"Student Accommodation FacilityProject Finance and ProcurementG3/23/2016Table of Contents:Table of Contents: ......................................................................................................................................... 1Introduction ................................................................................................................................................... 2Commercial outcomes of various options available ..................................................................................... 2Option -1 ................................................................................................................................................... 2Option -2 ................................................................................................................................................... 3Option -3 ................................................................................................................................................... 3Option – 4 ................................................................................................................................................. 3Option – 5 ................................................................................................................................................. 3Occupancy Risks ........................................................................................................................................... 4Procurement Notice ...................................................................................................................................... 5Traditional Procurement ............................................................................................................................... 6Project Risks ................................................................................................................................................. 7Facility management by third party .............................................................................................................. 8Conclusion .................................................................................................................................................... 9References: .................................................................................................................................................. 10 IntroductionGriffith University one of the most prestigious universities in the country plans for starting ofhigh quality student accommodation centre. It is in the planning stage and is being planned forwith quite of lot of amenities included such as 300 bay car park, laundry, games room, IT andstudy areas, and a number of common rooms.The University management is committed toprovide secure accommodation for students at reasonable cost which would also be close tocampusCommercial outcomes of various options availableGriffith University has five models/options that can be chosen from and those are –? Option – 1 Design and construct a student accommodation facility using own funds andoperated by the university.? Option – 2 Design and construct a student accommodation facility using own funds andoperated by a facilities management company.? Option – 3 Design and construct a student accommodation facility using external investorfunds and operated by the university? Option – 4 Design and construct a student accommodation facility using external investorfunds and operated by a facilities management company? Option – 5 Design, finance, construct and manage a student accommodation facility byan external company.Option -1This would require the deployment and utilization of own funds of the university and alsoincreases the manpower outlay of the university. The number of employees that will have to beemployed by the university for non academic purposes will be very high. The planned facilityand its amenities is a very large asset base that would be created and can cause change of focusfrom towards non core activities. The administration department would have to be spruced up tohandle non academic administrational activities. (Bent, 1989) Option -2This would require the deployment and utilization of own funds of the university only. The onusof administration of the facility can be outsourced to experience facilities managementcompanies and the university can focus on its core activity of academics. However the pangs oflarge investments still remain in this option too. (Billngham, 2008)Option -3This option would not require the deployment of own funds from the university, externalinstitutional investors could be roped in and a special purpose vehicle company could be formedunder the control of the university which will be used for the investment to come in. This wouldtake away the financial burden of the project but the operations aspect would still remain withthe university. As mentioned above, the administration and operation of such a large facilitywould certainly be a huge task and would take a large manpower outlay to do the administrationand operational activities.Option – 4In this option the deployment of funds from the university would not be required, externalinvestors could be roped in and a special purpose vehicle company could be formed under thecontrol of the university which will be used for the investment to come in. This would take awaythe financial burden of the project. In this option the administration and operation could beoutsourced to a facilities management company. (Pearson and Pontin, 2013)Option – 5In this option a third party company/organization could be roped in who would have to beprovided with a land close by to the university campus on a 30 year lease period.This companywould design, finance and construct and manage a student accommodation centre in the land fora period of thirty years. In this option there is no requirement for deployment of university fundsfor this project. The university could create a structure and format on how the building wouldhave to be designed keeping in mind the needs of the student community. (Pearson and Pontin,2013) All amenities too could be done in the same manner where in the third party companyoperate these in the proposed campus. All payments for using these facilities would be collectedby the university and then paid to the third party company. A royalty amount of not more than 5- 10% of the charges for use of each amenity would be payable to the university by the third party company (Fleming and Koppelman, 2000). These would be deducted from the payments thathave to be made the third part company.In this scenario the university stands to benefit in allaround manner and also makes business sense for the third party company who wishes to investin such a facility with a concession period of 30 years. Once this concession period is over theymust handover all the assets and amenities to the university. Occupancy RisksThe university is at a large financial risk when a large accommodation facility is made andremains unused by its student community. Occupancy risk has to be managed by making thefacility affordable for the student community. While making it affordable the university has tostrike a balance for getting the costs of deployment of such a large facility to its employees.Students can use the facility since it is being planned at a location which is very close by thecampus. This is one of the most important aspects that need to be considered while planning forsuch a venture (Billngham, 2008). The student accommodation facility must be a self containedone where in all the needs of the students are met with. At the same time if they could just walkdown from the accommodation units to their classes the students would certainly patronize sucha facility, provided the costs involved are at reasonable levels for students. Moreover facilitiessuch as free internet access in the accommodation facility, laundry services, games andentertainment rooms, study areas, canteen arrangements, other requisite IT infrastructure shouldbe provided at a nominal cost to attract the student community to use these facilities.The students who opt for using the accommodation facility must be provided with goodstandards of accommodation and good standards of food to be offered at such a facility. Sincepeople from far off places and or even nearby places may opt for using of this facility this has tocater to students from various backgrounds. In order to promote the use of such facility providedby the university, the management of the university must make it a point to highlight theavailability of such a good facility within its precincts and how it can be helpful for the student tospend more time on the campus (Dvir and Shenhar, 2011). It can also communicate throughappropriate channels on the low cost and affordable type of quality accommodation that itprovides for the students with an aim to increase their time spent in academic activities rather than spending time in travelling from their homes to the university and back. It can promote thisfacility as place of living in good comforts with all amenities that are required for student lifeand thus try and increase the use of such a facility. Moreover with the number of courses beingadded the student population is also on the rise which would mean that there would more numberof students who might want to use these facilities.Procurement NoticeGrifith University is a comprehensive and research intensive university of Australia as is rankedamong the top 5% of the universities worldwide.Griffith has highly progressive traditions of itsnamesake, Sir Samuel Walker Griffith, who was a two time Premier of Queensland, the firstChief Justice of the High Court of Australia, and is considered to be the principal author of theAustralian Constitution.Founded in the year 1971, today Griffith has a student population ofover 44000 students studying in various disciplines across five campuses in South EastQueensland (Bower, 2002). The university management is now considering a proposal to Design, Build, Finance, Operateand Transfer (DBFOT) a student accommodation facility at its Gold Coast campus. Theproposed facility would be made with three star facility accommodation and amenities. Theproposed facility shall include 342 self-contained units of accommodation in variousconfigurations, a 300 bay car park, laundry, games room, IT and study areas, a number ofcommon rooms a host of other various student amenities such as a jogging track, aquaticcomplex, gym etc to name a few. A basic plan has been made by our architect to make thisconstruction in a 20 acre land complex owned by the university adjacent to the gold coastcampus. (Atkinson, 1999)The university management now invites Expression of Interest from companies who might beinterested in the development of a student accommodation facility on a DBFOT basis. Theproposal would be to design a student accommodation facility centre based on the designs madeby the University approved architect. The interested company has to finance and construct thefacility as per approved design at their cost and run the facility for a period of thirty years. Further the same company would hand over the facility to the university management after theperiod of thirty years. All statutory approvals required for the construction of the facility would be the responsibility of the university management. The company would have to run the facilityas per the standards and norms followed by the university in all its other campuses andaccommodation facility. The companies that would be eligible for such a project should have a demonstrated experiencein the last 10 years of managing similar facilities of not less than 1 million square feet in areasuccessfully. A special purpose vehicle (SPV) company is proposed to be started, the duration ofwhich would thirty years. This SPV Company in which the university management would alsobe a minority shareholder wouldrun the accommodation facility during the thirty year period.Once this thirty year period is over the company would automatically get dissolved and all assetsin the name of this company would get transferred to the university management.Companies who may want to participate in the due process of selecting a right partner for thisproject may send a letter to the University management in the form of an “Expression ofInterest” along with a refundable deposit of 10000 AUD. Interested companies have tonecessarily send a detailed company profile which shall contain all details of thepromoters/directors of the organization, financial results for the last five years, and all relevantdetails of its experience in facility management services. The right to select the company stands with the university and all matters in connection inrelation with this shall be decided by the University Administration Committee. This is only anexpression of interest and no way construed to be an invitation for tender. Kindly send details asper above to the following address.Traditional ProcurementIn a traditional procurement system, the university has to identify an approved architect andcreate a base plan for the construction of 342 room student accommodation facility along with allother proposed amenities. On the base of this plan a land has to be identified and procured by theuniversity authorities. Once is land is procured, based on the contours and size of the land, adetailed architectural plan has to be made on how the building and other amenities would bemade as per the land available. Once the architectural plan is made, a detailed engineering plan has to be made ready and a bill of quantities (BOQ) of all materials and other works that will berequired to complete the work has to be made to the minutest detail covering every square inchof the proposed construction.Based upon the bill of quantities a tender can be called for and the tender documents made inconjunction with the BOQ. A traditional tendering system can be called for where in eligiblecompanies can compete with each other and win the contract from the university. The eligibilitycriteria could be based on a simple logic – The proposed facility is for 342 rooms and each roomwould be assumed of size approximately 50 square meters and total area to be constructed wouldbe 17000 square meters plus all other amenities which would make the facility to be built overapproximately 25000 square meters. Hence any eligible contracting company should have hadprevious experience of constructing 50000 square meters of a hostel, hotel or other similarstructure in the past one year. A project management consultant can be roped in to prepare thetender schedules and tendering documents based on a detailed project report which will be thebible for the project. A competitive bidding process based on same specifications provided to allvendors who would be eligible can determine the best vendor based on prior demonstratedexperience and cost of construction as the two main criteria for contractor selection.Project RisksAll projects do carry risks along with it and the most obvious of sources could come fromdependencies (internal and or external), assumptions made by team members which could be inrelation to any aspect of the project. During the start of a project the potential impact of risk isalmost unlimited. However it all boils down towards improving the ability to identify risk, whenthere is time in the project life cycle to influence it. It is only natural that a project of this size,construction of 20000 square meter student accommodation facility can also have various risksthat get tagged along. In the planning stage and or initiation stage the university must make surethat the risk of not having patronage of the student accommodation is eliminated to the extentpossible, else the whole venture might end up being a dead investment (Nokes and Kelly, 2007).While project is in the planning stage, all possible assumptions must be eliminated to the extentpossible or marked upon as assumptions where in situations cannot be avoided. In the planningstage all possible precautions for minimizing risks during execution must also be included while making a detailed project report. During the execution phase there could be more risks than inthe first three which can have varied risks (De Millo, 2005). There could work, health and safetyrisks, risk of cost over runs, risk of natural calamities, etc to name a few. Such risks should beidentified through the discerning eye of the project management consultant or an experiencedproject manager in an attempt to identify and minimize risks.Risk management is an integralpart of any project and should be given its due importance in all stages of the project. Allpossible activities where risks can be indemnified through insurance must be undertaken. Thiswill give a relief in the event of any risk that may be possibly covered through an insuranceprocess while a project is being executed.Facility management by third partyThe university has to frame a set of norms and standards by which the facility must be run. Thesecould be in terms of standards to be followed for routine running of the facility by adhering tocertain pre-set standards. For example the facility could be designated by the universitymanagement to be run as per three star standards. Hence the can provide for all such amenitieswithin the facility which would be as per the three star standards (Kuda and Berankova, 2014).The facility management company can adhere to this standard and run the facility as per this.Combined with this the norms and other disciplinary standards that are followed in the universitycampus can be taken as a lead for setting the standards for running of the facility. The variousstatutes and legislations in this regard as per local state government laws or federal governmentlaws can be used as a yardstick for the daily operations. In the absence of state government lawsin that particular locality, the standards or statutes followed by other state governments can beused as a yardstick for setting the standards. For example Department of Human services, StateGovernment of Victoria has made a detailed accommodation Standards and Design Guidelinesfor the Provision of shared and supported accommodation for the student community in its state.These guidelines give a clear cut setting of standards on how such facilities are to be made,deployed, utilized and run on a regular basis. All standards for safety and other allied issues forthe general students as well as differently able students are clearly mentioned in this document.The experience from the operations of other facilities which are being run by the college can alsocome handy in this scenario. Practical experiences gained from this can be used while setting thestandards for a new facility. (Baars, 2006) The experience of the facility management company can be utilized and their experiences can also come in handy while setting the standards for therunning of a new facility. The opinions of students who have utilized the facility during thecourse of their study in the university can be elicited by taking feedback when they leave thefacility after their course can also be very useful for any changes that may be required in thestandards that are being followed in the present. Third party audit of the facilities can beconducted to find out the adherence of standards while the facility is being run and the results ofsuch audit can be used to better the standards that are being followed. Provision for facultymembers to stay in the facility in order understand the way the facility is being run can also bearranged so that a firsthand experience of the faculty can be used to make any changes that maybe required.ConclusionTraditional methods of procurement and project finance are changing and new avenues are beingopened up in this regard. A sound understanding of finance and procurement is absolutely vitalfor the successful delivery of a project. Finance can include design of funding, costing, sourcingand other allied aspects. The different procurement components can include various types ofcontractual arrangements, appropriate organizational structures, feasibility analysis, bid design,selection criteria, setting project budget, contract administration.In this project a design,finance, build, operate and transfer method with a lease period of thirty years is recommended tothe university. References:Atkinson, R. (1999) 'Project management: cost, time and quality, two best guesses and aphenomenon, its time to accept other success criteria', International journal of projectmanagement, vol. 17, no. 6, pp. 337-342.Baars, W. (2006) Project Management Handbook, [Online], Available:https://textbookequity.org/Textbooks/Baars_book_project_management.pdf [20 March 2016].Bent, J. (1989) Project Management for Engineering and Construction., Englewood Cliffs,NewJersey: Prentice Hall.rd Billngham, V. (2008) Project management: How to plan and deliver a successful project, 3edition, NJ: The project Management Excellence Centre.Bower, D. (2002) ' Profitable Partnering in Construction Procurement', International Journal ofProject Management, vol. 20, no. 1, pp. 91-92.De Millo, A. (2005) 'Risk management strategy: A practical guide for risk awareness and itscause and effect on project deployment', Journal of Digit Asset Management, vol. 1, no. 2, pp.88-95.Dvir, D. and Shenhar, A.J. (2011) 'What Great Projects Have in Common', MIT SloanManagement Review, March.Fleming, Q.W. and Koppelman, J.M. (2000) Earned value project management, NewtownSquare: PA: Project Management Institute.Kuda, F. and Berankova, E. (2014) 'Integration of Facility Management and Project Managementas an Effective Management Tool for Development Projects', AMM, pp. 2676-2681.nd Nokes, S. and Kelly, S. (2007) The definitive guide to project management, 2 edition, PrenticeHill: Financial Times.Pearson, G. and Pontin, G. (2013) 'Briefing: Public–private finance models – infrastructureprocurement', Proceedings of the ICE - Management, Procurement and Law, vol. 166, no. 6, pp.273-276."