Construction Plan for Business Expansion | Case Study

01 Dec 2017

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  • BEJAY GILOI YAPP

Task 1

SENARIO 1

  1. Building economics is a small part of a much larger subject of environmental economics whereby it consists of the application of the techniques and expertise of economics to construction projects. Its is important as economics are introduced in the early design stage for the entire build team and even for the client. This is concerned with the study of man’s needs in connection with shelter and the suitable and appropriate conditions in which to live. Building economics is also important to ensure that the resources available to the industry is effectively used and not wasted. Moreover, it ensures the increase rate of growth of construction work in the most efficient manner.
  1. Consideration must be given to other economic aspects such as the roles of the profession and the division of design and construction. Furthermore, the types of development and the size of the industry and its relationship to other industries should also be considered. Lastly, it is important that the types and sizes of construction firms and the variations in building costs and its influencing factors to be considered.

Task 2

SCENARIO 2

  1. Before Mr. Hashim should purchase a new office block to expand his business, I would advice him about a few factors that he might need to consider. The factors are as follows:

One of the factors that Mr. Hashim should consider is the Accessibility. The site should be easily accessible by automobile and within walking distance of some potential users. Mr. Hashim should also count in the safety of the location whereby it would be safe for potential users to work in the proposed location.

Next, is the Visibility of the office block. It is important that a prominent location is required so that the users can easily identify the office block. Visual Quality is also one of the factors that should be taken as the quality of the existing neighborhood or surroundings needs to complement with the office block. For example, it is not appropriate to set up an office whereby the surrounding buildings are residential buildings.

Moreover, Mr. Hashim should consider on the Site Capacity whereby the site should be large enough to provide sufficient space for the users including parking space or for future expansion. Most importantly, Mr. Hashim should consider on the rental cost or the building cost of the proposed office property. It should be reasonable or to say atleast following his budget. This is to ensure that the rentals or price of the office block are affordable so that he can run his business accordingly and in the same time his business can be profitable.

Lastly, Mr. Hashim should also consider the Facilities provided around the office property. For example, the presence of restaurants, cafes and department stores which will be really beneficial for him and his workers as they will not need to travel far to have there meals during Break hours.

  1. We can almost say that the meaning of the words Value and Cost are almost similar, although when it comes to building economic terms, these two components have totally different definitions.

Value is usually meant by the sum of original cost estimates and assumptions. Although in building economic terms, value can be defined as the measure of benefits that an individual or company can gain either form goods or service. In construction, value is what the building is worth based on various market rates. It can be said that the as the demand and supply for a particular building or product increases, the value will also increase accordingly. Value can also be the amount of money that say, an asset has for a certain time period whether at present or any other time. There are few factors that can affect the value of a certain building. As for example the Location of a proposed project as a 2 Story Bungalow build in the center of the city has a different Value compared to a 2 Story Bungalow built in the village.

Cost can be defined as the expenses or actual cost of a given project. In other words, it can also be defined as the total price of the project itself beginning from the design process to the finishing. This can be related to the components of cost which are the labor cost, material cost, plant and equipment cost, overhead cost and also the profit. These components can majorly affect the cost. For example, during the construction process of a given project, there happens to be a major breakdown on the equipment used. This will surely affect the end cost of the project.

Task 3

SCENARIO 3

  1. Wall to Floor Area Ratio is the measurement of the total floor area built or to be built in relation to the total size measurement of the project. The Wall to Floor Area Ratio is calculated by dividing the External Wall Area (EWA) by the Gross Floor Area (GFA) and the result ratio can be used to compare the building designs.

Calculations:(Floor Height = 3m)

External Wall Area (EWA) = (10+10+10+10) X 3 = 120

Gross Floor Area (GFA) = (10 X 10) = 100

EWA GFA = 120100 = 1.2

Calculations:(Floor Height = 3m)

External Wall Area (EWA) = (10+5+15+5+10+5) = 150

Gross Floor Area (GFA) = A (10 X 5) + B (10 X 5) = 100

EWA GFA = 150100 = 1.5

FIRST

SECOND

Gross Floor Area (GFA)

(10 X 10) = 100

A(10 X 5) + B(10 X 5) = 100

External Wall Area (EWA)

(10+10+10+10) X 3 = 120

(10+5+15+5+10+5) = 150

EWA/GFA

1.2

1.5

  • Based on the calculations, the FIRST floor plan is more economical because it has a lower wall to floor ratio which is 1.2 compared to the SECOND floor plan with a wall to floor area ratio of 1.5. The lower the wall to floor ratio, the more economic will be the design.

Task 4

SCENARIO 4

  1. (i) Time- Time can be defined as the given period or length of time during any construction process. Time should be discussed in detail to the client so that they may know when the construction project starts and when is the given time for the completion of the project to be done according to the deadline.

(ii) Cost- It is the total cost of the project to be finished up or completed. The cost of a given project should be carefully analyzed and controlled from over budgeting and causing problems to the build team and especially to the client. Cost can come from the proposed land the project to be built, the materials used for construction and other various factors.

(iii)Quality- It is based on the finished product and will be judged by the

client itself either from the quality of design, its looks and its overall function. It is also judged through the ability of the contractor to execute the project in such a way that the finished product is according to the client expectations and that the finished product does what it is intended.

  1. The three components, Time, Cost and Quality in the construction industry do play a big role in the success of a construction project. Although, these components should be balanced to ensure the success of a construction project. For example, if we reduce the time for a given project, the cost will drastically increase and the quality of work also increase.

For example, Mr. Kumar is deciding to further expand his current business. He currently owns a 2 Block Restaurant and now he is deciding to extend his restaurant. Although, there are a few factors that have to be suggested by Mr. Kumar’s consultant in order to minimize the total end cost of the project itself. It would be great for Mr. Kumar to have a specific time line for the construction of the new extension of his current restaurant. This is to ensure that expenses for the project will be used by the best way possible and that his investment is profitable. Having a very short time period of construction process would only burden him as the cost of the construction process will be a bit more expensive but in the other hand, this will result in a great quality in it. The extension of the restaurant will surely be able to have a return on Mr. Kumar’s investment if it has a short time period of construction time and will eventually incur a high price, but in the end have a great quality on the project.

Task 5

  1. Quality in the construction industry usually means excellence. It is the totality of the attributes of a building in which enable it to satisfy needs, including the way in which individual attributes are related, balanced and integrated in the whole building and its surroundings. Thus, it is also considered a philosophy rather than a mere attribute. For example, we tend to judge the two objects by their qualities. In the construction industry especially in manufacturing, quality can be divided into different parts such as quality control, quality assurance and many others. Quality in the construction industry can also be devided into different views, which are the customer’s view itself, the producer’s view and the government’s view. In Malaysia, we have certain certifying bodies based on the construction projects. For example, we have Jabatan Kerja Raya (JKR) and Construction Industry Development Board (CIDB) whereby these bodies set their own regulations to control the Quality of work according to the views of different clients.

Whereby Standards in the construction industry is more to achieving a recognized level of quality within an organization. For example, to ensure that a proper standard of insulation is done and the proper standard of carpentry is done on a house according to the given standards within an organization. For Standards, there are also several certifying bodies in Malaysia. For example, SIRIM QAS International Sdn. Bhd. And Bureau Verritas Certification Sdn. Bhd. Which is responsible of controlling the standards on the construction products in Malaysia.

  1. There are three categories of quality cost. Firstly, is the Prevention Cost whereby its main purpose is to avoid defects on the product in the beginning of production stage. It also supports activities whose purpose is to reduce the number of defects of the products. For example, this costs in put in place through methods and procedures which ensures that the product is made according to its standards, meet its requirements and that it is made according to the design.

Secondly, is the Appraisal Cost, whereby it is usually influenced by a third party. Appraisal Cost or also know as Inspection Cost where its main function is to identify defective products before the products are shipped to costumers. For example, some sample of the products pass through another inspection test or quality test before being certified to be packed and shipped to the costumers.

Lastly, is the Inter Failure Cost whereby this cost is divided into two, which are Internal Failure Cost and External Failure Cost. Internal Failure Cost is a result from identification of defects before they are shipped to customers while the External Failure Cost include warranty, repairs and replacements of the product.



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