Portfolio Project

By

Jason E Thigpen

A Paper Presented in Partial Fulfillment

Of The Requirements Of

MGMT 505 PROJECT MANAGEMENT FUNDAMENTALS

Sep 2011

Summary

Silver Fiddle Construction Company has been contracted to build a 2,500-square foot,

2½-bath 3-bedroom finished home for “Bolo” and Izabella Czopek in Grand Junction, Colorado

in the price range of $450,000-$500,000. The project is expected to run from 5 July to 7

November and is expected to meet all local building codes and energy ratings. Silver Fiddle

Construction Company is experienced at building homes in this market and is scheduled to build

a total 11 homes this year in Grand Junction, Colorado (Larson & Gray, 2011).

The scope of the project is to build a high-quality home within a 5 month timeframe at a

cost not to exceed $500,000. This home is to include a finished garage that is insulated and sheet

rocked, kitchen appliances excluding a refrigerator, and a high efficiency gas furnace with a

programmable thermostat. The house will be wired for air conditioning but a unit will not be

installed by Silver Fiddle Construction Company (Larson & Gray, 2011).

The customer will submit the blue prints for Silver Fiddle Construction and has the

overall final say on the project’s completion. Silver Fiddle Construction is not responsible for

landscaping and will be sub-contracting out most of the specialized work such as plumbing and

electrical work. The final inspection with the customer will be on 7 November. No contractor

liability or warranties have been discussed within the initial framing of the contract (Larson &

Gray, 2011). From permit approval to final inspection and acceptance by the customer the

project will span no more than 5 months and cost no more than $500,000. Silver Fiddle

Construction has reserved the right to sub-contract out services as they see fit throughout the

project duration.

Introduction

Congratulations to “Bolo” and Izabella Czopek for choosing Silver Fiddle Construction

to build their dream home. This project is perfect for Silver Fiddle Construction because they

are experienced in building homes in the Grand Junction, Colorado area. Silver Fiddle

Construction is known for their quality homes delivered on time and at cost.

This construction project has a short time line, however it is important that the home be

completed before the set in of winter so that other issues do not arise. This home will be built to

meet the specifications of the blue prints that have been provided by “Bolo” and Izabella

Czopek. It will take two to three months to get all the building permits approved by the city of

Grand Junction, so it is imperative to have the final blue prints available for submission by April

12 of this year so that construction will not be delayed.

This home will be a 2,500-squard foot 3 bedroom 2 ½ bath finished home when delivered

for final inspection on November 7 of this year. This home will meet all of the local building

codes. Silver Fiddle will not be responsible for landscaping according to original agreement. At

customer’s wish, landscaping can be provided at additional cost. Silver Fiddle Construction will

need 90 days notice of any additional requirements.

A three car finished, insulated and sheet rocked garage will be provided. The third

parking spot will be able to accommodate a 28 foot Winnebago. The kitchen appliances will

include a range, oven, microwave, and dishwasher. These appliances will be selected by the

customer and can affect the final cost of the project. A high-efficiency gas furnace with a

programmable thermostat will be provided. It should be noted that a refrigerator will not be

provided in the kitchen appliances and a air conditioning unit will not be provided. The house

will be prewired for air conditioning if the customer so chooses to add one later.

All window and doors will pass NFRC class 40 energy ratings and all exterior wall

insulation will meet an “R” factor of 21. All ceiling insulation will meet an “R” factor of 38 and

the floor insulation will meet an “R” factor of 25. The structure will pass all seismic stability

codes. To ensure that all these specifications are met, a city building inspector will be allowed

on site to inspect the final product as well as the customer before the project delivery date of

November 7 (Larson & Gray, 2011).

(House design software)

Note: the above blueprint is similar to the one that the customer will be submitting for this

project.

Order of Operations

Building materials will be purchased locally. No delays are expected because all

materials will be pre-ordered based on the needed materials from the customer submitted blue

prints. The equipment needed to complete the construction will be purchased by Silver Fiddle

Construction, again no delays are expected because most tools needed are already owned by

Silver Fiddle Construction or can be rented on an as needed basis locally.

The biggest concern for delay is building permits being approved by the city. The goal is

to have all permits approved by July 5 so that construction can begin on July 6. The 4 of July

holiday could delay these permits, but that should not hurt the construction timeline. Once the

permits are approved we will begin digging out and leveling the ground in order to build the

foundation. The foundation will be completed at the latest 12 July.

Once the foundation has dried and settled, the framing will begin. Once the initial

framing is completed, Silver Fiddle Construction will hire separate contractors to complete the

plumbing and electrical wiring of the house. Once the plumbing and electrical wiring has been

completed the outside walls will be installed. Silver Fiddle Construction will also hire a

contractor to build the trusses to frame off the ceiling and roof. Once the trusses have been

completed the roof will be installed. Before anymore construction can be completed an

inspection must be passed. This is expected to be completed by September 25 of this year.

Then the insulating and dry walling can begin as well as adding the brick to the outside

walls. A contactor will be hired to install the brick to the outside of the home. Once the drywall

has been installed and finished another contractor will paint the inside walls the colors already

selected by the customer. Flooring and fixtures will be installed after the painting has been

completed. Final inspection will be completed by the customer on November 7.

Current Market

This area happens to be one of fastest growing areas on the western slope with a growth

of 7% over the last 10 years (Ulibarri). Service boundaries have been recently expanded which

has caused an increase in the housing inventory which has caused housing prices to drop

(Ulibarri). Since 2007 housing prices have dropped 14.3% (Zillow Grand Junction Home Prices

and Values, 2011). This however should not affect this project because the average house is in

the range that this project will cost.

The current financial and housing market is a concern due to the number of projects

projected to be completed this year. Housing prices have dropped by 14.3%, but costs to design

and build a home have not. This could cut into the bottom profit line of Silver Fiddle

Construction Company. For this project alone, this could affect the amount of money the

Czopek’s are loaned causing them to back out of the project. The current financial and housing

market should be considered a viable risk.

Constraints and Resources

In order for this project to begin the customer has to submit a final blue print. This blue

print will be used to gain building and digging permits from the city. The blue prints will also be

used to purchase building materials. The costs of building materials are included in the

estimated cost of the project. Silver Fiddle Construction Company is responsible for obtaining

all permits and building materials to include tools.

The cost of the entire project will be between $450,000 and $500,000 for the timeframe

of 5 July to 7 November. During this timeframe it is not expected to have delays due to weather.

The cost of materials will cost approximately $170,000. The cost of labor will cost

approximately $150,000. This leaves a total profit of approximately $180,000 for Silver Fiddle

Construction.

Silver Fiddle Construction does not have on staff a plumber, electrician, painter, a

concrete pouring truck, brick mason, or a truss builder. These skilled laborers will have to be

sub-contracted in order for this to be a successful project. Silver Fiddle Construction has sub-

contracted these positions out during past projects and has trusted companies that will be used on

this project.

Risk

Construction projects always have risk associated with them. One of the main risks

involved is weather. Weather cannot be controlled; however enough time has been scheduled so

that weather should not be a factor. Once the structure has been framed and the roof has been

installed it will alleviate most of the risk with this because task can be completed on the inside of

the structure if it does rain. If it does rain a lot at the beginning of the project it could damage

some of the building materials and that would be an added cost and cut into the overall

profitability of the project.

Scheduling is also a risk because of the number of sub-contractors that will be used in

this project. Silver Fiddle Construction has eleven other houses under construction this year and

is using sub-contractors to complete all of them. Scheduling is critical to completing all of these

projects on time and under budget. The risk with scheduling is that we will not be able to put all

of our needed man-power at this project in order to get the structure ready for plumbing and

wiring at the scheduled time of 25 September.

Economic issues are also a major risk involved with this project (Warszawski & Sacks,

2004). Economic issues will affect the cost of labor, cost of fuel, and cost of materials which can

affect the overall project cost and affect the overall profitability of this project for the company.

This may also drive up the cost for sub-contracting out several of the jobs that will be needed in

order to complete this project. It is still more cost effective to sub-contract out plumbing,

electrical, concrete, and truss building than doing them in house. Another economic issue to

consider is the financial hardship of the time. Czopek’s may not be able to qualify for a loan and

then the house could sit on the market for a number of months. This could be an issue with the

other projects that will be in process at the same time.

Another issue to consider is the human aspects of this project (Raferty, 2000). The

customer is building their “dream home”. With that may come expectations from the customer

that does not always make it onto the blueprints. Silver Fiddle Construction is committed to

ensuring that the Czopek’s are completely satisfied with the final product, however this could

cause delays and frustration on the part of the work crew due to changing requirements.

Some other human issues to consider are for the workers and sub-contractors themselves.

With several other homes under construction at this time some of the more specialized workers

will be rotating in between projects. Also, sub-contractor availability can also become an issue.

With the workload, Silver Fiddle Construction and their sub-contractors may not always be able

to provide their most skilled technicians for this project. Judgment of the individual worker will

always be a risks, however the foreman will be able to select those who he wants on the job and

will have the option not to work with someone he is not comfortable with (Hyun-Ho, 2008).

Anytime a sub-contractor is used it needs to be considered that they may not do the type

of quality of work that is expected at Silver Fiddle Construction. The bottom line is to make a

profit, and this holds true for sub-contractors as well. These sub-contractors may use sub-

standard materials or unqualified workers in order to save money. This should be a concern and

considered a risk for Silver Fiddle Construction. The company should insist that each sub-

contractor use materials and workers that are pre-approved by Silver Fiddle in order to alleviate

this risk.

Risk Assessment

With the expected risks that have been identified for this project, it is important that these

risks be mitigated as much as possible. However, there will still be unexpected risk that may

surface during the project that will have to be mitigated at that time. The first risk that was

identified was weather. Grand Junction only receives on average a total of 8.99 inches of

precipitation per year (Colorado Annual Rainfall, 2010). This type of climate is conducive for

flash flooding which can damage the project while it is still under construction. In order to

protect the building materials from rainfall they will be covered with water proof materials when

they are not being used, however it is not expected that there will be much rain during the

months of July-November.

Scheduling is another issue that has been identified. With multiple projects being

completed at the same time this could be a risk that could put this project behind schedule. This

risk can be mitigated by pre-planning and coordinating between the multiple projects and

construction supervisors. However, if there is no pre-coordination between the construction

supervisors then this could delay multiple projects.

Economic issues are a major concern for this project. The current financial and housing

markets can cut into the profit that is expected for this project. Mitigation for these issues are

going to be hard, however one way to mitigate is selection of building materials. Pre-ordering in

bulk can also cut down on the cost of building materials. One issue that has to be considered is

the Czopek’s receiving their home loan and being able to take possession of the home at

completion. In order to mitigate this risk we should require that 20% of the final cost should be

paid up front so that some of the cost can be recovered if they are not able to qualify for a loan.

Another economic issue to consider is the cost of sub-contracting as opposed to hiring the skilled

labor that is required to finish this project. Hiring the specialized skilled laborers could cost in

salaries up to $35.00 an hour. This would be a long-term cost as oppose to the onetime cost of

hiring a sub-contractor to complete this project.

Human aspects are always a risk and not always predicable. One of the human

aspects identified is the ever changing requirements by the Czopeks due to this being their dream

home. The way we will mitigate this risk is to sit down and go over the blueprints before they

settle on a final drawing. This is to ensure that they understand what they are asking for and will

hopefully get them to look for new ideas that they would like added during the design phase of

this project. As for the workers and sub-contractors risk that has been identified, the only way to

mitigate this risk is to only use trusted workers. When it comes to sub-contractors we do not

have to accept their work and ask for them to re-accomplish their phase of the construction,

however this will put scheduling at risk again.

The risks that have been identified for this project are not calamitous enough to cause a

catastrophic failure for this project. However, there will always be a degree of risk that cannot

be predicted that will have to be dealt with when it arises.

Risk Assessment Matrix

Below is a risk assessment matrix that identifies the risk event, likelihood of the event

happening, then impact that it will have on the project, the detection difficulty, and when the

expected risk will have the most impact on the project. In my opinion, scheduling and economic

issues are the most likely to occur and have the greatest danger of being a major impact on the

project’s completion and success.

Risk Event Likelihood Impact Detection Difficulty

When

Weather 2 2 1 InstallationScheduling 5 5 3 InstallationEconomic 5 5 3 Post Installation

Human Aspects 3 3 4 InstallationSub-Contractor

ability2 5 5 Installation/ Post

installation

Risk Response

Below is a risk response that identifies the risk and the plan to deal with that risk. This

table also identifies who is the responsible individual for responding to these identified risks if

and when they happen. This table only deals with risks that have been predicted, if another event

arises that has not been predicted then that event or events will have to be dealt with on an

individual as needed basis.

Risk Event Response Contingency Plan

Trigger Who is Responsible

Weather Use waterproofing

materials

Do inside work when if it rains

during that portion of the

project

Rain/Snow Construction Supervisor

Scheduling Coordination between the construction

supervisors and sub-contractors

Schedule a time and date for each subcontractor to

be at each project to avoid

scheduling issues

Project runs behind original

schedule

Construction Supervisor

Economic Bulk ordering of supplies to cut

cost

Use of materials that do not have a high cost, but

have same quality

Gas prices, price of delivery for materials, price

of materials

Contract Engineer

Financial Insist of 20% of total project cost

before project begins

Place home on market to recoup

cost of project

Customer loan is not awarded

Office Manager

Human(Customer)

Final review and approval of

blueprints with customer

Flexibility with the drawing

Customer wanting to add

to original design

Contract Engineer

Human (Sub-Contractor)

Hire trusted local contractors

Only work with licensed/bonded skilled workers

Scheduling conflicts

Construction Supervisor

Conclusion

This project has the potential to be a huge success for Silver Fiddle Construction and

could help fund future projects. The amount of risk accepted by Silver Fiddle Construction does

not outweigh the amount of gain for successful project completion. The project has a low risk of

failure with a high potential of success which will mean high profits and the potential for future

projects in this housing market.

Works Cited

Colorado Annual Rainfall. (2010). Retrieved September 21, 2011, from Coolweather.net: http://coolweather.net/staterainfall/colorado.htm#Colorado climate data

House design software. (n.d.). Retrieved September 20, 2011, from Housedesignsoftware.org: http://www.housedesignsoftware.org/images/traditional_style_home_blueprint_l.jpg

Hyun-Ho, C. (2008, November). EBSCOHost: Construction Risk Assessment Using Existing Database and Project Specific Informaiton. Retrieved September 20, 2011, from Deets Library: http://ehis.ebscohost.com.ezproxy.sckans.edu/ehost/detail?vid=3&hid=121&sid=c5d73c44-e60b-4690-afcb-d5863cfde09e%40sessionmgr111&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=buh&AN=34772753

Larson, E. W., & Gray, C. F. (2011). Project Management: The Managerial Process 5th Ed. New York: McGraw-Hill Irwin.

Raferty, J. (2000, Jan/Feb). EBSCOHost: Managing Risk In Construction. Retrieved September 20, 2011, from Deets Library: http://ehis.ebscohost.com.ezproxy.sckans.edu/ehost/detail?vid=3&hid=121&sid=c5d73c44-e60b-4690-afcb-d5863cfde09e%40sessionmgr111&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=buh&AN=2776107

Ulibarri, B. (n.d.). Grand Junction Info. Retrieved September 20, 2011, from Grand Junction Houses for sale: http://grandjunctionhousesforsale.com/artman/publish/index.html

Warszawski, A., & Sacks, R. (2004, May/June). EBSCOhost: Practical Multifactor Approach to Evaluating Risk of Investent in Engeering Projects. Retrieved September 20, 2011, from Deets Library: http://web.ebscohost.com.ezproxy.sckans.edu/ehost/detail?vid=8&hid=12&sid=b3b0ebc6-37ca-42dd-a3c1-86df31312d3b%40sessionmgr14&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT1zaXRl#db=buh&AN=13116347

Zillow Grand Junction Home Prices and Values. (2011). Retrieved September 20, 2011, from Zillow: http://www.zillow.com/local-info/CO-Grand-Junction-home-value/r_31819/#metric=mt%3D34%26dt%3D33%26tp%3D5%26rt%3D8%26r%3D31819%252C120269%252C120135%252C28474%26el%3D0