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TW45

SCHOOL OF ENGINEERING

BSc(HONS) IN QUANTITY SURVEYING &

COMMERCIAL MANAGEMENT

SEMESTER 1 EXAMINATION 2015/2016

RISK AND VALUE MANAGEMENT

MODULE NO: CAS6003

Date: Wednesday 13 January 2016 Time: 2.00 – 5.00

INSTRUCTIONS TO CANDIDATES: This paper contains Four questions.

Answer ALL FOUR QUESTIONS

ALL questions carry equal marks.

Candidates are required to bring in

to the examination extracts from the

Valuation Table.

of 12 School of Engineering BSc (Hons) Quantity Surveying and Commercial Management Semester One. Examination 2015/2016 Construction Economics Module No. CAS5009

Question 1 (25 Marks)

New Industrial Workshops – Greenfields Document 1 The client has queried the likely costs of operating the space heating installations within the workshops. It seems that at least three prospective tenants dispute the economy that propane gas-fired boilers will bring in fuel, maintenance and replacement costs. Quite frankly, no figures which could be passed on to the client exists as yet. You will recall that your company’s original decision was based largely on the performance achieved in the workshops built elsewhere within the region. As you know, the contract incorporates a brief specification and a small number of measured items. A quotation which was received from the Heating Engineers for an installation based on oil as an alternative source of fuel and some indicative costings for maintenance and replacement is attached. Do you think it would be practicable to consider electric space heating as a further alternative? Please prepare as a matter of urgency, a cost appraisal indicating the comparative performance of the two installations over a fifteen year life. You are not expected to provide precise figures, although it is imperative that you present the client with a clear recommendation, supported by some calculations. The contractor will need to know fairly soon if there is to be any change to the specification.

Question 1 continued over page


Question 1 continued

Document 2 HEATING INSTALLATIONS A DESIGN A1 The contractor shall be responsible for checking the design of the

installation described in these documents.

A2 The production area heating is designed to provide a temperature of 19

degrees C when the outside temperature is -2 degrees C. A natural infiltration rate is to be calculated and an intermittent heating allowance of 25 per cent over and above the nett heating requirements should be made available.

A3 The contractor is to provide detailed installation drawings of the work for

the Architect’s approval. A minimum of 3 weeks is required for approval prior to commencement of the works.

B SCOPE OF WORK B1 Heating: one number gas warm air heater is to be installed at high level

within the Production Area to serve those units indicated on Drawing Nr GF/630.

B2 Associated Works: please note that electrical works and hot and cold

water services are covered elsewhere in the specification. C PRODUCTION AREA HEATING AND GAS INSTALLATION C1 Gas supply: provide a suitably sized gas supply pipework rising to high

level from the gas cylinder enclosure into the units and connect to the gas-fired warm air space heaters.

C2 Allow for hardstanding and dwarf brickwall to enclose propane gas

cylinders: exact allocation to be agreed and approved by Architect. Include for fixing gas supply pipework to steelworks and blockwork. Allow for a gas cock with union adjacent to each warm air heaters.



Question 1 continued C3 Pipework to wall heater must be half hard tempered light gauge copper

tube conforming to BS.871: Part 1: 1971, Table X, complete with all necessary capillary fittings to BS.864. One piece plastic pipe clips to used in office area.

C4 Painting: include for painting and colour coding of pipework. C5 Flues: warm air heating:

include for a single skin, stainless steel fuel from each heater to incorporate necessary flue sections, bends and approval terminal.

C6 Flues to be supported with necessary brackets, neat trim to roof lining, to

comply with Building Regulations where it passes through the roof, to incorporate suitable flashing and apron over the flashing. The flue above the roof level and the terminal are to be stove enamelled to a colour to be approved.

C7 Warm air heaters: these are to be ITT Reznor or of equal or superior specification.

All heaters must conform to the following: (a) Aluminised heat exchanger (b) Two stage Hi/Lo burner (c) Single phase 240V motor (d) Vertical louvres (e) Suitable for propane gas C8 Heaters are to be suspended from approved brackets bolted to the

steelwork. Brackets to be painted in approved colour. all heaters are to be fitted 2150 mm above finished floor level.

C9 Controls: ITT Reznor control panel is to be provided and fitted 1500 mm

from finished floor level beneath each heater, with loose night set back thermostat sited in toilet area.

C10 Commissioning: each heater is to be commissioned and set to maximum working efficiency. The contractor is to include for all necessary fuel and power to carry out this commissioning and any other tests deemed necessary by the Architect.



Question 1 continued C11 Provide full commissioning reports in writing for each heater and operating

and maintenance manuals for each heating installation together with manufacturer’s guarantees and record drawings on completion of the works.

GENERALLY D1 Where pipes pass through walls, sleeves must be provided and where

they pass through walls, ceilings etc. in visible locations, cover plates and trims must be provided.

D2 The above specification is to be read in conjunction with the drawings. D3 Approved Companies: the whole of the gas heating installation must be carried out by a contractor approved by the Architect.

Item Document 3C

ELEMENT 5.E - HEATING INSTALLATIONS HEATING

INSTALLATIONS

SUB-ELEMENT 2.A.A. - INFORMATION PLANT AND

PROTECTION

GENERALLY

Information

A for a full description of the work contained in this

element the contractor is referred to the Specification

and associated drawings issued with this Bill of

Quantities

item

Plant

B allow for bringing to site and removing from site all

plant required for this element

item

C allow for maintaining on site all plant required for this

element

item




Protection

D protect the work in this element item

SUB-ELEMENT 2.B.A. - GENERALLY

ALL INSTALLATIONS; INTERNALLY

Complete all the following installations including

marking the position of holes, mortices, chases or the

like and testing for performance, all in accordance with

the drawings and the specification

Units Nrs 1, 2, 6, 7, 9 and 10

E gas distribution services 6 Nr 2,580.00

F gas-fired heating in production areas including control

panels

6 Nr

11,400.00

G painting gas pipework and brackets 6 Nr 300.00

To page 5/72 14,280.00

£ P

Unit Nrs 3, 4,5,8,11,12 and 13

A gas distribution services 7 Nr 2,160.00

B gas-fired heating in production areas including control

panels

7 Nr

11,900.00

C painting gas pipework and brackets 7 Nr 385.00

SUNDRIES

Preparing ‘as fitted drawings’ to show




D all installations; two negative copies item

s

...............

To Collection £14,445.00

COLLECTION

From page 5/71 14,280.00

From page 5/72 14,445.00

TOTAL TO SUMMARY £28,725.00


5/72

Document 3D

NEWTOWN HEATING ENGINEERS LTD

Mechanical and Electrical Contractors

Sparks Lane, Littletown,

PG10 8PS 0735 5354731

QUOTATION

To:

A Architect,

12 Bridge Street,

Old Town

PG1 5KF 5Nov 2002

INDUSTRIAL WORKSHOPS AT GREENFIELDS

To completing the following installations based on drawings as supplied;

Large Units

a. oil distribution services 6 Nr £450.00 2,700.00

b. oil-fired floor mounted heaters in

production areas including controls 6 Nr £2,050.00 12,300.00

c. oil storage tank 6 Nr £850.00 5,100.00

Small Units

a. oil distribution services 7 Nr £400 2,800.00

b. oil-fired floor mounted heaters in

production areas including controls 7 Nr £1,800.00 12,600.00

c. oil storage tank 7 Nr £800.00 5,600.00

Sub Total 41,100.00

VAT 4,725.00

Total £45,825.00

(Include main contractor’s discount)




Document 3E

NOTE OF TELEPHONE CONVERSATION

Indicative Costings from Newtown Heating Engineers – November 2006

Maintenance Gas Oil

annual charge

per unit (large) £350 £360

annual charge

per unit (small) £300 £310

Replacement costs

burner unit

(after 5 years) £600 -

burner unit

(after 8 years) - £600

pump (oil only) - £300

Fuel costs per annum (approx.)

based on 2,000 hrs pa (large) £950 £900

based on 2,000 hrs pa (small) £800 £770

Please turn the page


Question 2

A developer is proposing to erect a block of six lock-up shops with two floors of offices above them. The shops are likely to let at an average annual rent of £60/m2 and the offices at £45/m2. The net floor area will be 500 m2 for the shops and 900 m2 for the offices. Circulation areas will amount to about 10% of total floor area and will remain under the control of the landlord, whose annual out-goings are estimated at 25% of income. The developer requires a 20% profit on the development. The freehold site is available at a purchase price of £30,000 and siteworks are estimated to cost £7,500. The rate of return in this area for similar developments is around 7%. The contract period is likely to be one year and finance is available at 15% rate of interest. Legal, agency and advertising costs are likely to be about 3% of GDV. Determine the allowable building cost per m2 of gross floor area and critically discuss its feasibility.

Annual rent of shop £60/m2

Annual rent of office £45/m2

Net floor area for shop 500m2

Net floor area for offices 900m2

Circulation space 10% of total floor area

Annual out-goings 25% of income

Purchase price of freehold interest on land £30,000

Cost of siteworks £7,500

Rate of return 7%

Construction contract duration 12 months

Interest rate 15%

Legal, agency and advertising costs 3% of GDV



Question 3 The risk free base estimate for a rail track refurbishment project is $15.6million. The work is to be undertaken whilst the existing rail network remains in use. The network connects two major North Western cities which is heavily used by commuters during the working week. As part of the risk management process, the Standard Deviation method of analysis is to be used.

Given the information provided below, calculate the values of the average and maximum likely risk estimates for this project.

It is almost certain that the following additional work will be required:

Items of work probability Estimated cost

Railway signalling work

0.85

2,250,000

Additional track renewal

0.40

1,200,000

Bridge renewal 0.33 2,075,000

It is almost certain that the following additional work in a range will be required:

Items of work 50% Confidence

level

90% Confidence

level

HSE additional trackside precautions

185,000 370,000

Revisions to specifications

155,000 275,000

Additional track ballast disposal

75,000 120,000

Additional track ballast decontamination

1,250,000 2,125,000

Additional weekend rail closures

265,000 420,000

(25 Marks)



Question 4 ‘On engineering and construction projects carried out with internal resources, i.e where no work is outsourced, only the organisation requiring the project, for practical purposes, is at risk. However, where construction projects are implemented by contract, a number of parties can be at risk ….’ Critically discuss the process associated with establishing and implementing a risk management plan for a typical construction project.

(25 Marks)

END OF QUESTIONS

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