Emergent Technologies in Commercial Construction Essay

Emergent Technologies in Commercial Construction - Essay Example This research will begin with the statement that the need has arisen for solving urgent environmental problems that have been caused partially by an anthropogenic factor. The consequences of the greenhouse effects (such as gas emissions), the forthcoming and unavoidable insufficient fuel supply, and other related topics are causing intensifying energy concerns among the global community. The increasing use of renewable fuels has become an inevitable practice when facing the global energy crisis. Oil depletion makes oil extraction more difficult and expensive, which has forced many countries to search for alternative fuel sources and energy conservation strategies. Due to these threats, sustainability planning has become the primary agenda for the states who are facing an energy crisis and environmental problems caused by destructive human activity. Since sustainability increases the chances to survive in the context of a complex and changing environment, timely planning of activities to enhance alternative energy usage seems the most reasonable. This paper will present a framework to help organizations design sustainability plans, aided by discussion and analysis of innovative technologies and construction in real-life settings. The revelation of commercial construction and building technology innovations of the near future will also be discussed. There is a pronounced need to expand knowledge on commercial construction and energy, and on their influences on sourcing, building material use, construction processes, and interior/exterior design. In addition, the positive changes in the global construction patterns that can create a reliable and sustainable living environment will be predicted. The need for energy conservation and analysis of biomimicry advantages will be considered herein. The discussion of future energy delivery models will provide a solid basis for the analysis of innovative construction technologies. The essence of smart interface technologies will be revealed as this phenomenon promises future benefits for the sustainable construction and engineering fields. Information about future construction techniques and material implications will also be covered. Energy Conservation and the Benefits of Biomimicry Throughout the centuries, people have been producing energy from natural resources like fossil fuels, such as coal, natural gas, and oil, which are nonrenewable. Unfortunately, these natural resources take millions of years to form and humanity has not yet discovered any methods to accelerate this process. Moreover, energy production is a costly process that causes enormous time and financial losses for individuals and organizations (Ollhoff, 2010). In this context, the necessity for energy conservation is growing at an alarming rate. The current energy crisis is accompanied by increasing prices for energy supplies, shortages of fossil fuels and other natural resources, and a reduction of the number of power stations in some countries. It is obvious that in facing the current energy crisis, people are searching for effective sustainable practices to solve these new problems; however, finding them implies initial clarity about the intricacies of the energy crisis, its causes, manifestations, and possible consequences. To respond to the energy crisis, research and development programs, along with the corresponding agencies, are focusing on biomimicry as the method to solve specific problems by following the examples of certain processes in nature. Biomimicry is welcomed in numerous energy conservation programs (Brebbia & Carpi, 2010). However, one needs to deepen into the essence of all essential aspects of energy conservation in order to understand why biomimicry occupies a significant place in contemporary innovative construction technologies. Ollhoff (2010) noted that the problem of energy conserv

How Did the Buildings and Landscapes of the Secular Elite Shape Term Paper

How Did the Buildings and Landscapes of the Secular Elite Shape Medieval Settlement and Social Relationships - Term Paper Example Deer parks were formed only on those estates of the very rich, nobility and the great clerics, who spent much of their time hunting, however by the end of the15th century, according to Michael Reed (page 124) the wood contained in the parks had become more valuable than the deer. Deer are notorious for stripping bark and so destroying woodland and the animals would be excluded in order to allow the trees to grow undamaged. Occasionally land in private ownership would pass back into public ownership as when Henry VIII gave his private hunting ground, Sutton Park to the people of Sutton Coldfield in 1528, as described on the web page Sutton Coldfield, but this did not necessarily mean it could then be farmed. When poor men hunt it is called poaching and punishable, but it was the rich who had the horses, weapons, and birds of prey, so once again it was they who were the main beneficiaries. The deer park was of economic importance in that it provided food, leather, wood etc, but also employment for many people. Just as with the fish ponds they provided an easily available larder of fresh food before the advent of modern-day preserving methods and chill rooms and freezers. Hunting was an expensive pastime but there were other advantages in that if the king was kept happy then social advancement was possible. The Medieval Source Book recording an Inquest of the Sheriffs Regarding the Forests in 1170 mentions reward, promise, and friendship as being the products of hunting. Hunting was both a pleasure and a necessity – a way of entertaining guests and also of filling their bellies. By the later medieval period new methods of farming were being used and hunting for survival was no longer required. Instead, hunting moved on from being a necessity into a stylized pastime for the aristocracy. James III of Scotland in the 15th century had several hunting lodges, as described by Gilbert, 2003, (page 42).  

Procurement Strategy In Uk Crossrail Project Construction Essay

Procurement Strategy In Uk Crossrail Project Construction Essay This dissertation is about investigating and evaluating the procurement strategy adopted in Crossrail project. A literature review is structured under first four chapters: (1) An Introduction; (2) Crossrail Project; (3) Literature review I; and (4) Literature review II. This is done to introduce the issue. This dissertation deals with the different procurement strategy applied for cross rail project. Cross rail being one of the biggest transportation project in Europe, have very complex procurement methods which should be very well planned. The thesis observes the methods of procurement adopted by cross rail by comparing it with different standard procurement methods and best practices used in the country. Research is carried out on three different areas of procurement. They are skilled resource procurement, type of contract used and demonstration of value for money. The initial survey carried out indicated that there is a skills shortage in Crossrail project and also some of the areas were identified which needed further clarification in using NEC3 contract. The dissertation was carried out based on the questionnaire developed as a result of literature review. Interviews were conducted based on the questionnaire. From the results of the research it was possible to conclude that Crossrail following robust project management techniques to deliver the project successfully. However it would be too early to reach a conclusion since the project is still well under progress. Acknowledgement First I would like to thank Mr Barry Wood for all his advice and help. It was a great help to have a supervisor like you. It was really interesting in discussing procurement with Mr Wood. Secondly thanks must go to the employees of Crossrail and TfL for agreeing to take part in the interview. I would also like to thank Mr Rupert Bruce for providing some journals related to my topic. Finally many thanks to all my friends and the almighty for being a great support and motivation throughout my work. Chapter 1 Introduction Rational for the research The continuing demand for developing transportation infrastructure projects is increasing day by day. This is putting tremendous pressure on public sector for development. Transportation has been a main function of government since long time. In the present scenario, it is difficult to manage and fund mega transportation project because of the financial crunch. This reduced the ability of government to implement big and unique projects by itself. Project delivery is the method by which government encourages the private sectors and other agencies for the development of infrastructures. Transportation megaprojects include huge capital investment, expert and competitive contractors, long period of time and a perfect delivery strategy to deliver the project in time, quality and within budget. To make such mega projects successful, a strong procurement strategy is required. A procurement strategy is to develop a framework keeping in mind the objectives and outcomes of the project. The con tractual and commercial strategy will be defined at the design and construction stage itself which will align the project team towards achieving the objective. A good procurement strategy will have a positive impact on projects performance in terms of time and cost. Client dissatisfaction is always related to late delivery of project, over budget and poor quality of work. This happens because less importance is given to value for money. The Latham report (1994) proposed change towards more collaborative culture. Partnering through the contract chain was seen as the most efficient way. The Egan report (1998) set out five key drivers which are important for the construction industry. They are committed leadership, client focus, integrated processes and teams, a quality driven agenda and commitment to people. This made a tremendous change in the industry. Innovative approaches in procurement and other areas of construction are encouraged. Value for money is given more importance than cost reduction. Crossrail Project This dissertation is mainly focussed on the procurement strategy in Crossrail project. Crossrail is one of the biggest transportation projects in Europe. Cross rail is the new high frequency, convenient and accessible railway for London and the South East. The project value is worth  £14.8 billion .From 2018, Cross rail trains will travel from Maidenhead and Heathrow in the west to Shenfield and Abbey Wood in the east via 21 km of new tunnels under central London. It will link Heathrow Airport, the West End, the City of London and Canary Wharf. Crossrail obtained the Royal Assent in 2008. Crossrail is divided into four distinct sections. They are Central section, western section, north-eastern and south-eastern sections. After Crossrail starts operation, 24 trains are expected to run per hour. This will add 10% to the transportation capacity of London. Crossrail will also reduce the journey time between many key destinations of London. CRL will be directly buying and managing a relatively small number of contracts with Tier 1 contractors. They, in turn, will be buying a wide variety of goods, works and services from a large number of smaller suppliers and contractors which form the supply chain for delivery. Cross rails approach to procurement is aligned with the UK governments achieving excellence in construction principles, including a fair allocation of risk and reward, early involvement of the supply chain, minimizing of interface risks, incentivizing performance and selection of suppliers on the basis of best value (NEC,2009). Research Goals 1.3.1 Aim The aim of this dissertation is to identify, and investigate different methods of procurement and the issues involved with it in the Crossrail project. Cross rail being one of the biggest transportation project in Europe, will have very complex procurement methods which should be very well planned. The thesis will observe the methods of procurement and the measures adopted to overcome the issues involved in cross rail. 1.3.2 Objectives In order to achieve the aim, the following objectives will be used, To examine the skilled resource procurement strategy of crossrail since crossrail will face shortage of skilled resources through its different stages of project. To establish the logic behind the type of contract used in procuring different contractors and different works involved in Crossrail. To analyse and observe on how the procurement strategy for cross rail is developed to obtain value for money. Outline Methodology of the Research The research process will be broken down into two key stages in order to meet the aim and the objectives indicated earlier. These are, 1.4.1 Literature Review This stage of the research process provides a comprehensive review of the relevant literature on different types of traditional methods of procurement. A review of cross rails policies and procedure will also be done. This is to develop a better understanding of the best practices in procurement and will help in the understanding of cross rail procurement strategy. The literature review will form the foundation for the research and provided a detailed background to the subject to enable the rest of the dissertation to be conducted. Dissertation Contents The second chapter will give more thorough introduction on the crossrail project. This chapter will review the project, its vision and objectives and the different procurement strategies adopted. Chapter three and four deals with different concepts of procurement. A literature review explaining NEC3 contract, value for money and skills issues in crossrail will be done. Chapter five starts with an explanation of how the case study area was chosen and thereafter sets out in detail the research methodology. It describes the tools used to make this investigation, describes the characteristics of the research sample, and the methods used to translate the results. Chapter six shows the work conducted and the results obtained. Chapter Seven will list out the main points from previous chapters to answer the questions which were set as objectives in chapter 1. This chapter will also include recommendations and suggestions for future work. Chapter 2 The Crossrail Project The Project Crossrail project is proposed to support the transportation requirements and economic development of London and southeast regions. The project comprises new tunnels running west-east through central London connecting directly with existing surface rail routes to Maidenhead and Heathrow in the west, and to Shenfield and Abbey Wood in the east (Crossrail Environmental Statement, p3). Crossrail is an urban transportation service, instead of a long distance type of railway transportation. It  is  a type of project in which different type of construction works are involved and all these works are carried out throughout the route together. Crossrail is a project which has different partners for delivery like Crossrail Central, London Underground, Network Rail, DLR, Canary Wharf Group and Berkeley Homes. Crossrail has five tunnelling drives, 21 km of twin bore tunnels under the centre of the capital dealing with the complexities that this involves (Crossrail, 2010). Crossrail also consist of construction of eight new underground stations which will be connected to the already existing Underground and rail networks and four over ground spurs including a connection to Heathrow Airport. Crossrail limited has changed form a promotional body to a world class body which is highly efficient and able to deliver a world class railway after gaining the Royal Assent. Crossrail limited was a 50/50 joint venture company between Transport for London (TfL) and the Department for Transport (DfT) until 5 December 2008 when it became a fully owned subsidiary of Tfl (Crossrail, 2010). Crossrails route has four distinct sections: a central section, within central London, and western, north-eastern and south-eastern sections extending into outer London and parts of Berkshire and Essex (Crossrail Environmental Statement, p6). New twin bore tunnels will be constructed in the central section and in some parts of south-eastern section. The Central Section The central section consists of the majority of the construction works. New stations will be built along the central route of the line at Paddington, Bond Street, Tottenham Court Road, Farringdon, Liverpool Street, Whitechapel and Canary Wharf (Crossrail, 2010). The new twin-bore tunnels will extend between Royal Oak in the west and Pudding Mill Lane (near Stratford) and the Isle of Dogs, in the east. Access will be provided to the west and east end of the platforms by the construction of two entrances and ticket halls in all the new stations except the Isle of Dogs station and probably Whitechapel station where this facilities will not be provided. For every Crossrail station, connections will be given to the already existing stations which will allow the passengers to transfer to other services, such as the Underground, Docklands Light Railway, other mainline services such as Thameslink, and bus services. Shafts will be provided at regular intervals throughout the route which will be used for emergency access, escape and ventilation. These shafts will be connecting the tunnels with the surface. Some of these shaft structures will be near to the new stations, whereas others will be located on their own. In addition, some temporary shafts will be constructed for tunnelling purposes, and will be filled in once construction is completed. (Crossrail Environmental Statement, p30) The Western Section In the western section, there may be a requirement to change the existing Great Western mainline between Maidenhead and Paddington, such as new or realigned track. Added to that, an overhead electrification will be installed along the route west of Stockley Road (Hayes). For this purpose, erection of steel gantries will be required at about every 50m intervals. Demolition or reconstruction of numerous bridges will be required as a result of overhead electrification in order to provide overhead clearance for the electric wires. Major engineering works like construction of a flyover will be required at Stockley to allow access for Crossrail trains to and from Heathrow Airport. New sidings for stabling Crossrail trains will be provided at Maidenhead, West Drayton and Old Oak Common. The stations at Maidenhead, Slough, West Drayton, Hayes Harlington, Southall, West Ealing, Ealing Broadway and Acton Main Line will be remodelled to various styles in order to accommodate Crossrail trains a nd to provide more improved and efficient facilities for passengers such as new ticket halls, escalators, bridges and lifts. At a further five stations, platform extensions will be required to serve the Crossrail trains. (Crossrail Environmental Statement, p39) The north-eastern section The proposed works in the north-eastern section are renovation of Romford and Ilford stations, extension of platform at nine different stations, a new depot and sidings west of Romford station, construction of an underpass in order to provide access for trains, new sidings for construction purposes at Alders brook and Pit sea; new sidings for stabling trains at Gidea Park and Shenfield; and a new freight loop (a single track dedicated to freight trains) between Goodmayes and Chadwell Heath, to replace an existing loop at Manor Park (Crossrail Environmental Statement, p44). The south-eastern section East of the Isle of Dogs, the twin-bore tunnels from the central section will continue under the River Lea, before emerging on the North London Line at a portal near Victoria Dock Road and Custom House station. New shaft structures will be built at Blackwall Way and the Limmo Peninsula. New twin-bore tunnels will be driven beneath the Thames to link North Woolwich with Plumstead station on the North Kent Line. New portals will be located at each site and shaft structures will be constructed at Warren Lane and Arsenal Way, in Woolwich. Two new tracks will be provided beside the North Kent Line between White Hart Road in Plumstead and a point about 1,200 m east of Abbey Wood station, to serve up to 12 Crossrail trains per hour in each direction. This will require works to two road bridges and replacement of two footbridges. Custom House station and Abbey Wood station will be reconstructed. Silvertown station, which is likely to have been closed already under powers to construct the Doc klands Light Railway extension to Stratford International, will be demolished. Passive provision will be made for a new Crossrail station at Silvertown, should this become desirable following redevelopment of nearby sites. New overhead electrification will be required throughout this section. In order to accommodate this, the existing Connaught Tunnel, which runs between Royal Victoria Dock and Royal Albert Dock, will be reconstructed. Manor Wharf, in Belvedere, will be refurbished and used to load excavated material onto barges. (Crossrail Environmental Statement, p48). 2.2 Crossrail Delivery Strategies Crossrail has procured a Program delivery partner and a Project delivery partner. The project delivery partner is Bechtel, which is responsible for the delivery of central section of crossrail. The program delivery partner is the Transcend consortium made up from Aecom, Nichols Group and CH2M Hill. Program delivery partner will be responsible for the overall management of the project. (NCE, 2012) Figure 2.1 Crossrail Delivery Strategy. Source: Michael A Kay, p155, 2009 2.2.1 Crossrail Program Delivery Partner The role of Transcend is to coordinate throughout the project. Since the crossrail project is split into many small contracts and small section of works, the major function of program delivery partner will be to manage the interface in merging the different components of work into a single and efficient railway system. To achieve this, program partner will be working closely with National Rail, London Underground Limited and Rail for London. The program partner is also responsible for the work of stations which are privately funded by developers like Canary Wharf Group and Berkeley Homes. The program delivery partner will be closely working with crossrail limited as an integrated delivery partner. Staff for the program delivery team will be chosen on the basis of efficiency and regardless of the employer. Integrating the two teams in the early stage will be safe for the clients and risks can be shared. In the later stage, if everything is running smoothly, CRL can hire more of its own staff and can reduce the number of staff in program partner. This will increase more in-house control. The role of program delivery partner is very broad as compared to the project delivery partner. (NCE, 2012) 2.2.2 Crossrail Project Delivery Partner The project delivery partner will be responsible for the delivery of Central Tunnel Section (CTS) in which stations and systems are also included. Bechtel will manage the procurement of all the contracts which will be responsible for delivery of central section. Although the contract will be between CRL and the contractors, the project delivery partner will be acting on behalf of CRL. The CTS is very well defined and therefore will require more traditional approach of project management. The main responsibilities of project delivery partner will be implementation of engineering design, managing interface within the central section, procurement, testing and commissioning. (Michael A Kay, 2009) Both delivery partners are expected to have strong inputs in finalizing the procurement strategy. Both should make important decision like size of contract and incentivization structure to get maximum output and quality. 2.2.3 Crossrail Stakeholders Crossrail being a mega project will have many stakeholders. The table below shows all the government and private stakeholders of Crossrail: Stakeholder Role Department for Transport(DfT) Co Sponsor. Main interface to national government and HM Treasury Transport for London(TfL) Co Sponsor. Main interface to local government, the Greater London Authority (GLA) and the Mayor of Londons office. Owner of the central section. Crossrail Limited(CRL); previously Cross London Rail Links Limited(CLRL) Delivery agent. Formerly a 50/50 joint venture of TfL and DfT, now a wholly owned subsidiary of TfL. Main interface to the delivery supply chain, including both the project and program delivery partners. National Rail (NR) Industry partner. Responsible for the operation, maintenance and renewal of the National Rail network. Infrastructure manager of crossrail end to end rail systems. Main interfaces to train operating companies (TOCs) and Freight Operating Companies (FOCs). London Underground(LUL);a TfL subsidiary Industry partner. Responsible for the operation, maintenance and renewal of the National Rail network. Infrastructure manager of the central section stations, except Paddington. Main interface to the PPP and PFI LUL contractors. Rail for London(RfL); a TfL subsidiary Operator franchising authority or shadow operator of crossrail. Infrastructure manager of crossrail stations at Paddington, Isle of Dogs and Woolwich. Docklands Light Railway(DLR); a TfL subsidiary Industry partner. Responsible for the operation, maintenance and renewal of the Docklands Light Railway transport system and for providing crossrail limited(CRL) with access for proposed modification of the DLR British Airports Authority Owner of the Heathrow spur Canary Wharf Group(CWG) and Berkeley Homes Group(BH) Developers that have agreed to make contributions towards the cost of stations at the Isle of Dogs and Woolwich respectively. (Table 2.1 Crossrail Stake holders and roles. Source Michael A Kay, 2009) Chapter 3 Literature Review I 3.1 Skills Issues for Crossrail Being a mega transportation project, Crossrail will be facing many skills shortage in different departments of its works. According to Crossrail Skills and Employment Strategy, July 2010, the following skills issues will be faced by Crossrail: 3.1.1 Ageing workforce Across the construction industry and engineering fields there is an ageing workforce and for many years youth were not attracted towards the industry because they did not treated it as an attractive career option. The major issue is that the age profile of Registered Engineers has been rising steadily for 20 years. Now the condition is that almost 50 percent of the Registered Engineers have either crossed their retirement age, or will be reaching their retirement age in 10 years. In London, the issue is particularly stark with 38 per cent of the engineering workforce aged 45 to 64, and only 10 per cent aged 16-24 (Crossrail Skills and Employment Strategy, 2010). Although there was a remarkable growth in construction industry since the early 1990s, the expansion the workforce was not even. It was different among different age groups. The number of older workers aged 55 years and over in the industry has increased by 65 per cent since 1990, while those aged 24 and under has fallen by m ore than 40 per cent over the same period. (CITB Construction Skills, 2011). 3.1.2 Underground construction skills gap Crossrail will have a huge requirement of skilled tunnellers.But the main problem is that since the last 30 years, the construction industry which is involved in underground works, has suffered from cyclical peaks and troughs of work due to which it failed to maintain an experienced workforce because the work were lacking continuity of employment. Not only Crossrail but there are a number of major projects in London like a number of National Grid tunnels (2009-2016), Thames Water tunnels Thames Tunnel (2012-2020) and Lea Tunnel (2009-2014), and London Underground (LU) line upgrades from 2010 onwards. On an international level, there is the  £2.5bn expansion of the Copenhagen Metro, and the 3bn Dublin Metro will be delivered between 2009 and 2018 (Crossrail Skills and Employment Strategy,2010). There is no estimate of labour available for this project but the amount of funds required for this project indicates that a huge number of workforces will be required to execute the work. T he effect of these entire projects will definitely create a tunnelling skills shortage and this can only be overcome by giving proper training to a significant number of construction workers. 3.1.3 Logistics training needs While excavating for crossrail tunnels, a huge quantity of excavated materials will need to be removed from the site. Although Crossrail has to remove much of the material by using rail transport and also by using barges, some materials will be removed by using road transportation system. Also, the road transportation system will be required to deliver the materials required for the station site. According to Crossrail, there will be around 3,500 frequent lorry drivers. In addition to these drivers, there will also be a small number (around 25) of operatives at consolidation centres, around 60 people with logistics skills at site operations and around 20 at lorry holding areas and central control. (Crossrail Skills and Employment Strategy, 2010) 3.2 NEC3 The Construction Contract The NEC is a major attempt to draft a simple and direct standard form contract from first principles without attempting to build upon the standard forms that already exist. The specification prepared in 1987 set out the aims of those drafting the NEC. 3.2.1 Overview As per Fenwick Elliott, 2007, the aims were to: Attain an advanced degree of clarity when matched to other existing contracts; Use of a simple language which is commonly used and avoid legal jargon; Repeat identical phrases if possible; Specifically and unmistakably allocating roles and responsibilities to the right Person; Aim for clarity above fairness; and Avoid including details which can be more adequately covered in a technical specification. To summarize, it can be said that using three core principles like flexibility, simplicity and clarity, the authors drafted core clauses which are applicable to all NEC contracts. The core clauses were then used as the basis for six main options (Nicholas Gould, 2007) .Under NEC3 these six main options remain: Option A (priced contract with activity schedule); Option B (priced contract with bill of quantities) provides that the contractor will be paid at tender prices. Basically, a lump sum contract approach; Option C (target contract with activity schedule); Option D (target contract with bill of quantities) provides that the financial risks are shared between the contractor and the employer in agreed proportions; Option E (cost-reimbursable contract); and Option F (management contract) a cost-reimbursable contract, where the risk is therefore largely taken by the employer. The contractor is paid for his properly incurred costs together with a margin. As per the experts of the NEC contract, the greatest strength of NEC is that it believes in partnering approach and at the same time adopts a project management technique which is proactive. There are perhaps three ways that this is clearly demonstrated in the NEC form. First one is the early warning system. According to this system, early identification of problems involved in the project and finding an early resolution is encouraged. The early warning system says that an experienced contractor would have or ought to have recognized the need to give the warning failing which, the contractor will not be compensated for the issue. Therefore contractors are encouraged to be active in early warning procedures so that any problems arising in the future can be avoided in the initial stages and inadequate cost recovery can be avoided. Second, those risks for which the employer is not expressly responsible under clause 80.1 are risks for which the contractor is liable. Finally, the target cost option most clearly reflects the early warning proactive management approach by affecting the financial bottom line of the parties, in particular the contractor (Fenwick Elliott, p7, 2007). 3.2.2 Target cost contracts In traditional form of contracts, a lump sum contract is used to carry out the work on the basis of which contractor will be paid. This sum will only be adjusted for the changes which will be done by employers or for any other risk items which will be mentioned in the contract for matter such as design errors. In this type of approach, the work will always be awarded to those contractors who quote the lowest price to do the job. In the present scenario, this type of procurement is highly discouraged and rarely practiced especially in the public sector department where best value or value for money is mostly preferred. It is now usual in the public sector where best value applies for procurement systems to provide for payment to the contractor based upon its recorded costs. To make sure that there should be no cost overrun which will be difficult to control in the future, a target for these costs is fixed at the beginning stage. This target is adjusted in such a way that any changes made by the employer and other price risk allocated to the employer under the contract are taken into account. Incentives are given to the contractor so that cost can be kept minimum. To ensure this, a gain share / pain share mechanism is fixed at the initial stage of the project. The costs are recorded and compared with the target cost. Any saving from the work will be shared between the contractor and the employer in a pre-agreed manner. Same thing happens when the recorded price exceeds the target price. 3.3 Value for Money Value for money is always beneficial to the client. It means that the project is worth doing and is more refereed in business terms rather than financial terms. Value for money is all about creating a better working environment. The term value means to make sure that a right choice is made about getting best balance of benefits in terms of cost and risk. Value management is a defined and systematic approach for the analysis and development of a project so that chances of achieving these requirements are increased and value for money will be achieved. Value engineering is a continuous process in which all the components and processes involved in construction are critically appraised to determine whether better value alternatives or solutions are available. (OGC, Risk and value management, p7, 2007). This helps in reducing wastage and managing all those inefficient processes involved in the different stages of construction. Value management is very important because it gives an option for stakeholders to give their input in the project by encouraging more participation, teamwork and end user buy in. The benefits which can be obtained by following value management approach is more focus on business needs, more flexibility to make the future needs simple, taking stakeholders into consideration to get different views and developing more options, considering various options by being innovative and creative, prevention of unnecessary wastage and inefficiency and encouraging teamwork to find solutions. (OGC, Risk and value management, p8, 2007). Value management aims to maximize project value within time, cost and quality constraints. However, sometimes extra capital expenditure is required at the start of the project to improve whole life project value. It is important that the value management method is based on the whole-life cost of ownership instead of acquisition alone. Issues of health and safety, sustainability, design quality, build ability, operation and maintenance and disposal should all be considered during value management reviews and evaluation of options (OGC, Risk and value management, p9, 2007). Departments should act as intelligent customers by discussing with suppliers all the elements of the contract price including level of service, timescale of the assignment, skill mix of the suppliers team and how costs are to be remunerated. Optimizing the cost of delivering a service or goods over the full life of the contract rather than minimizing the initial price, introducing incentives into the contract to ensure continuous cost and quality improvements throughout its duration, aggregating transactions to obtain volume discounts, collaborating with other departments to obtain the best prices and secure better discounts from bulk buying is the best approach. Developing a more effective working relationship with key suppliers to allow both departments and suppliers to get maximum value from the assignment by identifying opportunities to reduce costs and adopt innovative approaches. Chapter 4 Literature Review II 4.1 Inspiring Future Talent It is very important for the crossrail project and also the for the industry that more and more young people get attracted towards the construction and engineering industry and choose it as their career paths. CRL will inspire young people by offering them with opportunities to work in the industry in the form of work placements and Apprent

Cost Accounting: Its role and ethical considerations Essay -- Business

Cost Accounting: Its role and ethical considerations Introduction: Accounting is the process of identifying, measuring, and communicating economic information about an entity for the purpose of making decisions and informed judgements. The major areas of within the accounting are: Financial Accounting, Managerial Accounting/Cost Accounting and Auditing- Public Accounting Managerial accounting is concerned with the use of economic and financial information to plan and control the activities of an entity and to support the management in planning and decision-making process. Cost accounting is the subset of managerial accounting and it helps management in determination and accumulation of product, process or service cost. Role of Cost Accounting: Increased competition and uncertain business conditions have put significant pressure on corporate management to make informed business decisions and maximize their company?s financial performance. In response to this pressure, a range of management accounting tools and techniques has emerged. One of the most important tools that a management can use is - Cost Accounting. Cost accounting helps management in making strategic decisions by identifying an organization?s comparative strengths and weaknesses and a better ways to use, improve or eliminate them. Cost information is used for many different purposes:  · Performance measurement;  · Cost reduction and control;  · Determination of reimbursement and fee or price setting;  · Program authorization, modification, and discontinuation decisions; and  · Decisions to contract out work or make other changes in the methods of production or delivery of services. Cost accounting provides various tools for example: Cost-benefit analysis, break-even analysis, and CVP to help management in making decisions. Role of Ethics in Cost Accounting Webster's Dictionary defines ethics as "...the principles of conduct governing an individual or a profession: the discipline dealing with what is good or bad or right and wrong, or with moral duty and obligation; a particular theory or system of moral values". Ethics are very important in any field. In cost accounting also ethics play an important role. Ethical situations can easily arise in any business setting when money is involved. . The whole Enron saga was the result ... ...g is an important tool that can help management in making informed decision. Though it is not legally required but still it is necessary to run an entity effectively. Cost accounting is turned toward the future. There are different methods of costing in Cost Accounting: Absorption costing and Variable costing. Both have some merits over the other. An entity can use both of them for different uses. Absorption costing can be used for external reporting, managers need to review the effect of their decision on financial reporting to outsiders whereas Variable costing can be used by managers to review the effect of management decisions on production, costs and profits. References: Absorption, Variable, and Throughput Costing. Retrieved on December15, 2004 from http://www.kellogg.nwu.edu/faculty/balachan/htm/Acct439/Solutions/solution_manual19.doc Hilton, Ronald W: Cost Management: Strategies for Business Decisions, Second Edition: Marshall: Accounting, What the Numbers Mean, Sixth Edition: 3-8 Turner, Robert M: Ethics and professionalism: the CPA in industry, April1990. Retrieved on December15, 2004 from http://www.nysscpa.org/cpajournal/old/08416230.htm

Indiana Building Supplies

Indiana Building Supplies – Comment An analysis of these ratios shows that both Clemens and Willis are right. All of the profitability ratios for IBS are higher than the industry average. Thus, IBS seems to have done well. And indeed, it was done well for its shareholders in 2005. Note, however, that the current and quick ratios have generally been trending downward and are significantly lower than the industry averages as well as the stipulations in the loan covenants. Thus, liquidity is poor. Moreover, inventory is turning over very slowly and the average collection period has increased significantly.These figures are manifestations of IBS’s policy of raising prices and focusing almost exclusively on Indiana customers who are relatively price-insensitive but have a more uncertain demand. It seems like IBS is charging a sufficiently high price to overcome a sales level that is significantly lower than it was in 2004. In fact, it has probably been lucky to encounter a r obust demand from its Indiana customers (it is reasonable to assume negligible demand from Ohio and Missouri), so that it did not experience a more precipitous decline in sales relative to its 2004 sales.In addition to this, IBS has also experienced very high volatility in its liquidity and inventory turnover ratios during 2005, another development that is consistent with its pricing strategy. The lengthening of the collection period seems to indicate that Indiana customers are more risky in the sense that they don’t pay as promptly as the average customer. What does this mean for the bank? Peter Willis is correct in being concerned. What IBS seems to be doing is to adopt a strategy of increasing risk for the possibility of higher profit.Raising the prices of its outputs is equivalent to concentrating on the Indiana market and excluding the Ohio and Missouri markets. This means changing its market in such a way that IBS now faces a riskier demand schedule for its products, bu t one that yields it higher profits if it is â€Å"lucky†. Since the bank is simply repaid what it is owed, it does not benefit from this higher profit-higher risk strategy. If IBS is successful in selling off all that it produces (i. e. , if the Indiana customers exhibit sufficiently high demand), then all of the extra profits go to IBS.On the other hand, if demand is poor and IBS cannot unload its finished goods inventory, the bank may not be repaid and could be left holding a mix of finished goods, work-in-progress and raw materials inventory. So, the bank absorbs much of the risk associated with IBS’s pricing strategy. This is a classic example of moral hazard related to risky debt. Note also that IBS’s debt ratio has been increasing since 2000, and now it is well above the industry average as well as what is permitted in the loan covenants. This also hurts IBS’s creditors since their risk exposure is increased.Moreover, as we saw in our discussion of capital in this chapter, a decline in equity capital relative to total assets increases the firm’s incentive to take more risk at the creditors’ expense. So, Clemens’ willingness to go along with Klinghoffer’s suggestion now is not that surprising. Note that the benefits of increased profitability are skewed more in favor of IBS’s shareholders; for 2005 the return on the net worth of IBS is 299 basis points above the industry average, whereas its return on total assets is 70 basis points above the industry average.Let us now see if IBS could generate enough cash internally to repay FNBB its old loan as well as the new loan. As we saw in our earlier discussion, there are three sources of internal cash generation: (i)net income and depreciation, (ii)reduction of accounts receivables, and (iii)reduction of inventory. Now, suppose that we can get IBS to bring its ratios in line with industry averages. How much cash will this generate? (i) Net income a nd depreciation: Assuming cash flows from earnings and deprecation in 2006 remain the same as in 2005, we have cash flows from earnings plus deprecation = $202,500 + $72,000 = $274,500. ii)Reduction of accounts receivables: In 2005, IBS’s average collection period was 49 days, whereas the industry average was 37 days. Current accounts receivable = $600,000 (Average collection period = 49 days) Projected accounts receivable = (Sales / day) * 37 days = ($4,500,000/365) * 37 days = $456,164 where ($4,500,000/365) is sales/day for 2005. If IBS could reduce its average collection period by 12 days, it could generate $600,000 – $456,164 = $143,836 (iii)Inventory: In 2005, IBS’s inventory turnover ratio was 5, whereas the industry average was 8. 5.If IBS could increase its ratio to the industry average by reducing its inventory, then this would generate $900,000 – $529,412 = $370,588, where $900,000 is the actual 2005 inventory and $529,412 = year 2005 IBS sales / 8. 5. Adding up these three sources gives us $788,924 (=$274,500 + $143,836 + $370,588). If a new loan were to be extended, IBS would owe FNBB $473,000 + $220,000 = $693,000, assuming a 10% interest on the new loan and no new interest accumulation on the old loan. Thus, if sufficient preventive measures could be taken, IBS could generate enough cash internally to pay off the bank. A word of caution, though.The $788,924 is a very optimistic estimate since it assumes that IBS can bring its ratios in line with industry averages without affecting its profit margin. This is unlikely. We would recommend not calling the old loan and extending the new loan, but asking IBS to do the following: 1. Reduce sales prices so as to be competitive with sellers in Ohio and Missouri. 2. Pursue a more aggressive marketing strategy to reduce inventories and accounts receivables. 3. Cut back on production to ensure inventory does not get stockpiled. 4. Get tough in collecting old accounts from Indiana customers even if it means sacrificing some future business. .Provide some augmentation of equity by cutting back on dividends and possibly issuing some more new equity at an appropriate time. Get the debt ratio down. 6. Do not take on new debt to replace the $200,000 that will be paid off with the bank loan. 7. Secure the bank loan with specific (inside) collateral if not already done so. 8. Design a realistic periodic loan repayment plan. 9. Consider the possibility of asking for a personal loan guarantee from Bob Clemens. We have assumed that the accounting practices of other firms in the industry are comparable to IBS’s, so that a comparative ratio analysis like this is meaningful.

Regression Analysis and Credit Balance

AJ DAVIS Generate a scatterplot for CREDIT BALANCE vs. SIZE, including the graph of the â€Å"best fit† line. Interpret. Determine the equation of the â€Å"best fit† line, which describes the relationship between CREDIT BALANCE and SIZE 2591+ 403. 221 Determine the coefficient of correlation. Interpret. .75/ r-sq(56. 6%). There is a mild correlation. Determine the coefficient of determination. Interpret. 56. 6% Test the utility of this regression model (use a two tail test with ? =. 05). Interpret your results, including the p-value. P-value=0. Reject the null hpothesis.T value 7. 9147 Based on your findings in 1-5, what is your opinion about using SIZE to predict CREDIT BALANCE? Size is a good predictor for credit balance. Compute the 95% confidence interval for beta-1 (the population slope). Interpret this interval. (300. 79, 505. 66) Using an interval, estimate the average credit balance for customers that have household size of 5. Interpret this interval. (4368. 20 , 4846. 90) Using an interval, predict the credit balance for a customer that has a household size of 5. Interpret this interval. (3337. 87, 5877. 23)What can we say about the credit balance for a customer that has a household size of 10? Denotes a point that is an extreme outlier in the predictors. Using MINITAB run the multiple regression analysis using the variables INCOME, SIZE and YEARS to predict CREDIT BALANCE. State the equation for this multiple regression model. Credit balance= 1276. 02+ 32. 2719 income(1000) + 346. 852 size + 7. 88209 years. Is this multiple regression model better than the linear model that we generated in parts 1-10? Yes. Reject years there is no corralation of coefficient. Income is useful and years in combination with size and income.