Reference no: EM132148907

1. What is different in a project selection process in a construction project?

2. Write a project charter and a scope for this project.

Case Study: Construction: Craig Construction: Home Improvement Project Low construction spending can drive the U.S. economy into recession, and in late 2007, strong construction spending was all that kept the U.S. economy out of recession.39 Construction includes residential construction and nonresidential construction. Nonresidential construction consisting of local and federal government investment spending such as roads and schools added a full percentage point to the overall growth rate, preventing the economy from showing a decline. Investment in construction may be one of the methods of stimulating the whole economy as well as jobs. Implementing new schools, homes, hospitals, transportation, and infrastructure will provide long-term economic and social benefits. In the public sector, construction project selection is usually carried out by a Metropolitan Planning Organization (MPO). A project usually starts with a need or an idea from the community, state, or federal government. Once a need has been identified, projects are selected based on project selection criteria including safety, maintenance, preservation, access, mobility, economic vitality, and transportation congestion relief. All projects must adhere to standards as well as state and federal laws and regulations. One of the main concerns in project selection is cost and economics. Early in the planning process, a funding strategy for the suggested projects is envisioned. Projects are funded through a combination of funding categories as funding can be a complex task. Public construction projects are usually financed through multiple sources, including local funding, state funding, federal funding, debt financing, and public–private partnerships. The MPO, local officials, and the public evaluate the project and work together to develop a strong proposal. The organization’s engineers, planners, and environmental specialists evaluate the project’s viability and implications. Many different solutions are evaluated and costs are estimated for project planning to begin. Private residential construction is funded by private enterprises and individuals. Nash and Myra had many conversations about the new room they were planning for their home improvement project. Myra was a bit hesitant about this project as she had another project in mind. She wanted to upgrade her kitchen with a new state-of-the-art range, oven, refrigerator, modern cabinets, marble flooring, and granite countertop. Nash felt that they would increase the value of their house with the addition of a new room. The living quarters were small compared with other homes in the subdivision, and Nash thought that the new addition would enhance the space with a more open look. Myra asked, “Can you compare the two projects to see which one is better?” Nash thought about it for a second and answered, “Sure! That is a great idea. Let us take a look at the two projects to select the best one.” Both of them agreed that this was the best way to break the stalemate. Nash identified a set of criteria for the selection process, which he showed Myra; she added one more factor to the set. In the end, they came up with the following selection criteria: Project cost; Project duration or schedule; and Value of the house. With the criteria, they set out to select the project for their home improvement. Both the kitchen remodeling project and the new addition project promised a greater value to their home. Nash called a Realtor who told him that when the housing market is good, the kitchen will increase their home’s value more than the addition by about 50 percent; during moderate market times, the kitchen will yield a higher value by more than 80 percent than that of the new addition. With this knowledge, Nash was swayed toward the kitchen idea, and he told Myra so. Now that the value was much better with a kitchen than the addition, Nash told Myra, “The kitchen will cost us twice the amount of the addition. We are sort of short on cash now. Let’s take a loan.” Myra said, “Nash, I work in a loan office at the Regional Bank of America, and I know that the loan will cost us more than what we would make by selling our house.” Nash told her, “Myra, I thought that you were the one who wanted an updated kitchen!” Myra told Nash, “Yes, but when I figured out the cost of the kitchen, I think the new addition would be a much better idea for us right now. I could use the new room for social events and perhaps read more books looking at the beautiful lake view.” Thus, the new addition was approved by Myra, and Nash was to implement the project. Nash wanted to write down all the requirements necessary to build the new addition. He sat down next to Myra and asked her, “Can we get all the requirements written down so that I can get some quotes from three different contractors? I have already asked Craig, and he gave me a figure and schedule. He wanted to fine-tune the amount once I give him our requirements, but he told me that his amount and schedule were very close. If we can get a couple more quotes, we can select the contractor and start the project.” They brainstormed for a while and jotted down the following requirements: Clear the area adjacent to the dinette area; Build a 14-by-14 new room; A cathedral ceiling; Fan, HVAC, and lighting; Open entrance from the dinette area; Seven windows equally spaced on the three walls of the room with trim; Relocate existing french door toward the existing deck; and Finish the floors, ceiling, and walls. Myra and Nash went through the list again and were definitely satisfied with the requirements.