Running head: ADVANCED PROJECT PROCUREMENT

Advanced Project Procurement Insert Name Here Course Name/Number Instructor: Date Submitted Insert Affiliation Here

Advanced Project Procurement 2 Abstract Project management principles guide businesses and organizations in achieving their project goals. Organizations have different frameworks in place in order to facilitate their companies goals and objectives. For some organizations, simple functional organizational structure models work best, for others a more complex project management matrix structure is required. The model of the organizational structure depends on the nature of the desired outcome, whether it is a product or service, or something else entirely. For complex high-input needs, a company will adopt a project management structure, such as Emaar has done with its property management building model. Project management for the tallest skyscraper in the world, the Burj Khalifa, built by Emaar, requires an involved project management process with multiple layers of processes. This report examines the Burj Kalifa project and associated project management principles involved in this project.

Advanced Project Procurement 3 Advanced Project Procurement Introduction Organizations that have complex business goals embrace an organizational model the project organization. For large-scale, multi-phase projects, a heavy-weighted model of a project organization is utilized. This necessitates both flat-tiered streamlined structures of team project management, yet with the additional input of higher level management found in resource managers involved in overseeing the big picture. The structure of the following essay is divided into two main parts: part one is on the issue of project management, and part two is the case study example of the Burj Khalifa project. An outline of the history of project management is offered, followed by a breakdown of the general principles of the concept. The success and failure of projects is related to project management. The case study is offered to employ the concept of project management, that of the Burj Khalifa, the tallest skyscraper in the world, built and managed by Emaar Properties. A look at the Emaar organization is offered, followed by a discussion on the Burj Khalifa project. Principles of project management are related to the Burj Khalifa project to illustrate the application of the concepts of project management. Additionally, the issue of risk as related to the Burj Khalifa project is conceptualized. A conclusion is offered to highlight the main points of this report and synthesize the topics. 1. PROJECT MANAGEMENT

What is Project Management Undertakings of all sizes require a plan. For the organization involved in a profit-driven enterprise that engages in large scale operations of staggering complexity, the rubric of project management is necessarily utilized. Project management is the framework within which the processes of planning, organizing and managing resources occurs for the ultimate goal of a

Advanced Project Procurement 4 timely completion of a task (Nokes, 2007). Projects are size, time, and financially delimited issues; project management utilizes methods to facilitate these the processes bound within these delimitations for a successful outcome. Examples of project management include budgeting, setting deadlines, allocating resources, assessing progress, and tracking expenditures (Webb, 2003). History of Project Management Modern project management is credited to begin in the era of the 1950s. However, that is not to discount the enormous efforts of managing large scale projects of ancient times, such as massive building projects including the Zuggerats, the Egyptian Pyramids, the Great Wall of China, the hugely complex Byzantine Cathedral projects, and more. Each era dealt with their limitations on time, money, and resources to make the project happen (Project Management Source, 2005). Modern project management dates to having roots in the 1950s with the implementation of various project management models including the Critical Path Method, the Program Evaluation and Review method. Moreover, the U.S. Department of Defense employed techniques of project management in their defense projects, and the American Association of Cost Engineers formed as well (Carayannis, Kwak, & Anbari, 2005). The International Project Management Association formed in 1965, and the Project Management Institute formed in 1969. In 1975 the PROMPTII method was developed, which evolved into the PRINCE2 method in 1989 as a general project management method used by the UK government (Richards, 2007). Software and engineering technological developments drove the evolution of project management methods in the 1980s, 1990s, and into the 21st century. The need for more complex models to reflect and manage complex multi-phase projects involving scores of various

Advanced Project Procurement 5 inputs were and are the impetus for the evolving nature of project management (Evaristo & van Fenema, 1999). General Principles of Project Management Project management typically utilizes a five-stage approach in addition to a closing process. The following diagram represent those stages:

(Building Design Construction, 2010) The roles of the stakeholders, the time involved, the scope, and the financials all need to be taken into careful consideration in the project management process. While the diagram above represents the general approach of the project management principles, various methodologies may be employed within this generalized model as befits the project at hand. A project can also be terminated at any stage, before it ever reaches a completion time. As such, in the design process of the project development, various analyses will be performed to assess inputs, risks, and favorability of success (Carayannis, Kwak, & Anbari, 2005) . The success of failure of any given project can happen at any stage from development to closing. Success is favored if the proper organizational structure is utilized to begin with, followed by a detailed project analysis consisting of financial assessments, risk analyses, stakeholder analyses, and other factors depending upon the project scope and nature. Failure can happen if mismanagement occurs,

Advanced Project Procurement 6 whether it be from an improper assessment of risk, mismanagement of resources, lack of knowledge of various sectors involved, or even lack of human capital to get the job done (Laufer, 2009). Large projects such as the Burj Khalifa represent a significant investment in sound project management decision making within a complex heavy-weighted matrix project organizational structure utilizing both flat and hierarchical models of project management. Procurement, Vendors, Contracts Procurement is essentially the process of securing goods and services external to the organization is order to facilitate the project. This includes a process that takes into account the accounting principles that maximize the return on investment, as well as issues related to minimizing risk and exposure to potential fraud (Benton, 2010). The procurement process can be illustrated in the following general diagram: PROCUREMENT PROCESS

Source: Original author-derived diagram

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Explanation of Procurement Process: 1. 2. 3. 4. 5. 6. 7. Information Gathering: involves the search for suppliers in regard to purchasing needs. Supplier Contract: involves identifying potential suppliers and putting out Requests for Proposals to get a pool of bids for the posted supplies/services. Background Review: involves researching the quality and warranties for goods and services; assesses reliability of products and services. Negotiation: involves agreeing on price, availability, and deadlines with potential supplier. Contract is written and agreed upon. Fulfillment: products and services are delivered, installed, and/or installed. Payment is delivered per contract agreement. Consumption, Maintenance, and Disposal: products and/or services are assessed as they are consumed; may involve ongoing support per contract. Renewal: involves reassessing the potential future needs to continue with an extended or new contract once the old contract requirements are met and completed. (Indirect Purchasing Ltd., 2010)

Contract Management Within project management and the procurement phase, the contract management portion involves determining needs, such as should something be made or purchased, determining correct costs, deciding on what type of cost contract will be used (fixed price, cost-plus contract, cost plus fee contract, etc), deadlines, and how the job will be determined to be complete; that is, in the final stages of the contract, a method needs to be managed to close out the contract (Houman, 2002). 2. CASE STUDY The Burj Khalifa and Emaar Properties About Emaar Emaar Properties formed in 1997, and is a Dubai-based property construction and management property specializing in large-scale, high end communities and buildings. It is a publicly owned joint stock company, and is listed on the Dow Jones Arabian Titans Index

Advanced Project Procurement 8 (Emaar Properties, 2010). The company has holdings in the Middle East, Pan Asia, Europe, North America, and North Africa, with over 60 different business segments (Emaar Properties, 2010). Emaars vision is to offer premier global lifestyle solutions, incorporating not just real estate but also shopping, entertainment, health, education, and finance. They propose to accomplish their mission through establishment of business segments that act as different growth engines (Emaar Properties, 2010). Emaar has a hierarchical management structure with the Chairman at the top, followed by the Board of Directors. The next level is the Corporate Office management, followed by the levels of the business segments management. Each level is flat unto itself, yet has a higher chain of command up to the Chairman (Emaar Properties, 2010). The Burj Khalifa The Burj Khalifa (formerly the Burj Dubai) is a skyscraper located in Dubai that was built by Emaar Properties. Construction began in 2004 and completed in 2009. The Burj Khalifa is the tallest skyscraper in the world (Bianchi & Critchlow, 2010). The building is a mixed-used building, offering residential, business, and entertainment facilities. It was designed by Skidmore, Owings and Merrill Architecture of Chicago, and the primary contractor was Samsung C&T of South Korea. Turner Construction Company, one of the largest construction companies in the United States and a subsidiary of a German company, was hired as the major project manager of the venture (Turner Construction Company, 2010). The total cost for the building was $1.5 billion U.S. dollars (Springer, 2010). The facilities provided by the building project are based on Emaars corporate vision of offering a high-value luxury multi-use living space. The Burj Khalafi has an observation deck, a

Advanced Project Procurement 9 fine dining restaurant, a four story fitness club, 37 office floors, 160 guest rooms and suites, 144 private residences, an 11 hectare park, 6 water features, four pools, a 3000 car garage, and access to the meticulously planned downtown Dubai, which offers even more amenities and value to those investing in the Burj Khalafi (The Burj Khalafi, 2010). The factors of success of the Burj Khalafi reside within the value created by its completion. Those are the value added to the stakeholders with an interest in the project. Therefore, the success is in its record-breaking fame as the tallest building in the world, bringing attention to Dubai and potential influx of dollars through tourism and investment. Value is given to residents and occupants of the tower, through the amazing service amenities and access to luxurious dining, parks, and entertainment, as well as access to a thriving and desirable downtown Dubai destination. Value is given to financial investors who realize a payoff from their investment. The company enjoys success in its project completion, realization of the project goals as they mesh with the corporate vision, and financial profit from the venture. The unfavorable issues cannot be considered failures as the project was a success with the ultimate realization of that success yet to be determined based on interest and investment. However, factors of unfavorability associated with the project are that the project was delayed due to reported upgraded finishes by Emaar. It may be that upgrades as they were reported actually meant delays in getting materials and ultimately were an issue of project management. Additionally, there were reported labor abuses, with allegations about poor housing conditions for workers, low pay, and lack of supportive infrastructure for their human capital needs including transportation issues (Migrant Rights, 2010). Project Management and the Burj Khalafi

Advanced Project Procurement 10 The construction of the Burj Khalafi demonstrates the complex nature of large scale project management. First, the company Emaar needed to have an organizational structure in place that could support these ventures. A heavy-weighted matrix project organizational model best fits the nature of Emaars projects. Emaar also utilizes organizational structure models of management in both hierarchical and flat structure, with project management being the foundation to all functional entities in their project process. The building of the Burj Khalafi showed the world the cooperative ventures of architecture, engineering, construction, and follow through that is required for a venture of this scope. The five stage process given in the diagram presented earlier in this report was generally followed by the Emaar in getting from implementation to closing. The work breakdown structure of the Burj Khalafi project captures all the deliverables, including the following: 1. Idea formation of the Burj Khalafi project

2. Choosing the building site and running assessment on all variables (codes, politicians, risks, financials, human resources, building materials). 3. Choosing contractors for architecture, engineering, and construction. 4. Hiring workers for the project. 5. Planning purchase and delivery of materials. 6. Choosing subcontractors for inner construction work on pools and aesthetics. 7. Using EVM as a method of assessing and tracking project management. This work breakdown structure is very general, and WBSs can and should be very specific, being 100% exhaustive and 100% mutually exclusive in capturing all the relevant elements of the project. However, for general illustrative purposes, a level 1 WBS is offered

Advanced Project Procurement 11 here to demonstrate at a macro scale the issues that needed to be addressed in figuring out the micro scale needs of the project (Haugan, 2002). Assessing risk in a project such as the Burj Khalafi is paramount in managing this scope of a project. Risk in project management relates to the potential harm that may arise from some activity, on the future progress of the project. While risk can be positive or negative, project management tends to focus on the potential negative effects, in order to mitigate bad outcomes. Risk management strategies that can be used in project management include transferring the risk to another party, mitigating the risk factor, avoiding the risk, and accepting some consequence of the risk as a cost of the project (Edwards & Bowen, 2005). In the Burj Khalafi project, the risk in designing and constructing the tower was clearly transferred to outside sources, and the risk was assumed by another company involved in the construction project (Turner Construction Company, 2010). In controlling the project of risk management, the Project manager in charge of this aspect often utilizes a risk management log. In the Burj Khalafi project, the project manager might have filled in a similar type of log to ascribe various risk-associated activities with the correlating criteria. Projects are time-delimited and have a life cycle. Terminating the project at closing is the preferred stage of project completion, as presumable the project goals are realized. The final stage is also the time in the project life cycle in which final reports can be written reflecting upon the lessons learned from the project. The final report is the stage at which the projects success and failings can be documented, and recommendations made for future projects based on the issues encountered in the project. The Burj Khalafi is not the first major building project of the Emaar company; indeed, it is a project that has the good fortune of having successful predecessor

Advanced Project Procurement 12 projects, though not of the same scale. A post project analysis of the Burj Khalafi project would necessitate looking at each stage of the project process and reflecting upon the issues that arose during each phase. Final recommendations could be made from that point for future projects of the Emaar company. Conclusion The project management concept is not new, in fact the modern understanding of the discipline has been evolving steadily since the 1950s. There are various models of project management, and stages within each model that can be adopted depending upon the organization and scope of the project. Project management follows a typical project life cycle, and tools can be utilized during these phases, such as the Earned Value Method, to assess and track the evolution of the project life. The Burj Khalafi is a grand scale project, requiring the outsourcing of risk and the outsourcing of project management. The Burj Khalafi construction project is finished, though the management of the tower and its facilities still falls to the Emaar group, and hence likely requires a different mode of project management to keep pace with the companys model of growth engines.

Advanced Project Procurement 13 Bibliography Benton, W. J. (2010). Purchasing and supply chain management (2nd ed.). New York: McGrawHill Irwin. Bianchi, S., & Critchlow, A. (2010, January 1). Worlds Tallest Skyscraper Opens in Dubai. Wall Street Journal . Building Design Construction. (2010). Project Management. Retrieved June 4, 2010, from Building Design Construction: http://building-design-construction.com/manage-projects Carayannis, E., Kwak, Y., & Anbari, F. (2005). The story of managing projects: an interdisciplinary approach . California: Praegar Publishers. Edwards, P., & Bowen, P. (2005). Risk Management In Project Organisations. Burlington: Butterworth Heinemann. Emaar Properties. (2010). About Emaar. Retrieved June 5, 2010, from Emaar Properties: http://www.emaar.com/index.aspx?page=about Emaar Properties. (2010). Management Structure. Retrieved June 5, 2010, from Emaar Properties: http://www.emaar.com/Emaar.Upload/EMR-SINGAPORE-ENUS/CMS/Management%20Structure%20FINAL%2025MAR10.pdf Emaar Properties. (2010). Mission, Vision, Strategy, and Goals. Retrieved June 5, 2010, from Emaar Properties: http://www.emaar.com/index.aspx?page=about-mission Evaristo, R., & van Fenema, P. (1999). A typology of project management: emergence and evolution of new forms. International Journal of Project Management , 275-281. Haugan, G. (2002). Effective work breakdown structures . Vienna: Management Concepts. Houman, J. (2002). Project Management Handbook. Lincoln, NE: Writers Club Press. Indirect Purchasing Ltd. (2010). Procurement Lifecycle. Retrieved July 7, 2010, from Indirect Purchasing Limited: http://indirectpurchasing.com/lifecycle.html Laufer, A. (2009). Breaking the Code of Project Management. New York: Palgrave MacMillan. Migrant Rights. (2010, January 4). Behind the Glamorous Facade of the Burj Khalifa. Retrieved June 5, 2010, from Migrant Rights: http://www.migrant-rights.org/2010/01/04/behind-theglamorous-facade-of-the-burj-khalifa/ Nokes, S. (2007). he Definitive Guide to Project Management. . London: Prentice-Hall. Project Management Source. (2005, November 2). Ancient Project Management. Retrieved 4 2010, June, from Project Management Source: http://www.projectmanagementsource.com/2005/11/ancient_project.html Richards, K. (2007). Agile project management: running PRINCE2 projects with DSDM Atern . Norwich: The Stationary Office. Springer, M. (2010, January 7). Raising the Burj Khalafi. Retrieved June 5, 2010, from Built on Facts - Science Blogs: http://scienceblogs.com/builtonfacts/2010/01/raising_the_burj_khalifa.php The Burj Khalafi. (2010). The Burj Khalafi. Retrieved June 4, 2010, from The Burj Khalafi: http://www.burjkhalifa.ae/language/en-us/the-tower/fact-figures.aspx Turner Construction Company. (2010). Burj Dubai. Retrieved June 5, 2010, from Turner Construction Company: http://www.turnerconstruction.com/international/content.asp?d=3457 Webb, A. (2003). Using earned value: a project manager's guide. Burlington: Gower Publishing.

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