Week 6_LanreGiwa_Pricing

After acquiring a vast area of Land and obtaining a Bank loan, I have successfully completed 20 Blocks of 3 Bedroom apartment located in a very good location in Lagos.

Considering the cost of completion of each apartment, I am faced with the challenge of determining the quickest way of offsetting the loan I took from the Bank and also how to make profit from the Business investment decision of building a housing estate.

I therefore need to determine three critical things:

a) Whether to put up the apartment for outright sale, Long lease or to be rented out.

b) Determine the selling price of each apartment for any choice made from (a) above.

c) To make profit from the business investment or at a minimum, recover the cost of Investment.

The first thing I have done is to determine the Cost of Investments by summing up all my cost elements such as Labour Costs, Costs of materials, Cost of the Land, Overhead Costs and other Indirect Costs.

It could be difficult in fixing the price of the apartment considering complexities such as the economy in the country, the customer budget, and prices of other apartments in the neighborhood. So, In order to arrive at a good price for any of my final decisions (sell, rent or lease), I used available pricing tools such as:

1. Return on Investment ( ROI)
2. Return on Sales ( ROS)
3. Break even Analysis.

The tools used assisted in determining the mark-up amount by studying the current market trends and determining the amount to be added to the cost to make adequate profit.

With the tools used, it will take a longer period to recover my cost if I have to rent out the apartments or take a long lease.

Considering the available alternatives, based on the analysis and considerations carried out, I would decide the SELL the 3 bed apartments hoping to offset the loan from the bank and to make an appreciable profit. Continual analysis and monitoring will be carried out periodically to determine if it is most viable to keep selling, otherwise, other options like leasing or renting may be reviewed as the next option.

References

1. Chapter 2, Skills and Knowledge of Cost Engineering. 5^th Edition Revised.
2. Jelen, F.C. and J.H Black.1983. Cost and Optimization Engineering. New York: McGraw Hill
3. Chapter 38, Project management using Earned Value, pp 749 - 753. Humprey and Associates.
4. GAO Cost Estimating and Assessment Guide. Best Practices for developing and managing capital Program Costs
5. Engineering Economy,14^th Edition, Page 27,Table 1-1

W2_Abiola Ojo_Producing the first NigeriaAACE Weekly Report

Problem Statement

Producing the first NigeriaAACE Weekly report was a difficult task for the team and the milestone slipped by 4 weeks. Some of the reasons for this included:

1)     The template issued to us by our mentor was not-flexible, was too detailed, complicated, and contained lots of links, formula, macros and repetitions. It took us about 2 weeks to completely understand the template.

2)     The team did not have members with adequate macro experience to modify the template to suit our peculiar need. We needed to expand it to accommodate 19 people as against the 10 people it was originally developed for. We also wanted to track all 7 projects as oppose to just 4 contained in the template.

3)     Team member were not responsive to their report submission - timesheets, project reports etc. They got so engrossed in their personal deliverables - blog posting, paper, studying their materials etc. This conflict of interest between meeting individual targets versus meeting group targets was a real setback for the report and put the team leadership under lot of pressure.

4)     The project controls team which was originally responsible for the report was not on top of it.

5)     Team members are not co-located making conducting physical meetings to make decisions very difficult or almost impossible.

Alternative considered for the Report

Several alternatives were considered for generating the report:

1)     Stick to the template issued by the CFH

Several working-sessions held by the report team to modify the report to fit our peculiar need did not yield much result as we could not get around the report complexities.

2)     Reduce the template to meet just the minimum requirement

Attempts made at reducing the report also proved abortive. The sheets were so interlinked that removing any sheet or information caused distortion on other sheets. This eventually became too time-demanding and we had to drop the idea.

3)     Look for and adopt an existing simpler template

The general consensus was that the CFH may not accept this template and may insist on his template which he has spoken so much about. This idea was dropped for this reason.

4)     Develop our own simple template that will meet the minimum requirement

The general consensus was this will be time consuming and will be tantamount to “re-inventing the wheel.”

Selection Criteria

Our selection criteria were not clearly spelt out at the beginning but as we battled with the report, we were able to identify the following requirements:

1)     The report should meet the minimum reporting requirement of our CFH

2)     The report should be as simple as possible and involve minimal work

3)     The report should be produced within the shortest time possible

Selected Alternative

After about 4 weeks of stumbling and wobbling, and attempts at the first three alternatives failed, the team finally settled for option 4 - develop our own template that will meet the minimum reporting requirement without unnecessary excel fancy. We were sure it will at least meet two of our selection criteria. The selected alternative (option 4) was achieved within three days of rigorous work. The report was submitted in a hurry without some of the curves in a bid to meet the week 5 target. The template however, have the capability for all the curves - SPI, CPI, EAC etc and will be included in week 6 report.

Lessons Learned

1)     So much time was wasted waiting on the project controls team to come up with this report and it never happened. Had the team realized on time, we would have taken some more proactive measures to avoid this unnecessary delay.

2)     Another  team had to be constituted to take up this responsibility for us to achieve this result.

3)     The “do not re-invent the wheel syndrome” did not work in our case.

4)     We should have been bold enough to confront the CFH about his template rather than trying to get around it at all cost.

5)     We need to realize that project or group assignments are the responsibility of all team-members and not just the assigned-project team because in the final analysis, it will affect our overall program performance metric.

Week 5_ SeeGod Meregini_ How to write value adding weekly blogs

During the holidays, I tried to find a way to get maximum value for the weekly blog postings.

The problem was selecting the right method in writing weekly blogs such that I have maximum value for the work.

I developed some alternatives to solving this problem. They were:

A.    Write blogs after a work problem is found.

B.    Write blobs after a solution is known.

C.    Write blogs after reading AACE materials and discovering a tool or process.

D.    Write blogs only closely related to my paper topic (for the first 12 weeks i.e. till Feb. 2011).

The outcome of each alternative showed the following:

A.    This method would delay my delivery time because I would struggle with a solution to the problem due to limited foreknowledge in recommended (AACE) tools/processes.

B.    This method, while it would make me try to research for a solution before writing, might create a negative result if the problem is not correctly defined.

C.    This method would give me more time to proactively gain knowledge, understand different ways of solving issues, meet my one hour a day deliverable, research for a broader perspective without the burden of trying to solve a specific problem and better understand the best practices, tools and processes without trying to “check the box”.

D.    This would narrow my research and reduce my ability to freely gain knowledge in all spheres of TCM.

My selection criterion for this problem is that the alternative to be chosen must objectively meet at least 3 clear deliverables and must be measurable.

In analysing all alternatives bearing in mind my selection criteria, Alternative D was clearly not going to make it as it satisfied only 1 deliverable – writing paper. It also was not going to be sustained after submittal of the paper.

While Alternatives B and A were using the same method with different approaches, they still satisfied only 2 deliverables – 1hr/ day and “checking the box”- complete the blog posting column that I have submitted a weekly blog.

Alternative C satisfied 5 clear deliverables; 1h/day; completing my blog posting- “checking the box”;researching wide for my paper; preparing for the exam; and most importantly learning best practices to be used post exam period and for personal life.

I selected Alternative C based on the reasons above and exceeding my selection criteria goal.

For performance monitoring, I would use timely submission of quality deliverables as a key performance guide.

For post evaluation of results, the metric would be how many deliverables were accepted at first submittal. If too many rejections (3ce for same deliverable) are made, this alternative C would be reviewed. This can be determined using earned value metrics i.e. SPI, CPI and so on.

References

Giammalvo, P. D. (2010). AACE Certification Prep Course [PowerPoint slides], Day 5. Lagos: Nigeria.

Sullivan, W. G., Wicks, E.M., & Koelling, C.P. (2009). Engineering economy and design process. In M.J. Horton (Ed.), Engineering economy (14^th ed.) (chapter 1.3) (pp. 27). New Jersey, NJ: Pearson Education, Inc.

AACE International Education Board. (2010).Performance and productivity management. In S.J.Amos (Ed), Skills & knowledge of cost engineering (5th ed) (chapter 17). Morgantown, WV: AACE International.

AACE International Education Board. (2006).Project control performance assessment. In J.K.Hollmann (Ed), Total cost management framework – A process for applying the Skills & knowledge of cost engineering (1^st ed) (chapter 10.1.2.1.) (pp.203-204). Morgantown, WV: AACE International.

Global Alliance for Project Performance Standards. (2007) Performance based competency standards. A Framework for Performance based competency standards for global

level 1 and 2 project managers (chapter 2.2) (pp.3).Sydney: Global Alliance for Project Performance