Professional Documents
Culture Documents
RICS-SBE/XX/XX/S006/R02 1
Revised on: 24-05-2019
V. Paul C. Charlesraj
vpcharlesraj@ricssbe.edu.in
Chief Course Coordinator
M2 Agenda
Module 2 (30%)
Project Development
SLO2: Explain and appraise the project development process
M002: Client care
T037: Development/project briefs
T087: Project feasibility analysis
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Project Development
Overview of project development process - project need identification - feasibility
analysis - project selection
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Property Development
• Any activity that changes the state of land
• Erection of new buildings
• Demolition of existing buildings & their replacement with new one
• Improvement of existing buildings
• State of repair; fixtures & fitting; design; enlarging
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Supervision
Site Search & Arrangement Detailed
Study of Finance Planning
of
Development
Outline Building
Planning
Planning Control Site Purchase
Investigations
Application* Approval
Tender
Initial Financial Market Costing of Documents &
Appraisal Research Construction Construction
Contract
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Development Management
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management
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Project Selection
and
Feasibility Study
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Project Selection
• Process of evaluating projects so that the organizational strategy is
achieved
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Strategic Management
• Specific
• Measureable
• Achievable
• Realistic
• Time bound
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Q-Sort Model
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Models
• Payback Period
• Average Rate of Return
• Ratio of average annual profit to the initial fixed investment
• Discounted Cash Flow
• Net present value (NPV) of all cash flows by discounting them by the required rate
of return
• Internal Rate of Return
• Rate of return for which present value of inflows is equal to present value of cash
flows
• Profitability Index
• Benefit/cost ratio Payback period model combined with
discounted cash flow is commonly used
CM662-Project Development and Pre-Construction Planning by V. Paul C. Charlesraj
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• FEASIBILITY REPORT
• Project evaluation factors – Production/Technology, Marketing, Financial,
Personnel, Administrative/Managerial and Miscellaneous
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Pre-feasibility Report
• Synoptic review of project details
• Project background and history
• Project scale and size
• Project sponsor(s)
• Preliminary determination of project scope
• Estimated cost and time
• Project engineering
• Demand and market for the project
• Cost of studies already conducted and to be conducted if project is selected
• Preliminary risk assessment
• Contribution to organization objectives/goals …………….
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Feasibility Report
• DETAILED PROJECT INFORMATION
• Scope
• Alternatives and assumptions
• Infrastructure requirement
• Location
• Finance
• Cost
• Schedule
• Team
• Technology
• Risk assessment
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Financial Appraisal
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Market Appraisal
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…Market Appraisal
• Total demand and rate of growth of demand
• Demand in different segments of the market
• Socio-economic characteristics of buyers
• Motives of using/buying
• Unsatisfied needs
• Satisfaction with existing projects/products
• Competition
• Attitudes towards various projects
• Advertising and distribution strategy
• Government policies
CM662-Project Development and Pre-Construction Planning by V. Paul C. Charlesraj
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Examples
• Transrapid Shanghai Train
• Travels at 430kph from Pudong International
• Airport to close to Shanghai’s business centre
• Can carry 453 passengers on a trip, but only carries 500 – 600 passengers in a day
• Ticket price is beyond the reach of an average middle class Chinese family
• Community needs not studied properly
• Scope reduced
• Customer need not linked with Return on Investment
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Technical Appraisal
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Technical Feasibility
• Familiarity with Project Constraints
• Familiarity with construction technology
• Project size
• Compatibility
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Socio-Economic Appraisal
• To evaluate the project utility from the point of view of the society or
national economy instead of commercial profitability
• Social Benefit Cost analysis
• Used for public projects
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Managerial Appraisal
• Project Management methodologies
• Optimum decision-making structure Sample Pre-
• Decision making under risk and uncertainty is important feasibility Report
Sample Feasibility
• Principal-Agent Problem Report
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Business Case
• Used to create the Project Charter
• Describes the necessary information from a business standpoint to
determine whether the expected outcomes of the project justify the
required investment
• Typically contains business need and the cost benefit analysis to justify
and establish boundaries for the project
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Project Charter
• A document issued by the project initiator or sponsor that formally authorises
the existence of a project and provides the project manager with the authority
to apply organisational resources to project activities
• Documents high-level information on the project and on the product, service or
result the project is intended to satisfy
• Provides the direct link between the project and the strategic objectives of the
organisation
• Creates a formal record of the project
• Shows the organisational commitment to the project
• Establishes a partnership between the performing and requesting organisations
• The approved Project Charter formally initiates the project
• A Project Charter is not considered to be a contract because there is no
consideration or money promised or exchanged in its creation
CM662-Project Development and Pre-Construction Planning by V. Paul C. Charlesraj
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Prasanta Kumar Dey (2001) Integrated approach to project feasibility analysis: a case
study, Impact Assessment and Project Appraisal, 19:3, 235-245
CM662-Project Development and Pre-Construction Planning by V. Paul C. Charlesraj
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DPR Template
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Site Survey
and Mapping
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Geo-technical
Investigation
and Analysis
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Purpose
► Land Surveys / Aerial Surveys
► Sub-stratacharacterization
► Soil bearing capacity
► Rock
► Water level
► Water quality
► Contour Map
► To finalise the positioning of the building components
► To calculate earth cut and fill requirement
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pH Mapping
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Illustrations
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GIS
► A framework to organize, communicate, and understand the science of our world
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GIS
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Logistics Planning
logistics planning
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Site
Management
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Construction
Logistics
Planning
(CLP)
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Background
► Logistics
► A branch of knowledge applying new concepts to control material, service, information and
finance flows between suppliers and customers
► Supply Chain
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What is CLP?
► Important management tool for planners, developers and construction
contractors
► Focuses specifically on construction supply chains and how their impact on
the road network can be reduced
► Construction supply chain covers all movements of goods, waste and
servicing activity to and from site
► Well planned construction logistics will reduce:
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Purpose
► CLP provides the framework for understanding and managing construction
vehicle activity into and out of a proposed development.
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Types of CLP
► Outline CLP
► written during the planning and design stage and is submitted with the planning
application
► Detailed CLP
► written during the pre-construction/construction stage and is implemented and
monitored throughout the construction programme
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Outline CLP
► written during the planning and design stage and is submitted with the planning application
► gives the planning authority an overview of the expected logistics activity during the
construction programme
► required during the planning approval stage for medium and high impact developments
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Detailed CLP
► written during the pre-construction/construction stage and is implemented and monitored
throughout the construction programme
► submitted to a planning authority at the post-granted discharge of conditions stage and
provides the planning authority with the detail of the logistics activity expected during the
construction programme
► extensive plans that are required to be produced for medium and high impact sites
► An up to date CLP should be maintained as a live document throughout construction
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Who is Involved?
► Local Planning Authorities (LPA)
► Developers
► Planning Specialists
► Designers
► Contractors
► Logistics Operators
► Transport Authorities
► Insurance Companies
► Financial Institutions
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Writing a CLP
► Content of a typical CLP
► 1. Introduction
► Objectives of the CLP, Site context, Development proposals, CLP structure CLP toolkit
► 2. Context, considerations and challenges
► Policy, Plans, Local access including highways, public transport, cycling and walking,
Community Considerations
► 3. Construction programme and methodology
► Building and infrastructure phases
► 4. Vehicle routing and site access
► Regional, local and site plan
► 5. Strategies to reduce impacts
► Committed, proposed, considered
► 6. Estimated vehicle movements
► 7. Implementing, monitoring and updating
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London Construction 74
Consolidation Centre
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Source: http://www.wilsonjames.co.uk/case-study-6-construction-consolidation-centre-.html
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The Problem
► Failure to plan the site layout in advance is a prime cause of
operational inefficiency, and can increase the overall cost of a
project substantially.
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► Offices
Shops
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► Standardization of design
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Approvals
administrative structures and statutory
compliances
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Design &
Manage
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Sacks, R., Eastman, C., Lee, G., & Teicholz, P. (2018). BIM Handbook. CM761-BIM for Built Environment by V. Paul C. Charlesraj
John Wiley & Sons, Inc.
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► Linear/Sequential Process
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► Variants
► BOT – Build – Operate – Transfer
► BOOT – Built – Own – Operate ‐ Transfer
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• IPD includes presence of all key factors of the project from outset in an integrated
manner, and using their experiences and constructive cooperation in a multilateral
contract to have a more successful project and participation in risk and reward for
all stakeholders in project life cycle
• Multiparty agreement
• Shared risk and reward
• Early involvement of all parties
AIA, “Integrated Project Delivery: A Guide,” Am. Inst. Archit., pp. 1–62, 2007.
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► Target Estimate
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Contracts
• E = contractor's original estimate of the direct job cost at the time of contract award
• M = amount of markup by the contractor in the contract
• B = estimated construction price at the time of signing contract
• A = contractor's actual cost for the original scope of work in the contract
• U = underestimate of the cost of work in the original estimate (with negative value of U denoting an
overestimate)
• C = additional cost of work due to change orders
• P = actual payment to contractor by the owner
• F = contractor's gross profit
• R = basic percentage markup above the original estimate for fixed fee contract
• Ri = premium percentage markup for contract type i such that the total percentage markup is (R + Ri),
e.g. (R + R1) for a lump sum contract, (R + R2) for a unit price contract, and (R + R3) for a guaranteed
maximum cost contract
• N = a factor in the target estimate for sharing the savings in cost as agreed upon by the owner and the
contractor, with 0<=N<=1
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Contracts
Type of Contract Owner's Payment Contractor's Gross Profit
1. Lump sum P = B + C(1 + R + R1) F = E - A + (R + R1)(E + C)
2. Unit price P = (1 + R + R2)A + C F = (R + R2)(A + C)
3. Cost plus fixed % P = (1 + R)(A + C) F = R (A + C)
4. Cost plus fixed fee P = RE + A + C F = RE
5. Cost plus variable % P = R (2E - A + C) + A + C F = R (2E - A + C)
6. Target estimate P = RE + N (E - A) + A + C F = RE + N (E - A)
7. Guaranteed max cost P=B F = (1 + R + R3)E - A - C
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Procurement Strategy
► Time‐ an early completion can be achieved if construction is commenced
before the design is fully completed. However, this approach can attract
risk in terms of cost certainty.
► Cost – the importance of cost certainty at various stages of the
procurement process.
► Quality – The quality characteristics that are required of the building will
have an impact on the cost and the timescale. Some procurement
strategies enable the Client to control the quality in detail, whilst others
reduce the client’s ability to both control and make changes to the
building’s specification.
► Risk‐ the Clients willingness to take on risk.
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Procurement Process
► Procurement Strategy – this will identify the best way of achieving the
project objectives, bearing in mind the four issues noted above.
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