The project manager for Z-Tec Developments will provide the best construction expertise in procurement methods of a modern real estate project to GMT Homes development. Z-Tec Development has a task of using its know how to not only design the project but also construct it. GMT Homes require the best structures for this development of housing properties. With knowledge of the choice of the right location, Z-Tec Developments will start construction to suit the market demand and enhance competitiveness. Additionally, an efficient procurement method is a key necessity for Z-Tec developments to suit GMT Homes objective, that is to see the project complete prior the opening of new Elizabeth Crossrail train line.
As noted by (Winch 1989; Paulson 1992; Clough 2000), the choice of a procurement method is fundamental to a real estate project, especially one that has a due deadline. Every effective real estate property requires a sufficient space also to protect the environment and allow space for expansion of the project in the future. In addition to this, GMT Homes focus on having the property to have access to water and energy financed within the provided budget. The housing property is a residential property, and in this case, can be influenced by a majority of factors after its development.
Z-Tec Development is a private construction company that will aim to construct affordable housing units for GMT Homes in a suitable location where market demand is favorable, and there is low competition from housing units. The development of this housing units will not only focus on making profits in the long run but also promote customers satisfaction. It will enhance customers satisfaction by providing a suitable environment around the housing units with the presence of water and energy. The housing units need to best suit the taste of interested customers together with the company that GMT Homes will sell the property. The property must suit the customer who is dependable on yielding back the profits from the investment. Price is an essential factor in this scenario, where the property should determine the costs at which the customer will pay. With well-established housing units, the choice of customer pay evaluated since it suits a modern housing unit. Location of the property is effective for easy accessibility of the property by the market. It incapacitates competition from other developers and therefore makes it a key factor in determining the demand.
The project which will be a property of GMT Homes has already found an interested client, an investor who will purchase the whole property upon its completion. The investor focuses on the demand of the property by evaluating where the propertys location and the environmental conditions around it. It is, therefore, to look into these factors that are crucial to the investor: the location, design of the building, extra accommodational services, and structure of the property. These requirements are necessary for the market view and therefore determine the market demand for the property. Additionally, GMT Homes budget looks to tailor the sufficient amount finance and budget for the development that is economical in costs and expenditure. The costs are adjustable to the profits which the company aims to make within a short period. Security is another significant factor for the investor and customers renting the property. It signifies the objective of the company to be able to increase the capital value of the investment in the future. For this reason, the listed factors are determinant of future rental income of the property. The property will enhance its profits in the future with proper maintenance of the property to see a stable rental income from, the property for some years in the future. The development is a housing unit and required to focus on the purchasing power of the property and the number of households in that location to determine the ultimate demand for its households units from customers.
These factors are essential in determining the profitability of the housing units by studying on the market demand for the housing units. All factors are related to each other which is therefore easily essential for the real estate development. Employment services and population trends show the type of customers to rent the housing units. They are the most dependable customers regarding the price of the property that is affordable for them and also the time in which they will accommodate the rental income.
To achieve the construction of this project, processes of the real estate development and ways of protecting the environment will follow it effectively. In addition to this, an appropriate procurement strategy is vital for the project in hand. As noted by (Westerberg 2011), procurement strategies vary depending on some factors relating to the client; for example, the deadline he wants the project completed, goals and objectives of the project, and the final results upon completion of the housing property. The objective of GMT Homes is to apply the best procurement strategy that is in line with meeting the December 2018 deadline when Elizabeth Crossrail rail line opens. These procurement approaches are discussed to apply the best for GMT Homes project.
Design and build strategy
This approach mainly focuses on one company doing the tasks of the employer. For this strategy, the client assigns a construction company the task to design the required layout of the project and also constructs the same layout. A construction company usually applies for the construction tender or may be selected by use of negotiation process (Barrie 1992). By use of this approach, the construction company will save a lot in production costs and tendering costs to advertise the design of the company and construction process differently. Design and build will also see that the construction period adheres. This strategy can be fundamental for projects with a deadline. Different variations are useful for this approach regarding how the contractor chooses the project.
To develop and construct
In this system, the practice of designing the layout and the construction of the company, which does this separately. Another architectural firm is given the task through a different contract and companies apply for it. If there were an initial layout of the construction company, the client would want to develop his design further by comparing it with that of a separate architectural design.
A single entity
A construction company will tender for the contract and successfully be awarded the tender having no competition from other firms.
The competition amongst firms.
The construction company evaluates designs from different firms by studying on focusing on the one that suits their objectives, their costs and the deadline for the project. However, it is time wastage for a lot of firms to make designs of a large construction project, and afterward, be denied the contract.
According to (Erikson 2011), the strategy is beneficial in some ways; specialization and skills, the construction will be fast, cost effective, and continuity of the project. However, the approach may not produce quality designs since one construction company is assigned the task. Similarly, there are costs in variations to which production costs outlined does not adhere.
The traditional approach
This approach was effective in its use in the period, where control consultants use, and the client prepares the documents useful in the tendering process. After preparations of these documents, they will give the task to a contractor of their choice. The construction company may be assigned the task by either competition from other firms or through negotiations. The traditional strategy uses standard project documentation which is a key function for this approach as noted by (Ritz 1994). It highlights details about the contract, ways of surveying and information about the project. Sequential method is where a successful a project developer is chosen after consultants establish their performance on how to categorize their tendering process. Accelerated method focuses on a contractor who assists majorly the architectural work of designing the project before he constructs the project. Traditional approach uses three contracts in determining the potential project developer for the project.
This type of contract evaluates the project upon completion to establish the total sum of the project. It cannot measure the sum of the work before tendering takes place. Measurement of the whole project takes place after that, reviewing of the tender process is initiated from the tender document.
Lump sum contracts
This contract determines the total amount of the tender before the start of the work The contract uses a fixed pricing scheme in this contract, where a project contractor pays the sum of money that is agreed. For long contracts of over two years, the price will fluctuate, and in case the contract has expired but there was still work, there will be compensation of the contractor will for additional costs. The costs include; additional materials, the cost of labor, and any inflation rates that might occur.
Cost reimbursement contracts
(Cherns and Bryant 1984) Note that costs in both labor and materials are useful to reach the final sum of the contract. In addition to this, an extra fee is added to the labor costs and materials to reimburse on profits or expenses.
Traditional strategy is effective since it is a well-established and popular procurement strategy. It promoted good quality control since the contractor involves himself throughout the whole period from designing work. It is beneficial to contractors who finish the designing work before tendering process starts. It provides a good timing and control of the costs efficiently. The approach has difficulties upon its usage. If the task in construction and designing takes place separately, disputes may arise from the architecture and the project developer.
Design and manage strategy
Design and manage is a combination of two procurement strategies; design and build and management strategy (Irani 2002). The client who wants his project developed communicates with a single firm to design the project layout and to engage in construction. The client provides a majority of requirements and guidelines for his project. The client sets a due date when the project should be completed and even provide financial support to the contractor with a lease-back option. It studies contractual relationship and functional relationships, where the design and organization management facilitates the work of contractors in a firm.
Project management is useful in this strategy to manage and organize various projects from its start to completion. It applies to other procurement approaches where management of projects takes place by either the client or the consultants. The management contract is a limited process in project management where a small area of the project management. Though it does not encompass an array of activities, it depends on an advisory team (Skibniewski 2004).
The contractor does not actively engage in designing the project and also construction but appoints for the purpose of gauging his expertise in architectural and construction work with that of the consultants. The contractors purpose is at this moment able to effectively engage in the project but not to take the entire role of project design and construction.
Appropriate procurement strategy to meet GMT Homes project deadline
GMT Homes requires a procurement approach that is effective for their objectives and the deadline for completion of the project. GMT Home...
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