SCHOOL OF ENGINEERING. BSc(HONS) IN QUANTITY SURVEYING & COMMERCIAL MANAGEMENT SEMESTER 1 EXAMINATION 2015/2016 RISK AND VALUE MANAGEMENT

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1 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: 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.

2 Page 2 of 12 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

3 Page 3 of 12 Question 1 continued Document 2 HEATING INSTALLATIONS A A1 DESIGN 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 B B1 B2 C C1 C2 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. SCOPE OF WORK 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. Associated Works: please note that electrical works and hot and cold water services are covered elsewhere in the specification. PRODUCTION AREA HEATING AND GAS INSTALLATION 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. 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 over page

4 Page 4 of 12 Question 1 continued C3 C4 C5 C6 C7 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. Painting: include for painting and colour coding of pipework. Flues: warm air heating: include for a single skin, stainless steel fuel from each heater to incorporate necessary flue sections, bends and approval terminal. 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. Warm air heaters: these are to be ITT Reznor or of equal or superior specification. All heaters must conform to the following: (a) (b) (c) (d) (e) C8 C9 C10 Aluminised heat exchanger Two stage Hi/Lo burner Single phase 240V motor Vertical louvres Suitable for propane gas 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. 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. 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 over page

5 Page 5 of 12 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 D2 D3 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. The above specification is to be read in conjunction with the drawings. Approved Companies: the whole of the gas heating installation must be carried out by a contractor approved by the Architect. Item ELEMENT 5.E - HEATING INSTALLATIONS SUB-ELEMENT 2.A.A. - INFORMATION PLANT AND PROTECTION GENERALLY Information Document 3C HEATING INSTALLATIONS A B C 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 Plant allow for bringing to site and removing from site all plant required for this element allow for maintaining on site all plant required for this element item item item Question 1 continued over page

6 Page 6 of 12 Question 1 continued 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, F gas-fired heating in production areas including control panels 6 Nr 11, G painting gas pipework and brackets 6 Nr To page 5/72 14, Unit Nrs 3, 4,5,8,11,12 and 13 P A gas distribution services 7 Nr 2, B gas-fired heating in production areas including control panels 7 Nr 11, C painting gas pipework and brackets 7 Nr SUNDRIES Preparing as fitted drawings to show Question 1 continued over page

7 Page 7 of 12 Question 1 continued D all installations; two negative copies item s... To Collection 14, COLLECTION From page 5/71 14, From page 5/72 14, TOTAL TO SUMMARY 28,725.00

8 Page 8 of 12 5/72 Document 3D NEWTOWN HEATING ENGINEERS LTD Mechanical and Electrical Contractors Sparks Lane, Littletown, PG10 8PS To: QUOTATION 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 , b. oil-fired floor mounted heaters in production areas including controls 6 Nr 2, , c. oil storage tank 6 Nr , Small Units a. oil distribution services 7 Nr 400 2, b. oil-fired floor mounted heaters in production areas including controls 7 Nr 1, , c. oil storage tank 7 Nr , Sub Total 41, VAT 4, (Include main contractor s discount) Total 45, Question 1 continued over page

9 Page 9 of 12 Question 1 continued NOTE OF TELEPHONE CONVERSATION Document 3E Indicative Costings from Newtown Heating Engineers November 2006 Maintenance Gas Oil annual charge per unit (large) annual charge per unit (small) Replacement costs burner unit (after 5 years) burner unit (after 8 years) pump (oil only) Fuel costs per annum (approx.) based on 2,000 hrs pa (large) based on 2,000 hrs pa (small) Please turn the page

10 Page 10 of 12 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 Please turn the page

11 Page 11 of 12 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 ,250,000 Additional track renewal ,200,000 Bridge renewal ,075,000 It is almost certain that the following additional work in a range will be required: Items of work HSE additional trackside precautions Revisions to specifications Additional track ballast disposal Additional track ballast decontamination Additional weekend rail closures 50% Confidence level 90% Confidence level 185, , , ,000 75, ,000 1,250,000 2,125, , ,000 (25 Marks) Please turn the page

12 Page 12 of 12 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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