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This assignment comprises 3 tasks as shown in the following sections.You are required to complete all parts of the assignment as detailed.

Carry out budgeting, cash flow analysis and forecasting for a real life project.

This assignment requires you to leverage your fact-finding and communication skills to research and report on the approaches taken by industry practitioners in carrying out the scheduling and cost management functions on real life projects. Preparing report will require you to do the following:

1- Find a practitioner in medium - or large-size construction firm who will be willing to take you through the approaches they use in carrying out the specified tasks for this assignment. You should be talking to a construction project manager/planner or a quantity surveyor/cost manager about one real construction project.

2- Record the lessons you receive from the practitioner and later convert these into a report. The focus should be on the key tasks listed below.

3-Obtain samples of the documents the practitioner used as illustrations. you could also ask the practitioner to block out any revealing details about the project such as the client or the contractor.

As the outcome of your consultation with a project manager/ project planner/ quantity surveyor/ cost manager, you are required to submit a report on the industry approach to project planning, budgeting, scheduling, estimating, monthly cash flow analysis/ forecasting, cost-budget reconciliation, cost control and reporting, tracking and control of project completion time for one completed real life project in NZ. Make sure all requested information/documents are available for selected project. Your report should be focused on the following aspects (which are also detailed in the attached Marking Scheme):

You need to introduce project in one page with a table of below information:

Required Information: Project Type (residential/ commercial/…any type but renovation project) + location (region) + Gross Floor Area (GFA-m2) + Number of stories + Contract type + Project team roles and responsibilities.sh date with resources and budget assigned if it is available) + monthly payment sheet + project monthly report.

Project Information

Project Information of the New Zealand International Convention Centre

The project that has been selected for conducting this study is the New Zealand International Convention Centre, which was initiated by SkyCity Entertainment Group Limited. The agreement to design and build the center was signed on May 12, 2013 (SKYCITY Entertainment Group Limited, 2013). The project of constructing the New Zealand International Convention Centre and Horizon Hotel is expected to be a pre-eminent event venue of New Zealand after its opening. The project mainly focuses on drawing audiences from around the world to experience the unique culture of the country alongside witnessing its innovative business approach. In addition, the construction project has been given to Fletcher Construction Company, as it has partnered with SKYCITY for its completion. The company has been given the task of completing the design “of the 32,000m² NZICC, the five-star, 300-room Horizon hotel, the retail laneway linking Nelson and Hobson streets, and 1327 carparks under the NZICC” (Fletcher Construction, 2019). The project has been initiated with the plan to enhance the construction market of Auckland (Fletcher Construction, 2019).

New Zealand International Convention Centre is expected to be the country’s largest purpose-built convention center, which will have the capacity of hosting conventions comprising 3,000 people or just a single event accommodating up to 4,000 individuals on its exhibition floor. It is further expected to have the biggest exhibition hall in New Zealand (Fletcher Construction, 2019). Additionally, the New Zealand International Convention Centre, at the end of its completion, is expected to comprise 33 meeting rooms along with pre-function spaces. The convention center will also have a parking area, wherein 1,327 cars can be parked. It will further have an adjacent laneway, wherein foods, as well as, beverage outlets are present. This project was expected to create jobs for at least 1,000 individuals and will be able to attract 33,000 new tourists to the country. The respective convention center is expected to generate $90 million worth of economic benefit to New Zealand on an annual basis. In this concern, it was reported that “The NZICC will be at the heart of New Zealand’s knowledge economy and innovation system – a hub of inspiration and knowledge exchange” (New Zealand International Convention Centre, 2019a).

Project Information Table

New Zealand International Convention Centre

Project Type

Assembly Building

Location

Centrally situated in Auckland

Gross Floor Area

32,500sqm GFA

Number of Stories

3 Levels

Contract Type

Licensing Agreement

Project Team Roles and Responsibilities

Sales Team

To promote company as a global competitive destination

Management Team

Attracting International Conferences to the Country

Table 1: Project Information of the New Zealand International Convention Centre

The New Zealand International Convention Centre is an assembly building project. Contextually, assembly building is a place, wherein a large number of people gather for different purposes wherein exhibition halls, theaters, club rooms, and conference rooms among others are integrated (Daily Civil, 2017). In the same way, the New Zealand International Convention Centre has all these facilities available (Auckland Tourism, Events and Economic Development, 2019). In addition, the total Gross Floor Area (GFA) of the center is 32,500sqm and is divided into three different levels (New Zealand International Convention Centre, 2019a; Auckland Tourism, Events and Economic Development, 2019). The center has been constructed based on a licensing agreement signed between SKYCITY Entertainment Group Limited and the government of New Zealand (SKYCITY Entertainment Group Limited, 2013). Furthermore, the sales team is engaged in promoting the company as a competitive destination, whereas the management team is engaged in attracting global conferences in New Zealand (New Zealand International Convention Centre, 2018; New Zealand International Convention Centre, 2017).

Planned Data

New Zealand International Convention Centre

Start Date

12-May-13

Finish Date

Mid 2019

Budgeting

NZ$402 Million

Cash Flow Forecasting Method

Financial Forecasting

Milestones

· Agreement of Preliminary Design for the Project

· Laneway Construction Likely to initiate in late 2019

Activities

Not Applicable

Interdependency

Interdependent with SKYCITY hotels

Table 2: Planned Data of the New Zealand International Convention Centre

The above table focuses on analyzing the planned data for the New Zealand International Convention Centre, which is located in the city of Auckland. The project was initiated with the signing of the contract between the owing company (SKYCITY) and the New Zealand government on 12th May 2013. The two parties came into an agreement for the purpose of designing along with developing and fitting out the project in the center of Auckland, which is surrounded by the Wellesley, Hobson, and Nelson streets. The project was mainly initiated for the purpose of enhancing and strengthening the infrastructure of national tourism within the country (SKYCITY Entertainment Group Limited, 2013). When the project first started a lot of challenges were experienced. This can be well understood from the fact that the operators of casinos in the New Zealand International Convention Centre initially planned the project to be completed by the month of February 2019. However, it has been evident that the company has not provided any new timeline regarding the completion of the project. This is because it will be provided once the company becomes certain about the date of completion (NZ Herald, 2018).

New Zealand International Convention Centre was given permission only after the respective government gave permission, which excluded taxpayer top-up. In addition, SKYCITY emphasized establishing a ‘smaller national convention center’ as compared to what was originally planned; however, it has been expected to meet all the costs related to the construction process of the New Zealand International Convention Centre. The budgeted cost, which was agreed by SKYCITY for constructing the convention center, was NZ$402, which is expected to increase at least to NZ$430 million. These figures were given by Steven Joyce, who was the former Economic Development Minister of New Zealand. Besides, SKYCITY stated that the company can invest between NZ$450 million to NZ$470 million for the same project. This excluded the cost related to a five-star hotel i.e. Carpark and Laneway that would comprise 300 rooms, which would account for a total of NZ$630 million (Anthony & Kirk, 2015; NZ Herald, 2015).

Furthermore, it can be assumed that SKYCITY, in order to complete the project, has focused on using the financial forecasting approach (Research Prospect Ltd, n.d.). Correspondingly, the financial forecast can be defined as a technique, which can help in determining both current, as well as future, conditions required for the guiding policy. It can also be perceived as a financial management tool, which can assist in predicting information on the basis of current, past, and future financial conditions. It can hence be assumed that the respective project has used this tool for identifying future revenue along with expenditure trends, which may influence government policies and strategic goals as well (Government Finance Officers Association of the United States and Canada, 2018). Moreover, the construction of the New Zealand International Convention Centre was observed to achieve a significant milestone, when the agreement for this project was signed. Herein, the government was observed to significantly agree with the preliminary design presented by the company (Australasian Leisure Management, 2015). The agreement included a three-month review of the SKYCITY’s previous design of the project. Hence, in this regard, it can be considered to be a milestone, as the company finally obtained success after many years of failed attempts to get the approval of the government (vBulletin Solutions Inc, 2019). Another milestone related to the project is the construction of laneway, which is expected to start in late 2019. This is because after waiting for six years, the project team can now finish the project (Boffa Miskell, 2017).

Lessons Learned

With respect to the interdependency aspect, the construction project has been predicted to be connected with 1,000 hotel rooms with the support of an airbridge (New Zealand International Convention Centre, 2019). This interconnection of the New Zealand International Convention Centre (NZICC) will depend on SKYCITY Grand Hotel along with Horizon hotel, and SKYCITY hotel (New Zealand International Convention Centre, 2019). The Hobson Street Hotel is also expected to be connected with SKYCITY, as well as, the International Convention Centre in New Zealand. It was further reported that “In addition to the infrastructure opportunity the NZICC supports the growth of the business events industry for Auckland – which aims to significantly grow the sector from $236 million of direct spend to Auckland in 2013 to $430m by 2023. Auckland Convention Bureau, a division within ATEED, is already fielding interest in a venue suited to staging large scale conferences” (Sherson Willis, 2015). The NZICC along with Hobson Street Hotel was planned to be established together, thereby resulting in the overall worth of NZ$700 million. It must be noted that SKYCITY and “Fletcher Construction entered into a binding commitment letter which records the agreed commercial and legal terms of the building works contracts for the NZICC and Hobson St hotel” (SKYCITY Entertainment Group, 2015, 4).

A construction project can be monitored with the support of the earned value management system. It is a technique through which the manager of a project can measure its overall performance. This technique can be effectively utilized if a construction company requires monitoring the actual expenditures along with the process of the work or project continuously. Furthermore, through this technique, EVM can also be considered, which “calculates cost and schedule variances, along with performance indices for project performance management” (Gupta, Mahatme, & Bhagat, 2015, 652). Besides, cost tracking can be found to be an important aspect at the time of developing a project. Hence, in relation to the construction industry, it is essential for making notes at the end of every month based on the budget, which has been developed so as to keep a track of the project’s progress. Hence, tracking costs on a monthly basis can help in adjusting the budget along with the resources to complete the project (Clarizen, 2018). Thus, based on this particular approach, it can be stated that New Zealand International Convention Centre project can effectively use this approach for keeping track of the cost, which is being incurred on a monthly basis.

On the other hand, cost control can be defined as the process in which the costs related to a construction project is managed so that no loss is incurred by the contractor. In a construction project, a cost-control approach can help in eliminating unnecessary costs so that it can be completed within the stipulated time. Hence, the managers need to be highly equipped for the purpose of executing the project by focusing on and maintaining the quality of work within the assigned budget and limits (Otim, Nakacwa, & Kyakula, 2011). Hence, it can be asserted that there is a strong relationship between cost and time, especially at the time of controlling costs on site. It becomes essential to report, as well as record, all the activities associated with the plant, labor, and material involved in the project. This significantly assists contractors to have knowledge regarding the cost along with the expenses associated with the resources. This can further help in comparing the expenses with the cost budget. Herein, different approaches or techniques can be used, including monthly recording, site reports, project budget, and schedule control (Otim, Nakacwa, & Kyakula, 2011).

 Project Actual Data Table

New Zealand International Convention Centre

Start Date

2015

Finish Date

End of 2019

Actual Cost (NZ $Million)

703

Monthly Cash Flow(NZ$)

24158

Payment ($)

26,400

Monthly Progress

In Progress

 


Table 3: Actual Data of the New Zealand International Convention Centre

Table 3 depicts the actual data related to the NZICC, which is being constructed in the respective nation. Based on the above table, it can be understood that the construction project was initiated in the year 2015 (Fonseka, 2018). Moreover, the project is to be completed by the end of the year 2019. However, the project had to face some challenges, which delayed its progress. This is the main reason for the construction project of the NZICC to be identified as one of the major contributors leading to incurring a loss of $660 million to the Fletcher building. As a result of which the actual cost of this project is expected to be NZ$ 703 million. In the year 2018, it was reported that the project has used over 173,000 cubic meters of concrete along with 330 and 7,300 tons worth of secondary steel and structural steel respectively. The actual cost also included expenses relating to 17,000 liters of paint. In addition, the actual cost included expenses for the hotel, which is being constructed beside the NZICC, using about 1,000 tons of steel along with 2300 cubic meters of concrete and reinforcing steel of about 300 tones. With all these additional expenses, the actual cost comprised expenses related to building floors, electrical work, air conditioning, and plumbing among others (Fonseka, 2018). However, as a result of costly delays in the completion of the project, SkyCity announced that the company withheld about $26.9 million from Fletcher Construction Company (Fonseka, 2018). Correspondingly, the expenses of SkyCity during the fiscal year 2019 amounted to $62,662,000. Hence, based on these incurred expenses, it can be assumed that the monthly cash flow related to the construction project of NZICC, would account for $5,221,833.33 (SKY CITY, 2019).

It has further been found through investigations and reports that the construction of the NZICC has been delayed due to several reasons, which has also postponed its completion to December 2019. However, SkyCity has failed to provide any specific data for the project to be completed. The company has further informed that it will only announce the data until it becomes more certain about project completion (Review Publishing Ltd, 2018). Therefore, it can be affirmed there has been no data available relating to the monthly progress regarding the respective construction process i.e. New Zealand International Convention Centre (NZICC). Hence, it is recommended to the associated parties to monitor its progress time-to-time so that delay can be managed and the project can be completed as soon as possible.

References

Anthony, J. & Kirk, S. (2015). Govt greenlights SkyCity Convention Centre. Retrieved October 21, 2019, from https://www.stuff.co.nz/business/industries/68851861/govt-greenlights-skycity-convention-centre

Auckland Tourism, Events and Economic Development. (2019). New Zealand International Convention Centre (NZICC). Retrieved October 21, 2019, from https://www.aucklandnz.com/meet/plan-your-event/venue/new-zealand-international-convention-centre-nzicc

Australasian Leisure Management. (2015). Design agreed for New Zealand international convention centre. Retrieved October 21, 2019, from https://www.ausleisure.com.au/news/design-agreed-for-new-zealand-international-convention-centre/

Australasian Leisure Management. (2015). Financial forecasting in the budget preparation process. Retrieved October 21, 2019, from https://www.gfoa.org/financial-forecasting-budget-preparation-process

Boffa Miskell. (2017). New Zealand International Convention Centre. Retrieved October 21, 2019, from https://www.boffamiskell.co.nz/project.php?v=new-zealand-international-convention-center

Daily Civil. (2017). Types of buildings. Retrieved October 21, 2019, from https://www.dailycivil.com/types-of-buildings/

Fletcher Construction. (2019). “Pitting New Zealand on the world stage”. Retrieved October 21, 2019, from https://www.fletcherconstruction.co.nz/projects/commercial/nzicc-and-horizon-hotel


Fonseka, D. (2018). First look: Inside NZ's largest convention centre construction in Auckland. Retrieved October 21, 2019, from https://www.stuff.co.nz/business/property/108053942/first-look-inside-nzs-largest-convention-centre-construction-in-auckland

Gupta, R. R., Mahatme, P. S., & Bhagat, T. C. (2015). The cost controlling and monitoring of construction project through earned value management system. International Journal of Advanced Technology in Engineering and Science, 3(1), 651-656.

Honest Buildings. (2018). The fundamentals of cost tracking for commercial real estate owners & managers. Honest Buildings Inside Track, 2-24.

New Zealand International Convention Centre. (2017). Welcoming new members to NZICC sales team. Retrieved October 21, 2019, from https://www.nzicc.co.nz/2017-welcoming-new-members-to-the-nzicc-sales-team

New Zealand International Convention Centre. (2018). Katie Page joins the NZICC team. Retrieved October 21, 2019, from https://www.nzicc.co.nz/2018-katie-page-joins-the-nzicc-team

New Zealand International Convention Centre. (2019). New ins

piration, invigoration & enlightenment centre. Retrieved October 21, 2019, from https://www.nzicc.co.nz/

New Zealand International Convention Centre. (2019a). The centre. Retrieved October 21, 2019, from https://www.nzicc.co.nz/venue

NZ Herald. (2015). Sky City: Convention Centre vital for NZ. Retrieved October 21, 2019, from https://www.nzherald.co.nz/skycity/news/article.cfm?c_id=1503717&objectid=11385169

NZ Herald. (2018). Auckland convention centre won't be finished by December 2019: SkyCity. Retrieved October 21, 2019, from https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12158625

Otim, G., Nakacwa, F., & Kyakula, M. (2011). Cost Control techniques used on building construction sites in Uganda. Second International Conference on Advances in Engineering and Technology, 367-373.

Research Prospect Ltd. (n.d.). Overview of New Zealand International Convention Centre (NZICC). Retrieved October 21, 2019, from https://www.researchprospect.com/new-zealand-international-convention-centre/

Review Publishing Ltd. (2018). NZICC not opening 2019. Retrieved October 21, 2019, from https://hotelmagazine.co.nz/2018/11/12/nzicc-not-opening-2019/

Sherson Willis. (2015). SKYCITY and Fletcher construction form partnership to build NZICC and hotel. Retrieved October 21, 2019, from https://www.shersonwillis.com/skycity-and-fletcher-construction-form-partnership-to-build-nzicc-and-hotel/

SKY CITY. (2019). Annual report year ended 30 June 2019. About This Annual Report, 4-183.

SKYCITY Entertainment Group Limited. (2013). SKYCITY signs full agreement for New Zealand International Convention Centre. Media Release, 2-7.

SKYCITY Entertainment Group Limited. (2015). Skycity Entertainment Group Limited (SKC) Skycity appoints contractor for New Zealand International Convention Centre and Hobson St Hotel. ASX Market Announcements, 1-26.

vBulletin Solutions Inc. (2019). The construction forum. Retrieved October 21, 2019, from https://www.skyscrapercity.com/showthread.php?p=106832821

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