6CN024 – COMMERCIAL PROJECT

1828110
MANAGEMENT

Commercial Project
Management
6CN024

M.Z.M Muzny
1828110
University of Wolverhampton

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Acknowledgement

I would like to take this opportunity to express my sincere gratitude to Dr Tony

Auchterlounie, who is the module leader for the Commercial Project Management. His
extensive assistance and support were immeasurable in completing this module and
furnishing this assignment to its maximum potential. And also, Miss.Nishanthini who was
our local module leader who assisted in explaining and clearing our doubts time to time. Last
but not least, I would like to thank the management of British Collage of Applied Studies for
providing us the wonderful opportunity of studying at an overseas university through distance
learning.

Thank You

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Contents
Acknowledgement ................................................................................................................ 2

Introduction .......................................................................................................................... 4

Task 1 – Life Cycle Analysis................................................................................................. 5

Task 2 : Strategic Leadership .............................................................................................. 10

Task 3 : Ethical Decision Making ........................................................................................ 12

Task 4 : Discussion on Key CPM Factor. ............................................................................ 14

Conclusion .......................................................................................................................... 16

References .......................................................................................................................... 17

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Introduction

Commercial Project Management is an essential subject required to gain a good

understanding on the current practices being a commercial project manager as well as a
quantity surveyor. This report is focused on life cycle costing, strategic leadership being a
commercial project manager, requirement of professional ethics in the industry and a brief
explanation on risk management on certain organization and preparing for it.

The given scenario is where Grosvenor (PLC) had opted to venture it’s two new hotel
projects in Sri Lanka and chosen Synergy Constructions (PVT) LTD. These two hotels will
be designed as to provide 5 star services to the customers consisting 150-180 luxury rooms
along with private villas, restaurants and conference hall facilities which can accommodate
3000 people at the same time.

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Task 1 – Life Cycle Analysis.

Findings below are the detailed life cycle cost of the Design A, and Design B for the
proposed hotel project ventured by Grosvenor PLC in Sri Lanka.

Floor Area of Tower A : 12,000m2

Floor Area of Tower B : 7,000m2

Economic Life of Building : 30 Years

Agreed Discount Rate : 6%

No replacement or Maintenance in the Final Year

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Design A
Capital Cost
G.F.A Cost/m2
(m2)
Tower A 12,000.00 520.00 6,240,000.00
Tower B 7,000.00 350.00 2,450,000.00
Subtotal 8,690,000.00

Annual Maintenance
Cost DF (6%)
Tower A 31,600.00 13.76 434,967.68
Tower B 16,000.00 13.76 220,236.80
Subtotal 655,204.48

Cyclic Maintenance
External Painting @ 8 Years
8 Years 0.63
16 Years 0.39
24 Years 0.25
1.27

Cost 4,200.00
Subtotal 5,325.75

Internal Painting @ 6 Years

6 Years 0.70
12 Years 0.50
18 Years 0.35
24 Years 0.25
1.80

Cost 6,600.00
Subtotal 11,871.76

Flat Roof @ 13 Years

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13 Years 0.47
26 Years 0.22
0.69

Cost 10,200.00
Subtotal 7,024.22

Irregular Costs

Replace STP @ 20 Years

20 Years 0.31
0.31

Cost 30,100.00
Subtotal 9,385.32

Replace Windows @ 15 Years

15 Years 0.42
0.42

Cost 13,000.00
Subtotal 5,424.45

NPV Total 9,384,235.98

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Design B
Capital Cost
G.F.A Cost/m2
(m2)
Tower A 12,000.00 510.00 6,120,000.00
Tower B 7,000.00 320.00 2,240,000.00
Subtotal 8,360,000.00

Annual Maintenance
Cost DF (6%)
Tower A 52,000.00 13.76 715,769.60
Tower B 25,000.00 13.76 344,120.00
Subtotal 1,059,889.60

Cyclic Maintenance

External Painting @ 12 Years

12 Years 0.50
24 Years 0.25
0.74

Cost 5,000.00
Subtotal 3,719.74

Internal Painting @ 9 Years

9 Years 0.59
18 Years 0.35
27 Years 0.21
1.15

Cost 8,200.00
Subtotal 9,426.80

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Irregular Costs
Replace STP @ 16 Years
16 Years 0.39
0.39

Cost 26,000.00
Subtotal 10,234.78

NPV Total 9,443,270.92

From the above calculated figures, we can come to a conclusion that Design A has the lowest annual
maintenance cost when comparing with Design B. which makes Design A the most suitable design for
the project as the maintenance cost required is low.

Annual Maintenance Cost of Design A : 655,204.48

Annual Maintenance Cost of Design B : 1,059,889.60

A is the Suitable Design for this Project

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Task 2 : Strategic Leadership

A Commercial Project Manager in the construction industry is a key person who is solely
responsible for financial management aspects of the projects. At the same time looking out
for new incoming offers and opportunities to place bids and win new projects for the
organization.

Working as the Commercial Project Manager for the 5 Star Hotels launched by Grosvenor
(PLC) is actually a crucial and an important role. My role at Grosvenor (PLC) does not limit
only to Commercial Project Manager but also a visionary strategic leader. A good leader is
someone who is self-motivated and motivates his subordinates by inspiring them to achieve
the aims and objectives set out by the organization. Strategic leadership is an essential skill a
successful Commercial Project Manager should possess in order to maintain a good
interpersonal relationship among the subordinates.

Leadership theories explain how certain people successfully become a good leader and also
these theories reflect the skills which a leader should possess and also to adopt from these
theories and become a good leader. And also, leadership theories were formulated to find
answers for why some people still remain the follower and not becoming a leader.

One fine theory is the Trait Theory. Trait theory assumes that people acquire particular
qualities and traits which makes them suitable for the position of leaders. Moreover, Trait
theory of leadership identifies a specific personality or behavioral characteristic features
shared by leaders. For example, intelligence, energy, resourcefulness, extroversion, self-
confidence and courage. This theory gets a bit complex in an angle whereas, if the above
mentioned traits are key aspects of leadership, then why are some people who possess this
quality are not leaders. At the same time there are people who have all the mentioned
personal traits qualifying for a leader but they don’t seek or ask for leadership positions. And
also, some do not possess the above said traits but they are effective leaders. (Cherry, 2019)

Another good theory is the Contingency Theory. It is focusing on specific variables relating
to the environment which may determine which style of leadership is most suitable for the
situation. As per this theory not all the leadership theories are applicable to all situations.
Researchers indicate that leadership is not always about the quality of the leader, but also
maintaining the perfect balance between behaviors, needs and context. Successful leaders are

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able to evaluate what their followers seek for and consider the type of the situation and then
adjust and adapt their behaviors to suit the situation. Successfulness of this leadership style
depends on various variables. Leadership style, qualities of followers and the weight of the
situation are among them. (Cherry, 2019).

Functions of leadership is a wide and broad subject. But there are some important roles being
a successful leader. When it comes to a task, a leader should define the task on what has to be
done and how it has to be done to his followers clearly so as to be understood by the
followers. Another crucial role is planning, it means building a mental bridge from where you
are now to where you want to be, the leader should create a plan and announce it to the
subordinates and should listen to the follower’s perspective on the plan. By which even a
complex plan can be simplified when ideas are put together and implemented. Establishing a
clear vision of the organization’s future is an important role of being a good leader. This can
be very well related to Commercial Project Manager. Leader should lead his followers to the
success of the organization collectively. Another function of leadership is controlling. This is
a critical role where a leader should be careful before using his authority or power to his
followers. This has to be carried out after a good analysis of the situation.

Another important role of being a good leader is motivating his followers. A leader should
understand his followers well and what he needs so that it will be easy for the leader to
motivate his followers to work well and achieve well. Fluency in Organizing is an important
function of a leader. Organizing means structuring a group of people to work as a team while
each follower performs his best.

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Task 3 : Ethical Decision Making

Maintaining good ethics practices in construction industry creates a strong foundation of trust
between the contracting parties. When either one involved in the contract breaches the ethics
maintained, it creates a bad image and the trust will be broken. Maintaining good ethical and
moral values are considered to be the pillar of a successful construction organization. The
organization which maintained good ethics lasts longer on industry with good fame and
reputation. (Editor, 2020)

The governing body for construction professionals and property developments, the Royal
Institute of Chartered Surveyors insist it’s all members to demonstrate these 5 qualities as the
Professional and Ethical Standards which are, Firstly Acting with integrity. Which is
behaving a transparency manner in whatever the activities we perform and staying
trustworthy in all the work we do. Second code of conduct is Always providing a high
standard of services, which is delivering what is promised without a compromise, Third
standard is to Act in a way that promotes trust in profession which means we have to promote
what we do and what our profession is up to and also by fulfilling the obligation by doing
what we promise to do. Fourth standard to Treat other with respect and the 5 th standard is
Taking Responsibility, this an important and a crucial task, for example if someone makes a
complaint about something we have done, we should try to manage it in an appropriate
manner and also to act with good skills, care and diligence.

Breach of ethics in this scenario can be clearly identified from the given rationales.
Allegations have been made as a Sub contractor knowingly had employed illegal immigrants
and they aren’t being paid well and accommodated in unsuitable conditions. These are critical
factors which are proven as to breach the ethical standards prescribed by the RICS. It should
be noted that whoever we move along during the professional dealings are suspected to be
wrong, its our duty to do the needful to establish the justice. In this situation, it is an
allegation, so it is better to have an informal discussion with the related sub-contractor
regarding the allegations made against him so that we can get the full story from him and
establish the facts.

If it is proven to be true and accurate, then we have to organize a formal meeting with the
particular sub-contractor and asking him regarding the allegations. After he accepts his fault

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we have to take necessary actions to make it right. If the above said sub-contractor has a good
reputation and if his works are up to satisfactory standards and if don’t want to terminate the
sub-contractor, we should instruct the particular sub-contractor to legally register his labours
as per the country’s law and regulation protocols and we have to firmly instruct him to pay
the labours according to the market prices based on their work and performance, and also to
provide them with proper and suitable accommodation facilities to ensure their wellbeing. In
order to ensure this, there have to be formal agreement should be drafted indicating above
clauses and on upon failure of it, the sub-contractor will be terminated immediately with a
compensation.

As an RICS member its our duty to uphold the professional ethics and standards in the
industry. The above scenario is handled as per the RICS professional ethics and standards. It
was ensured to act with integrity to a given situation, the other ethic of Treating other people
with respect was adhered and the sub-contractor’s immigrant labours were given justice and
also a main ethic of Taking responsibility was reflected by handling the situation wisely
considering all the facts associated within.

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Task 4 : Discussion on Key CPM Factor.

Risk Management

Construction industry is all about managing risks and challenges associated within it. It is an
essential role of a Commercial Project Manager to effectively handle risks associated within
the certain project. Risk management consists of 3 main stages, which are risk identification,
risk assessment and risk response. Risk identification stage is where we have to focus on the
threats and issues while we execute a new project or issues which may likely arise in the
ongoing projects. Listing them out in the order of priority will help weigh the scale of risk
and possible loss, thus enabling us to better prepare for it. Risk assessment stage is where the
identified risks are assessed based on their property. It can be classified as qualitative
assessment and quantitative assessment. For example, a natural disaster or a global pandemic
can be studied by qualitative assessment and inflation and fluctuations in material prices can
be assessed under quantitative assessment. The 3rd stage is the Risk response stage, a stage in
which we have to decide how we handle the risk. By following the above mentioned stages,
the drastic effects of a certain risk can be minimized or in some situations it can be eliminated
and avoided completely causing no harm to the organization. Managing a risk is a
collaborative effort which has to be shared among team members equally. (Bosse, 2019)

Risk awareness can be explained as the process of creating a warning prior to a foreseeable or
non-foreseeable risk. It creates attention among the employees of the organization to be better
prepared for what is coming. Risk awareness should be strictly followed and implemented in
every possible way to minimize losses.

There are several risks associated with in the construction of these two High Rise Hotel
Projects. The main risks identified are the Change of Sri Lankan Government after the recent
elections, Issues from adjoining land owners and area people, Safety issues during
construction phase, Global Pandemic (COVID-19) and Fluctuations in material price.

The identified risks can be effectively managed by a strategic risk response plan for each of
them. Change of government can result in new investment policy for foreign investors,

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restrictions in employing foreign labours and use of local currency for transactions and so on.
as the Grosvenor (PLC) is a UK based organization. Adhering to government policies
effectively and also signing treaties with local governing bodies to ensure successful
completion of the project. It was identified from the ground studies that adjoining land
owners were signing petitions against this construction project indicating that possible effects
of pollution This effect can be reduced by explaining the possible Strategic solutions for the
waste management system and also creating awareness program to the area people opposing
this project so they can get a clear understanding of the waste management policies that the
construction will follow and also we will have to give an assurance for the people who are
opposing the project that the project will always follow the standard waste management
practices. As this is a high rise project the chances of safety related accidents are high. So, in
order to prevent any critical and crucial accident, we have to implement the best safety plan.
This will start from employing qualified safety personnel with proper experience and also
instructing the employees and labours about safety within the site and Instruct them to follow
the safety practices effectively. One of the focused issues is the global pandemic warning
issued by the World Health Organization recently that will severely affect the construction
industry in total as the countries will go into lockdown and no work will be permitted to be
done outdoors. This is a major challenge where the company’s finance will be deeply
affected. In order to overcome the salaries of the employees can be given in a certain
percentage, temporarily avoiding purchase of materials and suspending site works and
planning the work from home for the employees whose job is computer based. Based on the
recovery stage of Covid-19 global pandemic, chances are high that material prices can
fluctuate. As a necessary precaution step material of higher value can be purchased priorly in
a considerable amount to save huge losses in future. A thorough market analysis will help us
predict new prices, whether the prices will go up or down, this can save a huge amount of
money for the organization.

Risks in the construction industry cannot be avoided, it has to be faced wisely to reduce the
worst case scenario. When following the above mentioned risk response strategies precisely
and effectively, we can minimize the possible side effects of risks which are to come.

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Conclusion

Grosvenor (PLC)’s decision on investing in Sri Lanka for their major multi billion hotel
project is a very good investment considering the increasing demand for the 5 star luxury
hotels along with other recreational activities. Being in the position of the Commercial
Project Manager I was handed over with two design options for the hotel. The best design
option was chosen based after a detailed life cycle costing of both designs to ensure the
maximum profitability to the client while giving a good output product.

It should be noted that strategic leadership while being a Commercial Project manager was
discussed extensively and also the ethics and professional standards adhering to the Royal
Institute of Chartered Surveyors. And also, an important key commercial project management
attribute, Risk Management was discussed and evaluated the possible risks which could occur
to this project and also strategical solutions on over coming them.

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References
Anonymous, 2020. Ethics. [Online]
Available at: https://www.rics.org/south-asia/upholding-professional-standards/standards-of-
conduct/ethics/
[Accessed 26 May 2020].

Bosse, M., 2019. What is Risk Awareness. [Online]

Available at: https://americanheritageins.com/what-is-risk-awareness/
[Accessed 20 May 2020].

Cherry, K., 2019. The Major Leadership Theories. [Online]

Available at: https://www.verywellmind.com/leadership-theories-2795323
[Accessed 25 May 2020].

Editor, 2020. Ethics in Construction. [Online]

Available at: https://www.designingbuildings.co.uk/wiki/Ethics_in_construction
[Accessed 30 May 2020].

Scamihorn, S., 2013. Ethical Standards. [Online]

Available at: https://bearpm.com/quality-control/
[Accessed 20 May 2020].

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