Possible remedial actions during budget reduction - Revision history

Editor at 13:31, 18 August 2022

2022-08-18T13:31:18Z

← Older revision		Revision as of 13:31, 18 August 2022
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	To help develop this article, click 'Edit this article' above.		To help develop this article, click 'Edit this article' above.

−	= ~~INTRODUCTION~~ =	+	= Introduction =

	This article will evaluate the potential risks that might affect project financing/budgeting along with examples from personal experience and possible remedial measures if a project is subject to a budget reduction during each of the strategy and implementation stages.		This article will evaluate the potential risks that might affect project financing/budgeting along with examples from personal experience and possible remedial measures if a project is subject to a budget reduction during each of the strategy and implementation stages.
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	Published by ROMAN GORYAINOV.		Published by ROMAN GORYAINOV.

−	= ~~PROJECT FINANCING DEFICIT AND BUDGET REDUCTIONS~~ =	+	= Project financing deficit and budget reductions =

	Factors like recession, inflation, changes in government regulation, political instability and so on can negatively impact the financing of ongoing projects (both international and domestic).		Factors like recession, inflation, changes in government regulation, political instability and so on can negatively impact the financing of ongoing projects (both international and domestic).
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	Negative effects on the ongoing project's financing can cause budget deficits that may require halting the project or undertaking remedial measures.		Negative effects on the ongoing project's financing can cause budget deficits that may require halting the project or undertaking remedial measures.

−	== ~~POSSIBLE RISKS~~ ==	+	== Possible risks ==

	Yescombe (2002) divides risk into tree main categories:		Yescombe (2002) divides risk into tree main categories:
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	* Political – related to the effects of government action or political force majeure events (Yescombe 2002) , such as investment risks and change of law risk		* Political – related to the effects of government action or political force majeure events (Yescombe 2002) , such as investment risks and change of law risk

−	== ~~EXAMPLE~~ ==	+	== Example ==

	More than 70 % of the income in to the Azerbaijan Republic economy depends on Oil and Gas prices that significantly decreased during the period of 2014 – 2015. Due to low prices, the local economy experienced major budget deficits that forced the government to devalue the local currency (Azerbaijan New Manat).		More than 70 % of the income in to the Azerbaijan Republic economy depends on Oil and Gas prices that significantly decreased during the period of 2014 – 2015. Due to low prices, the local economy experienced major budget deficits that forced the government to devalue the local currency (Azerbaijan New Manat).
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	Differences in exchange rates also affected many ongoing Projects as more than 80 % of all materials and equipment that were being used in the local Projects were procured from abroad.		Differences in exchange rates also affected many ongoing Projects as more than 80 % of all materials and equipment that were being used in the local Projects were procured from abroad.

−	= ~~REMEDIAL MEASURES~~ =	+	= Remedical measures =

	Budget reduction might be requested during any stage of a Project and remedial measures that will be implemented will be directly dependent on the current Project stage.		Budget reduction might be requested during any stage of a Project and remedial measures that will be implemented will be directly dependent on the current Project stage.

−	== ~~STRATEGY STAGE~~ ==	+	== Strategy stage ==

	In the Strategy stage projects are flexible in terms of accommodating changes. The following remedial measures are suggested to be implemented by Project Manager:		In the Strategy stage projects are flexible in terms of accommodating changes. The following remedial measures are suggested to be implemented by Project Manager:
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	* The contractor is able to use their experience and expertise in providing a design that allows them to procure materials and services which give the best margins.		* The contractor is able to use their experience and expertise in providing a design that allows them to procure materials and services which give the best margins.

−	== ~~IMPLEMENTATION STAGE~~ ==	+	== Implementaton stage ==

	Reduction of the budget during the construction stage of the project is a major risk that can significantly impact project implementation, however if a budget were subject to a reduction, the following remedial measures are suggested:		Reduction of the budget during the construction stage of the project is a major risk that can significantly impact project implementation, however if a budget were subject to a reduction, the following remedial measures are suggested:
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	Offsite fabrication can be an efficient way of relocating activities. Priority can be given to local facilities to reduce transportation / shipping costs.		Offsite fabrication can be an efficient way of relocating activities. Priority can be given to local facilities to reduce transportation / shipping costs.

−	= ~~CONCLUSION~~ =	+	= Conclusion =

	It is clear that any reduction of the estimated project budget during any stage of the project will require the implementation of remedial and preventative measures to minimise effects that in the worst cases can cause project failure.		It is clear that any reduction of the estimated project budget during any stage of the project will require the implementation of remedial and preventative measures to minimise effects that in the worst cases can cause project failure.
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	It can be beneficial to undertake a study that defines possible remedial measures and their effectiveness. However, implementation of the Risk Management process at the early stages of the project is strongly advised due to it's effectiveness if properly undertaken to identify potential risks and plan response actions before they occur.		It can be beneficial to undertake a study that defines possible remedial measures and their effectiveness. However, implementation of the Risk Management process at the early stages of the project is strongly advised due to it's effectiveness if properly undertaken to identify potential risks and plan response actions before they occur.

−	= ~~REFERENCES~~ =	+	= External references =

	* Urmila A Mahadik, September 2015, Volume 3,. Cost Reduction in Construction Projects. International Journal of Engineering Technology, Management and Applied Sciences, pp.397-400.		* Urmila A Mahadik, September 2015, Volume 3,. Cost Reduction in Construction Projects. International Journal of Engineering Technology, Management and Applied Sciences, pp.397-400.

Designing Buildings at 07:14, 25 November 2020

2020-11-25T07:14:12Z

← Older revision		Revision as of 07:14, 25 November 2020
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	It can be beneficial to undertake a study that defines possible remedial measures and their effectiveness. However, implementation of the Risk Management process at the early stages of the project is strongly advised due to it's effectiveness if properly undertaken to identify potential risks and plan response actions before they occur.		It can be beneficial to undertake a study that defines possible remedial measures and their effectiveness. However, implementation of the Risk Management process at the early stages of the project is strongly advised due to it's effectiveness if properly undertaken to identify potential risks and plan response actions before they occur.
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	= REFERENCES =		= REFERENCES =
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	* VECES LEÍDA ,2014. Tips on cutting costs in the construction industry. [Online]. Available from: [http://www.ecoticias.com/bio-construccion/94035/Tips-cutting-costs-construction-industry http://www.ecoticias.com/bio-construccion/94035/Tips-cutting-costs-construction-industry];		* VECES LEÍDA ,2014. Tips on cutting costs in the construction industry. [Online]. Available from: [http://www.ecoticias.com/bio-construccion/94035/Tips-cutting-costs-construction-industry http://www.ecoticias.com/bio-construccion/94035/Tips-cutting-costs-construction-industry];

−	[[Category:~~Education~~]] [[Category:~~DCN_Education_and_Training~~]] [[Category:International]] [[Category:Projects_and_case_studies~~]] [[Category:DCN_Project_Knowledge~~]] [[Category:Publications_/_reports]] [[Category:Construction_management]] [[Category:Cost_/_business_planning]]	+	[[Category:DCN_Commentary]] [[Category:Education]] [[Category:International]] [[Category:Projects_and_case_studies]] [[Category:Publications_/_reports]] [[Category:Construction_management]] [[Category:Cost_/_business_planning]]

Designing Buildings at 12:57, 19 July 2016

2016-07-19T12:57:59Z

← Older revision		Revision as of 12:57, 19 July 2016
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		+	To help develop this article, click 'Edit this article' above.
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	= INTRODUCTION =		= INTRODUCTION =

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	* VECES LEÍDA ,2014. Tips on cutting costs in the construction industry. [Online]. Available from: [http://www.ecoticias.com/bio-construccion/94035/Tips-cutting-costs-construction-industry http://www.ecoticias.com/bio-construccion/94035/Tips-cutting-costs-construction-industry];		* VECES LEÍDA ,2014. Tips on cutting costs in the construction industry. [Online]. Available from: [http://www.ecoticias.com/bio-construccion/94035/Tips-cutting-costs-construction-industry http://www.ecoticias.com/bio-construccion/94035/Tips-cutting-costs-construction-industry];

−	[[Category:Education]] [[Category:International]] [[Category:Projects_and_case_studies]] [[Category:Publications_/_reports]] [[Category:Construction_management]] [[Category:Cost_/_business_planning]]	+	[[Category:Education]] [[Category:DCN_Education_and_Training]] [[Category:International]] [[Category:Projects_and_case_studies]] [[Category:DCN_Project_Knowledge]] [[Category:Publications_/_reports]] [[Category:Construction_management]] [[Category:Cost_/_business_planning]]

Designing Buildings: Removed protection from "Possible remedial actions during budget reduction"

2016-07-19T12:57:31Z

Removed protection from "Possible remedial actions during budget reduction"

← Older revision

Revision as of 12:57, 19 July 2016

Designing Buildings at 12:57, 19 July 2016

2016-07-19T12:57:17Z

← Older revision		Revision as of 12:57, 19 July 2016
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	=== Construction Procurement route: ===		=== Construction Procurement route: ===

−	Procurement routes can influences project costs.	+	Procurement routes can influences project costs. A Design & Build procurement route can have the following advantages:

−	~~Considering budget reduction requirements, it would be suggested to proceed with Design & Build procurement route, due to the following advantages:~~	+	* Lack of contractor input can result in a number of change orders during the implementation / construction stage. Design & Build procurement route allows early input of the construction contractor in to design, specification development, buildability review, and planning of traffic control.
−		+	* This option may have a reduced programme as design & construction activities can be undertaken in parallel and there is greater potential to save time and reduce costs.
−	* Lack of contractor input can result in a number of change orders during the implementation / construction stage. Design & Build procurement route allows early input of the construction contractor in to design, specification development, ~~constructability~~ review, and planning of traffic control.	+	* The contractor is able to use their experience and expertise in providing a design that allows them to procure materials and services which give the best margins.
−	* This option ~~will~~ have a ~~significant~~ reduced programme as design & construction activities can be undertaken in a parallel ~~manner~~ and ~~has~~ greater potential to save time and reduce ~~cost~~	+
−	* ~~A construction~~ contractor able to use ~~his~~ experience and expertise in providing a design that allows ~~him~~ to procure materials and services which ~~allows him to obtain~~ the best ~~buying~~ margins~~, the design and build procurement route can be more cost effective and can provide more cost (RICS Guidance notes~~.)	+

	== IMPLEMENTATION STAGE ==		== IMPLEMENTATION STAGE ==

−	Reduction of the budget during the construction stage of the project is a major risk that ~~if occurs will~~ significantly impact project implementation, however ~~in case~~ if a budget were subject to reduction following remedial measures are suggested ~~to be implemented~~:	+	Reduction of the budget during the construction stage of the project is a major risk that can significantly impact project implementation, however if a budget were subject to a reduction, the following remedial measures are suggested:

	=== Project time schedule; ===		=== Project time schedule; ===

−	Developing a detailed and a comprehensive schedule for construction projects can save ~~a lot of~~ time and money during the implementation stage. Therefore, it is suggested to develop more detailed schedules (Level 5 schedule) and highlight and concentrate on critical path activities.	+	Developing a detailed and a comprehensive schedule for construction projects can save time and money during the implementation stage. Therefore, it is suggested to develop more detailed schedules (Level 5 schedule) and highlight and concentrate on critical path activities.

	=== Procurement; ===		=== Procurement; ===

−	~~As of personal experience, procurement~~ and logistics ~~are often becoming a~~ main ~~factor~~ that delays the construction schedule, which subsequently increases project costs as any delay causes downtime / standby of labour and equipment. ~~Following~~ actions suggested ~~to be considered~~:	+	Procurement and logistics can be one of the main factors that delays the construction schedule, which subsequently increases project costs as any delay causes downtime / standby of labour and equipment. The following actions are suggested:

−	* Begin procurement process early for all imported and long lead time materials;	+	* Begin the procurement process early for all imported and long lead time materials;
−	* Priority ~~shall~~ be given to locally available materials;	+	* Priority should be given to locally available materials;
−	* Material ~~requirement shall~~ be planned ahead and communicated to suppliers.	+	* Material requirements should be planned ahead and communicated to suppliers.

	=== Labour: ===		=== Labour: ===

−	As already highlighted ~~in Section 3.1~~, labour holds a major part of the project costs, ~~where~~ poor performance of labour can significantly affect construction schedules and increase cost, therefore employee productivity should be increased and efficiency maximised by setting deadlines and providing daily targets.	+	As already highlighted, labour holds a major part of the project costs, and poor performance of labour can significantly affect construction schedules and increase cost, therefore employee productivity should be increased and efficiency maximised by setting deadlines and providing daily targets.

	=== Rework: ===		=== Rework: ===

−	~~Any rework leads to~~ the ~~prolonged~~ schedule and ~~requires~~ extra ~~expenditures~~, such material and labour ~~man-hours~~. Preventing or minimising rework is an effective solution for cost saving.	+	Rework can prolong the schedule and require extra expenditure, such as material and labour. Preventing or minimising rework is an effective solution for cost saving.

−	~~As stated in Section 3.1, using of~~ Building Information Models during the design stage could be an efficient tool for cost reduction in implementation stage if the project as it will ~~aim in~~ early identification of clashes. ~~It is suggested to perform constructability~~ reviews with ~~all~~ relevant disciplines and contractors ~~prior to start~~ construction works ~~at the site~~ to identify any potential areas of concern.	+	Using Building Information Models during the design stage could be an efficient tool for cost reduction in implementation stage of the project as it will allow early identification of clashes. Buildability reviews can be undertaken with relevant disciplines and contractors before starting construction works to identify any potential areas of concern.

	Hiring of an experienced contractor can also avoid rework.		Hiring of an experienced contractor can also avoid rework.

−	=== ~~Reused~~ demolition material ===	+	=== Reuse demolition material ===

−	Utilisation of demolished materials, such as concrete debris, instead of importing and disposing of new materials, for example, in construction of temporary roads or for soil stabilisation ~~could be considered~~.	+	Utilisation of demolished materials, such as concrete debris, instead of importing and disposing of new materials, for example, in the construction of temporary roads or for soil stabilisation.

	=== Equipment: ===		=== Equipment: ===

−	~~Another area that could be considered, depending~~ on project ~~scales~~, is hiring of equipment instead of buying ~~it for full cost. In this case, cost saving is also achieved by keeping of~~ fuel, maintenance and other associated costs ~~under lessors responsibilities~~.	+	Depending on project scale, hiring of equipment instead of buying can reduce fuel, maintenance and other associated costs.

	=== Discounts: ===		=== Discounts: ===

−	It is always worth ~~to ask~~ for a discount from material suppliers and service providers. Most of them will agree to reduce up to 10-15% of total costs to build up long term cooperation / supply-agreement.	+	It is always worth asking for a discount from material suppliers and service providers. Most of them will agree to reduce up to 10-15% of total costs to build a long term cooperation / supply-agreement.

	=== Offsite fabrication: ===		=== Offsite fabrication: ===

−	Offsite fabrication ~~is one of the~~ efficient ~~measures to relocate part~~ of activities ~~the external facilities~~. ~~While researching for the fabrication facilities for example to fabricate steel structure columns, priorities could~~ be given to ~~the~~ local facilities ~~that are located not far from the construction site. This approach could~~ reduce transportation / shipping ~~cost of the materials~~.	+	Offsite fabrication can be an efficient way of relocating activities. Priority can be given to local facilities to reduce transportation / shipping costs.

	= CONCLUSION =		= CONCLUSION =

−	It is clear that any ~~reductions~~ of the estimated project budget during any stage of the project will require implementation of remedial and preventative measures to minimise ~~the effect~~ that in ~~worth~~ cases ~~will~~ cause project failure.	+	It is clear that any reduction of the estimated project budget during any stage of the project will require the implementation of remedial and preventative measures to minimise effects that in the worst cases can cause project failure.

−	~~Considering that all projects are different in their environment it is suggested~~ to ~~perform~~ study ~~to define~~ possible remedial measures and their effectiveness ~~in case if they will require be applied~~. However, implementation of the Risk Management process at the early stages of the project is strongly advised due to it's ~~an effective tool that~~ if properly ~~maintained will aim in early identification of any~~ potential risks ~~that are associated with a project budget along with other project areas~~ and plan ~~for~~ response actions ~~to the potential risks prior their occurrence~~.	+	It can be beneficial to undertake a study that defines possible remedial measures and their effectiveness. However, implementation of the Risk Management process at the early stages of the project is strongly advised due to it's effectiveness if properly undertaken to identify potential risks and plan response actions before they occur.

Designing Buildings at 12:44, 19 July 2016

2016-07-19T12:44:41Z

← Older revision		Revision as of 12:44, 19 July 2016
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	= INTRODUCTION =		= INTRODUCTION =

−	This article will evaluate the potential risks that might affect ~~the~~ project financing/budgeting along with ~~the example~~ from personal experience and possible remedial measures ~~that are suggested to be implemented in case~~ if ~~the~~ project ~~was~~ subject to a budget reduction during each of the strategy and implementation ~~stage~~.	+	This article will evaluate the potential risks that might affect project financing/budgeting along with examples from personal experience and possible remedial measures if a project is subject to a budget reduction during each of the strategy and implementation stages.

	Published by ROMAN GORYAINOV.		Published by ROMAN GORYAINOV.
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	= PROJECT FINANCING DEFICIT AND BUDGET REDUCTIONS =		= PROJECT FINANCING DEFICIT AND BUDGET REDUCTIONS =

−	Factors like recession, inflation, changes in government regulation, political ~~stability~~ and ~~others are often~~ negatively ~~impacting~~ financing of ~~the~~ ongoing ~~Projects and/or Projects~~ (both international and domestic) ~~that are under initiation processes~~.	+	Factors like recession, inflation, changes in government regulation, political instability and so on can negatively impact the financing of ongoing projects (both international and domestic).

−	Negative ~~effect~~ on the ongoing project's financing ~~will potentially end up with budgeting~~ deficits that ~~will subsequently~~ require ~~either to stop~~ the project or ~~undertake possible and applicable to the specific Project stages,~~ remedial measures.	+	Negative effects on the ongoing project's financing can cause budget deficits that may require halting the project or undertaking remedial measures.

	== POSSIBLE RISKS ==		== POSSIBLE RISKS ==
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	Yescombe (2002) divides risk into tree main categories:		Yescombe (2002) divides risk into tree main categories:

−	* Commercial – those inherent in the project itself or the market it operates in. Sub-components of the commercial risks are expanded by the Yescombe (2002) as: commercial viability , completion, environmental, revenue and force majeure risks;	+	* Commercial – those inherent in the project itself or the market it operates in. Sub-components of the commercial risks are expanded by the Yescombe (2002) as: commercial viability , completion, environmental, revenue and force majeure risks.
−	* Macro-economic – financial risks or economic effects not directly related to the project , such as inflation , interest ~~rate~~ and exchange rate risks	+	* Macro-economic – financial risks or economic effects not directly related to the project , such as inflation , interest rates and exchange rate risks.
−	* Political – related to the effects of ~~the~~ government ~~actions~~ or political force majeure events (Yescombe 2002) , such as investment risks and change of law risk	+	* Political – related to the effects of government action or political force majeure events (Yescombe 2002) , such as investment risks and change of law risk

	== EXAMPLE ==		== EXAMPLE ==

−	~~Following example is given to supporting indicated~~ in ~~above Section 2~~.~~1 possible risks:~~	+	More than 70 % of the income in to the Azerbaijan Republic economy depends on Oil and Gas prices that significantly decreased during the period of 2014 – 2015. Due to low prices, the local economy experienced major budget deficits that forced the government to devalue the local currency (Azerbaijan New Manat).

−	~~More than 70 % of the income in~~ to the ~~Azerbaijan Republic economy depends on~~ the ~~Oil and Gas prices~~ that were ~~significantly decreased during the period~~ of ~~2014 – 2015. Due to low prices,~~ the ~~local economy~~ was ~~expressed major budget deficits that forced the government~~ to ~~devaluate~~ the ~~local currency (Azerbaijan New Manat~~) ~~that affected increasing of exchange rate against US Dollar up to 102%~~.	+	Due to the budget deficit, most of the government funded Projects being initiated were suspended. Projects that were under construction also experienced a significant budget deficit which required undertaking remedial measures such as changing material specifications (in our project, for example, specification of the site run cable trays was changed from stainless steel to the galvanised steel which is approximately 75% cheaper).

−	Due to the budget deficit, most of the government funded multimillion dollar Projects that were under initiation stage was suspended. Projects that were under construction also expressed a significant budget deficit which required undertaking such type of remedial measures as changing of material specifications with possible minimum effect to the quality (in our project , for example, specification of the site run cable trays has been changed from the stainless steel to the galvanised steel which is approximately 75% cheaper).	+	Differences in exchange rates also affected many ongoing Projects as more than 80 % of all materials and equipment that were being used in the local Projects were procured from abroad.
−		+
−	Differences in exchange rates ~~were~~ also ~~significantly~~ affected many ongoing Projects as more ~~that~~ 80 % of all materials and equipment that being used in the local Projects ~~being~~ procured from abroad.	+

	= REMEDIAL MEASURES =		= REMEDIAL MEASURES =

−	~~As stated in Section 2, budged~~ reduction might be requested during any stage of ~~the~~ Project and remedial measures that will be implemented will be directly ~~depending~~ on the current Project stage.	+	Budget reduction might be requested during any stage of a Project and remedial measures that will be implemented will be directly dependent on the current Project stage.

	== STRATEGY STAGE ==		== STRATEGY STAGE ==

−	~~Due to~~ the Strategy stage of ~~project is considerable flexible for~~ accommodating ~~of any~~ changes~~, therefore, considering that the Project was subject to 20 % budget reduction,~~ following remedial measures are suggested to be implemented by Project Manager:	+	In the Strategy stage projects are flexible in terms of accommodating changes. The following remedial measures are suggested to be implemented by Project Manager:

	=== Design and Quality Specifications: ===		=== Design and Quality Specifications: ===

−	Design and material specifications are one of the major factors that are affecting the total cost of construction and future facility operation and maintenance costs. Selection of alternate designs and materials might represent a potentially viable cost saving strategy; however following recommendations are suggested ~~to be considered~~:	+	Design and material specifications are one of the major factors that are affecting the total cost of construction and future facility operation and maintenance costs. Selection of alternate designs and materials might represent a potentially viable cost saving strategy; however the following recommendations are suggested:

−	* Incorporating of materials with better quality ~~that~~ will promote a longer life ~~cycle~~ and reduce future maintenance costs;	+	* Incorporating materials with better quality will promote a longer life and reduce future maintenance costs;
−	* ~~Usage~~ of BIM models that will allow identification of all potential clashes during design stage. This option will require some spending for hiring and/or training ~~of the~~ project stuff and obtaining of required software, but it still will be cost efficient for the implementation stage as ~~no rework~~ will be required;	+	* Use of BIM models that will allow identification of all potential clashes during design stage. This option will require some spending for hiring and/or training project stuff and obtaining of required software, but it still will be cost efficient for the implementation stage as less reworking will be required;

	=== Project Scope: ===		=== Project Scope: ===

−	While reviewing of Design and Quality ~~specification~~ it is also suggested to review Project scope to identify “nice to have” areas which could be removed from the construction programme.	+	While reviewing Design and Quality, it is also suggested to review the Project scope to identify “nice to have” areas which could be removed from the construction programme.

−	For example, during selection of project site ~~priorities~~ could be given to areas with the existing access ~~road~~, as in such case construction of the new access road could be removed from scope.	+	For example, during the selection of project site, priority could be given to areas with the existing access roads, as in such case construction of the new access road could be removed from scope.

	=== Project team; ===		=== Project team; ===

−	It is well known that most significant costs in construction projects are ~~generally~~ associated with labour ratios. As the Strategy stage is the stage where project teams are ~~only~~ being formed following options are suggested to be considered ~~in case if cost saving will be required~~:	+	It is well known that most significant costs in construction projects are associated with labour ratios. As the Strategy stage is the stage where project teams are being formed, the following options are suggested to be considered:

	* Hire employees from areas close to the construction site to minimise transportation costs;		* Hire employees from areas close to the construction site to minimise transportation costs;
	* In cases when specific training will be required, it is suggested to obtain training for one of the supervision personnel that could direct and provide instructions to others in the future;		* In cases when specific training will be required, it is suggested to obtain training for one of the supervision personnel that could direct and provide instructions to others in the future;
−	* Employment of part-time or temporary staff ~~will aim to~~ achieve long-term cost savings by ~~reduce~~ costs related to employment benefits that would have to be paid for full-time project staff;	+	* Employment of part-time or temporary staff may achieve long-term cost savings by reducing costs related to employment benefits that would have to be paid for full-time project staff;
−	* Priority shall be given ~~only~~ to ~~the~~ experienced personnel.	+	* Priority shall be given to experienced personnel.

	=== Site conditions: ===		=== Site conditions: ===

−	Site conditions such as poor soil, contaminated materials, utilities such as underground pipelines and cables, overhead lines, ground water, archaeological sites and etc. ~~shall~~ be clearly identified in design documents as any unidentified utilities can increase the project cost during the construction stage.	+	Site conditions such as poor soil, contaminated materials, utilities such as underground pipelines and cables, overhead lines, ground water, archaeological sites and etc. should be clearly identified in design documents as any unidentified utilities can increase the project cost during the construction stage.

	=== Construction Procurement route: ===		=== Construction Procurement route: ===

−	Procurement ~~route could be another factor that~~ influences project costs.	+	Procurement routes can influences project costs.

	Considering budget reduction requirements, it would be suggested to proceed with Design & Build procurement route, due to the following advantages:		Considering budget reduction requirements, it would be suggested to proceed with Design & Build procurement route, due to the following advantages:

Roman Goryainov at 18:51, 3 July 2016

2016-07-03T18:51:42Z

← Older revision		Revision as of 18:51, 3 July 2016
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	= INTRODUCTION =		= INTRODUCTION =

−	This article will evaluate the potential risks that might affect the project financing/budgeting along with the example from personal experience and possible remedial measures that are suggested to be implemented in case if the project was subject to a ~~20%~~ budget reduction during each of the strategy and implementation stage.	+	This article will evaluate the potential risks that might affect the project financing/budgeting along with the example from personal experience and possible remedial measures that are suggested to be implemented in case if the project was subject to a budget reduction during each of the strategy and implementation stage.

	Published by ROMAN GORYAINOV.		Published by ROMAN GORYAINOV.
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	Factors like recession, inflation, changes in government regulation, political stability and others are often negatively impacting financing of the ongoing Projects and/or Projects (both international and domestic) that are under initiation processes.		Factors like recession, inflation, changes in government regulation, political stability and others are often negatively impacting financing of the ongoing Projects and/or Projects (both international and domestic) that are under initiation processes.

−	Negative effect on the ongoing ~~project’s~~ financing will potentially end up with budgeting deficits that will subsequently require either to stop the project or undertake possible and applicable to the specific Project stages, remedial measures.	+	Negative effect on the ongoing project's financing will potentially end up with budgeting deficits that will subsequently require either to stop the project or undertake possible and applicable to the specific Project stages, remedial measures.

	== POSSIBLE RISKS ==		== POSSIBLE RISKS ==
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	It is clear that any reductions of the estimated project budget during any stage of the project will require implementation of remedial and preventative measures to minimise the effect that in worth cases will cause project failure.		It is clear that any reductions of the estimated project budget during any stage of the project will require implementation of remedial and preventative measures to minimise the effect that in worth cases will cause project failure.

−	Considering that all projects are different in their environment it is suggested to perform study to define possible remedial measures and their effectiveness in case if they will require be applied. However, implementation of the Risk Management process at the early stages of the project is strongly advised due to ~~it’s~~ an effective tool that if properly maintained will aim in early identification of any potential risks that are associated with a project budget along with other project areas and plan for response actions to the potential risks prior their occurrence.	+	Considering that all projects are different in their environment it is suggested to perform study to define possible remedial measures and their effectiveness in case if they will require be applied. However, implementation of the Risk Management process at the early stages of the project is strongly advised due to it's an effective tool that if properly maintained will aim in early identification of any potential risks that are associated with a project budget along with other project areas and plan for response actions to the potential risks prior their occurrence.

Roman Goryainov: Protected "Possible remedial actions during budget reduction" ([edit=author] (indefinite))

2016-07-02T09:03:38Z

Protected "Possible remedial actions during budget reduction" ([edit=author] (indefinite))

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Revision as of 09:03, 2 July 2016

Roman Goryainov at 18:53, 1 July 2016

2016-07-01T18:53:53Z

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	= INTRODUCTION =		= INTRODUCTION =

Roman Goryainov at 18:52, 1 July 2016

2016-07-01T18:52:51Z

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	= INTRODUCTION =		= INTRODUCTION =