,000 30,000 18,000 12,000 28,000 4,500 B 162,100 15,000 25,000 4,000 5,000 3,500 1,000 1,000 3,000 15,000 C B+C D=(A(B+C) E D-E 54,500 216,600 43,400 2,000 41,400 Raymond Ooi Sub- Con

No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Items Agreed Contract Value Direct Cost Fixed Labour cost Construction materials Piling Mansonary works and tiles Carpentry works Plumbings and fittings Electrical installations and fittings Security system Metal structure Sub-Total (Direct Expenses) Indirect Cost Labour Overtime Insurance Claims Transport Professional Expense Repair, Maintenance Expense Rental of Others Electricity Water House-Rent Expense Penalty for delay Sub-Total (Indirect Expenses) Total Expenses Direct + Indirect

Formula A

Actual

Budget Difference 0 -4,800 5,000 -2,000 5,000 2,000 3,000 2,000 500 -500 10,200 -5,000 5,000 1,000 3,000 0 -2,500 -3,000 1,000 0 5,000 4,500 14,700 -14,700 3,000 -17,700

240,000 500,000 500,000 60,200 104,800 100,000 60,000 85,000 90,000 7,000 7,000 5,000 30,000 35,000 18,000 20,000 12,000 15,000 28,000 30,000 4,500 5,000 7,500 7,500 7,000 134,700 296,800 307,000 20,000 5,000 12,000 2,000 15,000 35,000 25,000 9,000 17,000 3,500 3,000 15,000 1,000 3,000 15,000 30,000 30,000 10,000 20,000 3,500 500 12,000 2,000 3,000 20,000

72,000 126,500 131,000 206,700 423,300 438,000 33,300 33,300 76,700 2,000 74,700 62,000 5,000 57,000 15

23 Gross Profit/Loss 24 Administrative Expenses 25 Net Profit/Loss

4.1

Cost Down Activities

As to bring down operations cost so that can enable Lai Hock Builders go gain profit from the project such as: a) i) Reduce Indirect Costs Lai Hock Builder can put in more effort to bring down the indirect costs such as Indirect Overtime by putting in restriction to the workers not to carry out unnecessary overtime works beyond the actual working hours. ii) Can introduce two shift systems as the first group will be working from 7:00am till 3:00pm and the 2nd group will be working from 11:00am to 7:00pm as they can overlap their works without proceeding with overtime. b) i) Out-source jobs

Outsource skilled jobs such as masonry and tiles work as to reduce burden of daily pay basis as it will be expensive as to their special skill. Jobs like this can be outsourced with terms of completion and can stop dragging of work of in house workers who drags work as to accumulate the workmanship.

ii) Even jobs like plumbing and electrical jobs also can be outsourced to reduce the impact of high expenditures from domestic workers. iii) Subsidiary jobs as above and lot more can be done separately instead of given as turnkey project. c) Safe Working Procedures

Both the building main contractor and sub-contractor need to practice a good safety and health work procedures as they could avoid unwanted accidents that will force claims, medical leaves and loss time injury that might effects the task of completion of the project.

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5.0

CONCLUSIONS

Decisions are made from the choices of selection that could be optional to justify either positively or negatively or to consider the others. firm result neither than to regret later after decision. In the cases of this assignment it is quite complicating because the decision will affect both parties as the situation is not normal. If there were no delay in the completion task then the selection job will be very much easier as we could select the cheapest and complete the job. We have derived all the feasible method of decision making where the final conclusion such as stepwise conceptions, benchmark, decision tree, SWOT analysis and Gantt chart is used as the tool. It was a bit too much to use many kinds of tools for evaluation but as for a satisfaction we elaborate the problems in all aspects to make precisely a positive decision. The building referred in this assignment belongs to Mr. Anil Kumar who is basically a charter accountant who is more toward accounts and monitory consultation. Psychologically account dealing personals will be very much stringent with all the input and output in terms of monitory concern furthermore will get emotion if things are not to their expectations especially in cases of delayed jobs particularly. To enable an effective decision, we have to study at various aspects and formula before we come back with a

Intelligently we have to play save although the time factor was too complicated and has to commit with further penalty charges , the turmoil of the whole project. As to this topic of discussion we are not in the position not to give a trial for Ghulam Rasool contractor where this is not time to take a very high risk, simply to get a big return. It might give either positive or negative result but is no way for us to make any immediate remedy if mistakes found.

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We can give a trial for first timer Ghulam Rasool if there are projects in future where there is no rush for the lead time for completion of the project. Decision making is a process of planned movement to administrative, cost-effective, and social life. Decision making is also a crucial module of time organization assistances that can manage excellently hence in making decisions as explained in the BusinessWeek magazine on decision making process.

(Three thousand and Thirteen Words) REFERENCES http://bx.businessweek.com/decision-making-process-dmp accessed on 09/06/2012 http://www.businessdictionary.com/definition/decision-making.html, 09/07/2012 accessed on

Catherine D. Bennett, CPCU, ARM Cost Control Concepts, Inc. (2004). Forgarty Robin James Bellanca (1990) Teach Them Thinking http://people.stern.nyu.edu/adamodar/pdfiles/papers/probabilistic.pdf 09/06/2012. http://searchsoftwarequality.techtarget.com/definition/Gantt-chart 10/06/2012. accessed on accessed on

Luis F. Luna-Reyes (2003) citing website,http://www.systemdynamics.org/conference pdf Model Conceptualization: a Critical review accessed on 09/06/2012. http://en.wikipedia.org/wiki/Benchmarking accessed on 06/06/2012 http://en.wikipedia.org/wiki/Decision_tree accessed on 07/06/12 http://en.wikipedia.org/wiki/SWOT_analysis accessed on 11/06/12. Kanthilal, Dr. Haresh Kumar, Espira, Dr. Anton, OUM Thinking Skill and Problem Solving, 2008

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