Reference no: EM133263232

Case Study: Royale Pizza

Background

Royale Pizza was established in 2007 by an entrepreneur with more than 20 years of experience in the foodservice industry. Known for its high quality and authentic Italian pizzas, Royale Pizza now produces and delivers 40 types of gourmet and classic pizzas. The shop is located in one of the busiest streets of Melbourne CBD, near the Southern Cross Station, and offers its customers a fresh food menu, via its?online?(delivery of online orders) and?offline (dine-in) channels. Close to the CBD and railway station, Spencer Street has a mixture of businesses, including tertiary education facilities, hotels, and apartment buildings. Royale Pizza has a wide customer base including locals and tourists and must cater to the needs of a diverse range of customers with different backgrounds and different food preferences. Royale Pizza is open until late it is a great option for the tourists and other customers to order their pizzas when most other food venues are closed or have limited menu choices.

Opportunity

Royale Pizza is continuously trying to increase its food quality and ultimately increase its annual sales and profitability. Recently the owners have decided to renovate the entire pizza shop and buy some new equipment enabling them to expand their business by serving other types of food (e.g., fish & chips, and pasta), reduce their food waste, and are aiming to increase their profitability by 25%.  

The major renovation project includes two key components: the purchase of new equipment and fit-out, and infrastructure re-development. Key deliverables will be: new flooring, installation of the air-conditioning system, dust-free painting, increasing compressor capacity, and professional cleaning of the kitchen exhaust system. New equipment to be purchased and installed include 3 deep fryers, 2 boilers and 1 dough roller. A new Point of Sale (PoS) System with the required hardware and software will also be installed.

As the current floor plan of the shop has little room for expansion, changes need to be made to deliver the renovations. The stairs located in the rear area of the shop need to be removed in order to provide more food preparation space for the kitchen staff. As a result of this major change in the layout, the installation of the purchased equipment can be only done after the completion of  construction activities. As part of the renovation project, the shop owners aim to create additional dining-in spaces to serve more customers. So, 2 new sets of chairs and portable tables also need to be purchased.  Due to the Melbourne City Council regulations on the use of walkways/footpaths as dining spaces, any expansion in seating capacity must be indoors only.

The owners have estimated that the total cost of the work would be roughly around AU$40,000. The start date of the project is the 2nd of March. The target date of project completion would be 4 months from the start date. As the shop should be closed during the construction, installation and painting activities, no sales and revenue have been predicted during this period. As a result, there is a strong imperative to finish on-time and on-budget to minimise any further loss of revenue by Royale Pizza.

As the Project Manager, you will play a leading in this project. Your expertise is in the management of projects and your ability to bring the key stakeholders together and to deliver projects that fulfill the project brief, requirements, and business goals. You have strong risk management skills which will be useful in a project such as this with tight timeframes and a small budget.

While the aim of the renovation for Royale Pizza is to expand their menu offerings, reduce  their food waste, and  increase their profitability by 25%, your role is to deliver a renovated retail food outlet that will enable them to do this. You are not involved in whether they have the business skills to deliver on this.

Your role will be to coordinate the shop re-design, sourcing, procurement, delivery, and installation of new equipment. You will need to rely on other people to deliver the work including the Royale Pizza shop manager; a Main Contractor and various other installation contractors; the equipment suppliers; and the Industrial Body responsible for technical health and safety compliance certification. While you are an "expert" project manager, you have not worked on a project with a small restaurant outlet before, so to support you,  you have arranged to have an industry consultant available should you need advice.

In the first meeting held with owners, the Main Contractor and other key stakeholders, the issue was raised as to why the construction and installation stages could not be undertaken simultaneously. The Contractor also raised the issues of the electrical wires under the rear stairs which would need careful attention when removing the stairs and that the state of the wiring was at this stage an unknown factor. They also indicated that the water faucet in the rear area of the shop could not be removed or disconnected due to the safety issues.

In order to ensure that the renovation meets the required health and safety compliance certification and can be given a "Certificate of Occupancy" (which the owners will need before they can reopen the business),  safety inspections will be conducted every fortnight. These inspections will take at least 4 hours and will include the "testing and tagging" of all electrical cables and appliances (both new and ones currently installed) and certified as "safe" after completion of each stage. Mechanical ventilation compliance will also be checked as one of the safety considerations. All these safety controls have associated costs that will need to be factored into the project budget plan. 

As shown in Table, the whole project can be divided into 4 main project delivery stages. If the project is not completed on time, the Main Contractor will incur a daily penalty of AU$300 that to be paid to the owners. 

Table: The main stages of the project, estimated budget and due dates 

What are project assumptions?