Executive Summary


            Scope refers to all the work involved in creating the products of the project and the processes used to create them. It defines what is or is not to be done. Project scope management involves the identification, planning and management of the processes that will ensure that the project includes all the work required to make it successful. The Major processes of project scope management are:


Initiation – commitment to begin the next phase of the project


Scope Planning – developing a scope statement to as the basis for future project decisions; developing documents to provide the basis for future project decisions


Scope Definition – subdividing the major project work into manageable components


Scope Verification – acceptance of the project scope


Scope Change Control – controlling changes to project paper


 


            This paper presents a project scope management for a project which is to build a 18-storey condominium in Hong Kong. The paper includes discussion of the different processes of project scope management and a financial analysis of the project. The aim of this paper is to provide an appropriate plan for the processes needed to complete the project.


 


Table of Contents


                                                                                                Page Number


 


Executive Summary                                                                                  1


Introduction                                                                                                 3


Project Scope Management                                                                    3


            Project Initiation                                                                             4


            Scope Planning                                                                              4


            Work Breakdown Structure                                                        5


            Feasibility Study                                                                             6


            Scope Definition                                                                             7


            Scope Verification                                                                         9


            Scope Change Control                                                                 10


Financial Analysis                                                                                      11


Conclusion                                                                                                  14


 


 


 


Introduction


            The project entails the construction of a 18-storey condominium for residential use in Hong Kong. This paper will discuss the different processes involved in the proposed project which aims to build a 18-storey residential condominium in Hong Kong. The project is expected to start  in November 2009 and end in October 2010. The paper will discuss the importance of Project Scope Management and its processes and how the project team intends to complete the project in the given time frame. Financial analysis will be included in this paper.


 


Project Scope Management


            Project scope management includes authorizing the job, developing a scope statement that defines the boundaries of the project, subdividing the work into manageable components with deliverables, verifying that scope planned has been achieved, and implementing scope change control procedures (Lewis 2002). Project scope management is concerned with defining all the work of the project and only the work needed to successfully meet the project goals. These processes are highly interactive. They define and control what is and what is not part of the project (Heldman 2007).


 


            The project is Construction of an Eighteen-Storey Residential Condominium in Kowloon District, Hong Kong. The project entails the construction of a 66-ubit residential condominium in Kowloon District Hong Kong. A condominium consists of multi-unit dwellings wherein each unit is individually owned (or rented) and the common areas are jointly-owned by all the unit owners or tenants. Kowloon District is chosen due to its population density. As an urban dwelling with 47 square kilometers, the Kowloon District serves as the abode 48% of Hong Kong’s total population.   


 


Project Initiation


            Initiation is a gating stage in the project. It is the formal authorization to proceed with the project or to take the project to the next phase. The decision is based on the demonstrated alignment of the project deliverables to the goals and objectives of the business for which the project is being undertaken.


 


            The purpose of the project is to construct an 18-storey, 66-unit loft-style residential condominium with 1, 030 – 2, 060 unit square feet range from November 2009 to October 2010 at the Kowloon District at a cost estimated at 3, 000.


 


 


Scope Planning


            Scope planning follows directly from the initiation process. It involves the creation of a detailed scope statement agreed to by the customer and the project manager. This includes a short description of the project scope and list of guidelines concerning the way the scope will be managed (Knutson 2001).


 


            There are a total of 12 deliverables for this project. It is expected that throughout the duration of the project there are emergent deliverables. The residential condominium project deliverables would be as follows:


ü  18 stories


ü  66 residences in total


ü  12’ cemented ceilings residences


ü  3 units per floor at 3rd to 9th floors


ü  5 units per floor at 10th to 18th floors


ü  2 (1 with bathroom) to 4 (2 with bathroom) bedroom units + provision for den


ü  Kitchen with dining area + solid maple cabinets and laminated countertops


ü  Bathroom on main level


ü  Hardwood floors and ceramic tile on main level


ü  4’ by 8’ 2nd floor balcony


ü  High efficiency furnace 


ü  1 parking space per residence


 


Work Breakdown Structure (WBS)


            According to Richman (2002) a work breakdown structure defines the work to be completed in the project. It is a graphical representation (diagram) of the project showing its components parts. It provides definition to the project scope by showing the hierarchical breakdown of activities and end products that must be completed to finish the project (p. 75). This covers the process for the development of a work plan, the quality, quantity, and overall sophistication of the organization’s use of the WBS (Crawford 2002).


 


            The work breakdown structure of building the 18-storey residential condominium is divided into 9 phases namely feasibility study, compliances with authorities, mobilization, excavation, concrete, building the structure, ‘behind the walls’, finishing the site and miscellaneous activities. The stage of building a residential condominium is outlines as follows:


 


Feasibility Study


Compliances with Authority Having Jurisdiction



  • Acquisition of Permits and Licenses

  • Conforming to Zoning Regulations


Mobilization



  • Acquisition of raw Materials

  • Transferring of Raw Materials to the Site


Excavation



  • Cleaning the Land

  • Digging the Hole


Concrete



  • Building the garage

  • Setting the foundation


Building the structure



  • Pre-casting

  • Brick-laying

  • Installing the Windows


Behind the Walls’



  • Drywall Partitions

  • Plumbing

  • Electricity and flooring


Finishing the site



  • Tiles

  • Carpentry

  • Fire Finishing


Other Construction Activities


 


Scope Definition


            Beginning with the scope statement, this process further defines the scope of the project by decomposing the scope and producing the WBS. This involves the processes in place for the definition of project scope, assumptions, and constraints. Good scope definition is crucial to project success because it helps improve the accuracy of time, cost, and resources estimates; defines a baseline for performance measurement and project control; and aids in communicating clear work responsibilities (Schwalbe 2008).


 



  • Technical requirements center the actual project which is the residential condominium. These technical requirements are massing, landscaping, height, roofscape and car park. There are also technical requirements that are central on the maintenance of electric and power supply within the premises of the residential condominium. The technical requirements in the construction of the condominium are specified as:

  • Massing – Conforming to the existing topography of the site will be required to have pavements

  • Landscaping – Complementing the surrounding vertical greenery on roof decks, terraces and balconies

  • Height – Development of the residential condominium shall not exceed 18 stories including all structures and fixtures at the 18th floor

  • Roofscape – Pitched roofs with unglazed interlocking clay tiles of the earthen tone

  • Car Park – Parking spaces/garages will be provided


 


            Other technical requirements shall include: 1) accessible entrances to accessible routes; 2) accessible and common use areas; 3) usable doors; 4) accessible routes into and through the dwelling unit; 5) accessible light switches, electrical outlets and environmental controls; 6) reinforced walls in bathrooms to allow installation of grab bars and 7) usable kitchens and bathrooms that are disabled-friendly


 


            Seven of the project limits and exclusions are identified. The limits and exclusions of such project consist of:



  • Construction standards and obligations of the builder will be only define in warranty contract

  • Submission of requirements will be assigned to the project manager including site safety plan and site plan

  • Periodic inspection of construction will be implemented

  • Warranty of habitability will be required

  • Authority having jurisdiction will have the exclusive right to stop the construction operation

  • Corrective actions will be allotted with 1 month period

  • The condominium act will be applied


 


Scope Verification


            Scope verification is the formal acceptance by the sponsor and the client that the work results were as agreed to in the scope statement, the WBS, and the project plan (Wysocki 2004).


 


            The developer, contractor, design/build contractor, architect, construction manager, condominium association, condominium unit owners-to-be and the project team will be the stakeholders for the project. Representatives from this group of stakeholders will have an ongoing dialogue regarding the pros and cons of living in a condominium and solicit from them concerns regarding the project. The dialogue will be led by a representative from the project team. Topics of consideration are storage space, access to transportation, establishment and basic facilities, outdoor space and parking area. Others will include regulations, association fees, reserved funds, insurance, governance and customized needs.


 


Scope Change Control


            Scope change control includes the formal process of receiving change and change requests, evaluating the impact on the WBS and the project plan, and acting on the change. Scope change control is concerned with:



  • Influencing the factors that create scope changes to ensure that changes are beneficial

  • Determining that a scope change has occurred

  • Managing the actual changes when and if they occurred


All changes requests must be submitted via Change Control Process, and will be evaluated for scope impact. Each scope impact will be classified as one of the following:


1. Optional – meaning the change is recognized and accepted or rejected with the understanding that the success of the project will not be severely impacted with or without such change.


2. Mandatory – meaning that the change must be implemented to ensure the stability and/or success of the project product, or as a result of enterprise policies or regulatory requirements.


 


Financial Analysis


            The project resources for constructing the residential condominium are divided into: the pre-construction costs and the administrative costs. The total pre-construction cost is estimated at 2, 850 and the administrative cost at , 800. The following is a sample estimation of the pre-construction and administrative costs of the residential condominium:


 


Site Preparation (In US Dollars)


 


Foundations and Structure                                             130, 000


            Specialties                                                                73, 100


            Equipment                                                                15, 900


            Special construction                                                           2, 800


            Conveying systems                                                 1, 600                                    


            Plumbing                                                                  24, 000


            Fire protection                                                          12, 600


Exterior Enclosure                                                             167, 750


Demolition                                                                            13, 880


            Concrete                                                                    14, 820


            Masonry                                                                     19, 400


            Steel                                                                           23, 400


            Carpentry                                                                  37, 120


            Roofing, insulation                                                  19, 630


            Doors and windows                                                            16, 400


            Finishes                                                                    23, 100


Interior Construction                                                         131, 000


            Unit fit-out                                                                 48, 000


            Lobby fit-out                                                              37, 000


            Corridors circulation and service                          23, 600


            Stair railings                                                              3, 400


            Pool finishes and equip                                         7, 800                        


            Elevator                                                                     11, 200


Mechanical and Electrical                                                96, 000


            Plumbing fixtures                                                    24, 000


            Fire protection and parking                                                25, 000


            Heating                                                                      13, 500


            Ventilation                                                                 11, 000


            Electric power and lighting                                                14, 000


            Lighting                                                                     3, 000


            Site lighting                                                               5, 600


 


            TOTAL PRE-CONSTRUCTION COST                 US2, 850.


 


There are administrative costs for the pre-construction:


 


Transportation                                  , 000                      


Communication                               , 800


Project Team Compensation         $ 27, 000


            TOTAL ADMINISTRATIVE COST                         US, 800  


                                                TOTAL COST                        US2, 650


 


 


            Investment appraisal is the process by which an organization appraises a range of different investment projects with a view to determining which is likely to give the highest financial return (Hussey 1999, p. 66).


 


Discounted Payback Period Technique


            In the financial analysis the discounted payback period technique is used. The discounted payback period is the time needed to pay back the original investment in terms of discounted future cash flows. Each cash flow is discounted back to the beginning of the investment at a rate that reflects both the time value of money and the uncertainty of the future cash flows (Drake 2003; Weil and Maher 2005).


 


Net Present Value (NPV)


            The net present value technique gives an accurate assessment of the value of the investment, because it takes the time value of money into account and includes all future expected cash flows (Viljoen 2007). The NPV includes the timing or the futurity of cash flows. This is done by discounting all cash expenditures and revenues in the future by a chosen percentage. This discount factor is used to discount the yearly net differential cash flows and then making their sum (Daems 2006; Pike and Neale 2006).  


 


Internal Rate of Return (IRR)


            The IRR calculation measures the yield or rate of return on an investment rather than its present value (Berges 2004). IRR is a popular measure used in capital budgeting. IRR is a discount rate that makes the present value of cash flows equal to the initial invest6ment. In simple terms, the IRR is a discount rate that makes the NPV equal to zero (0) (Gropelli and Nikbakht 2000; Finnerty 2007).


 


Conclusion


            Project scope management is important in the success of every project. Project management makes or breaks a project. Good project management ensures the success of the project while bad project management leads to failure. Failure can be mitigated by following simple procedures such as having a scope document that all the stakeholders agree on and on having a change management plan if there are supposed to be modifications to it. Project scope management is defined as the processes required to ensure that the project includes all the work required, and only the work required, to complete the project successfully. If the scope is not managed correctly it may lead to an unsuccessful project.


 


 


 


References


 


Berges, S. (2004). The Complete Guide to Real Estate Finance for Investment Properties: How to Analyze Any Single-Family, Multifamily, or Commercials Property. John Wiley and Sons.


 


Crawford, J. K. (2002). Project Management Maturity Model: Providing a Proven Path to Project Management Excellence. Marcel Dekker.


 


Daems, H. (2006). Planning and Financing. Bloomington, IN: Author House.


 


Fabozzi, F. J. et al (2003). Financial Management and Analysis. John Wiley and Sons.


 


Finnerty, J. D. (2007). Project Financing: Asset-Based Financial Engineering. John Wiley and Sons.


 


Groppelli, A. A. and Nikbakht, E. (2000). Finance. Barron’s Educational Series.


 


Heldman, K. (2007). PMP: Project Management Professional Exam Study Guide. John Wiley and Sons.


 


Hussey, R. (Ed.) (1999). A Dictionary of Accounting. Oxford: Oxford University Press.


 


Knutson, J. (2001). Project Management for Business Professionals: A Comprehensive Guide. John Wiley and Sons.


 


Lewis, J. P. (2002). Fundamentals of Project Management: Developing Core Competencies to Help Outperform the Competition. AMACOM.


 


Pike, R. and Neale, B. (2006). Corporate Finance and Investment: Decisions and Strategies. Financial Rimes Prentice Hall.


 


Richman, L. (2002). Project Management Step-by-Step. New York: AMACOM.


 


Schwalbe, K. (2008). Introduction to Project Management. Cengage Learning EMEA.


 


Viljoen, S. M. (2007). Financial Management: Fresh Perspectives. Pearson.


 


 


Weil, R. L. and Maher, M. (2005). Handbook of Cost Management. John Wiley and Sons.


 


Wysocki, R. K. (2004). Project Management Process Improvement. Artech House.


 


 


 


 



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