11/09/2017 Prof Ekambaram, Palaneeswaran | Faculty of Science, Engineering & Technology, Swinburne University of Technology, Hawthorn, Victoria 3122 CSM80009 PROCUREMENT AND RISK MANAGEMENT IN PROJECTS ASSIGNMENT CSM80009 Procurement and Risk Management in Projects â€“ Assignment (Submission deadline: 06-10-2017, 5:00PM) Please return your answers to Dr. Ekambaram Palaneeswaran, email: [email protected] Page1 Important instructions: (i) The assignment answers should be submitted in hardcopy format before the deadline. Submit your answers at the Assignment Collection Box 91 in ATC Level 8 (or you may personally hand in my office at ATC738). For late submissions, penalties might be considered. Along with your hardcopy submissions, you are required to attach an assignment coversheet (signed). (ii) In addition to your hardcopy submission, you are required to submit the softcopy in Blackboard â€“ Turnitin. No coversheet is required for your softcopy submissions i.e. you should not upload the coversheet in Blackboard â€“ Turnitin submission. (iii) This assignment includes two parts and you should answer 2 questions as per instructions in each part – i.e. any one from Part A (10 marks) + any one from Part B (10 marks). (iv) Your answer for each selected question (including subparts) shall not exceed 1500 words. In addition, you may include representative diagrams/ figures and tables (if so relevant). (v) This is an individual assignment and not a group work. Plagiarism should be strictly avoided. You may check: http://www.swinburne.edu.au/ltas/plagiarism/index.html (vi) You should use the Harvard System for citations, quotations and references. PART A (Answer any one question from this part) 1. (a) By assuming procurement/ project delivery for a major infrastructure project (e.g. energy or roads or water) in a particular region, prepare your risk assessment report and â€˜Bowtie risk analysisâ€™ for any one of following scenarios: I. The main contractor becomes insolvent e.g. after 65% of project deliverables/ milestones have been completed II. A major specialist sub-contractor becomes insolvent during a critical stage of project delivery (b) Assume that your organization is planning for transformation by adopting novel/ disruptive technologies to enhance competitive advantages. You are required to prepare a SWOT (i.e. Strengths, Weaknesses, Opportunities, and Threats) analysis report for any one of following: I. 3D Printing II. LIFI and Visible Light Communication 2. Provide a risk assessment report for the ageing infrastructure in (i) a transport sector OR (ii) a manufacturing industry. Also, discuss your suggestions for the risk treatment (Potential references: http://www.dhs.gov/xlibrary/assets/st-aging-infrastructure-issues-research-technology.pdf http://infrastructureaustralia.gov.au/policy-publications/publications/files/Australian-Infrastructure-Audit-Volume-1.pdf https://infrastructure.gov.au/infrastructure/publications/files/Trends_Infrastructure_and_Transport_to_2030.pdf https://www.oracle.com/webfolder/s/delivery_production/docs/FY15h1/doc15/Benchmarking-Tool-Infographic.pdf) CSM80009 Procurement and Risk Management in Projects â€“ Assignment (Submission deadline: 06-10-2017, 5:00PM) Please return your answers to Dr. Ekambaram Palaneeswaran, email: [email protected] Page2 PART B (Answer any one question from this part) 3. In a major bridge project, the public-sector client decided to select a â€˜best valueâ€™ Design-Build contractor through â€œprice + non-priceâ€ assessments and time value adjustments. Five Design-Build contractors are prequalified in this project. The â€˜best valueâ€™ selection is based on following formula: Selection score of a contractor proposal = (Price proposal + â€˜Time valueâ€™ penalty adjustment)/ Technical score The prequalified contractor with lowest â€˜selection scoreâ€™ will be selected as the â€˜Best Valueâ€™ proposer. The client estimate for time is 375 days. For each extra day exceeding client estimate, the time value adjustment per day = $250,000. (For example, if a contractor proposal require 377 days, time value penalty adjustment = $500,000; if a contractor submits for 350 days, the time value penalty adjustment = 0). Following table summarizes details of four prequalified Design-Build contractors in this project: Prequalified contractor Technical proposal score Price proposal (in $) Time (days) Alpha Associates 75.9 276,940,000 369 Beta Builders 89.5 334,000,000 435 Gamma Constructions 58.1 278,278,500 395 Delta Design-Builders 84.9 318,900,000 404 Theta Master Builders 78.9 344,850,000 377 (i) Select a best value Design-Build contractor for this project. (ii)Discuss your strategy if you would consider a â€œBest and Final Offerâ€ process in this project. (iii) As a part of project contract, the client makes nominated supply arrangements for solar panels to be fitted by the selected contractor. Suppose that an overseas supplier provides 70% of solar panels and a local supplier provides 30% of solar panels in this project. In your inspections it is further identified that 2.5% of solar panels supplied by the overseas supplier are defective and 1.5% of solar panels supplied by local supplier are defective. (i) What is the probability that a solar panel unit is both defective and supplied by the overseas supplier; (ii) What is the same probability for local supplier? CSM80009 Procurement and Risk Management in Projects â€“ Assignment (Submission deadline: 06-10-2017, 5:00PM) Please return your answers to Dr. Ekambaram Palaneeswaran, email: [email protected] Page3 4. In a supplier selection case, the assessment details for four suppliers are: Supplier selection criteria (weighting) Sub-criteria Assessment scores (scale: 0 to 100) Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5 Cost (40%) Cheaper price (25%) 80 80 70 80 75 Better discount (5%) 100 60 90 100 70 Billing flexibility (10%) 70 60 100 60 90 Time (20%) Timely delivery (10%) 80 50 60 100 100 Capability to meet additional demands (6%) 90 50 80 80 100 Flexible delivery (4%) 90 50 90 80 70 Quality (30%) Compliance with design & specifications (20%) 60 70 100 75 90 Replacement of defective & damaged (5%) 50 60 80 70 90 Quality assurance & warranty (5%) 50 70 80 90 80 After Supply Services and Warranties (10%) Pre & post-sales customer support (2%) 70 50 60 80 80 Logistics capacity for delivery (2%) 100 40 50 90 90 Performance track-record (2%) 80 40 100 60 90 Reputation, brand/image value (2%) 100 50 80 50 30 Relationship (2%) 60 50 100 50 90 (i) By using a simple additive weighted scoring, you are required to select a best supplier. (ii) Conduct a sensitivity analysis for criteria weightings adjustment as below: i.e. (a) What IF: increasing â€œcostâ€ weighting by 5% and decreasing â€œtimeâ€ weighting by 5% while keeping the â€œqualityâ€ weighting unchanged; (b) What IF: increasing â€œQualityâ€ weighting by 10% and decreasing â€œcostâ€ weighting by 5% and â€œtimeâ€ weighting by 5% [Hint: You shall consider relevant sub-criteria weight adjustments to match this 5% sensitivity analysis] (iii) Discuss your tie-breaking strategies in the supplier selections for a manufacturing company. (iv) Assume that your top management subsequently recommends for further â€œBest and Final Offerâ€ negotiation in this supplier selection. Discuss your recommendation for the process of negotiated source selection in this regard.