Silver Fiddle Construction: The Czopek Project Zachary Stoy MGMT505 September 20, 2011 Tony Sines Southwestern College Professional Studies

Silver Fiddle Construction (SFC) Construct a High-End, Custom Home for The Czopek Project Company Silver Fiddle Construction (SFC) Client Bolo & Izabella Czopek Project Objective Construct a High-End, Custom Home for Mr. & Mrs. Czopeks Introduction: Good evening. My name is Zack Stoy, and I would like to present you The Czopek Project. Silver Fiddle Construction is home construction company that specializes in high-end custom homes in the Grand Junction, Colorado area. SFC has been hired by Bolo and Izabella Czopek to build their dream home , and will strive to ensure that the they are more than happy with the results. Grand Junction is a thriving housing market and demand for new construction is extremely high; as a result SFC has eleven house scheduled to be completed this year.

Project Details Project Team Budget Duration General Contractor (SFC) Part-Time Bookkeeper (SFC) Skilled Subcontractors Budget $450,000 -$500,000 Duration Five Months This project is lead by a general manager that will oversee all aspects and every step of the construction process. He must make sure the project stays with in the $500,000 budget and the five month time frame. In addition to the general contractor, SFC employs a part-time bookkeeper and subcontracting the construction and finishing work to skilled subcontractors. The utilization of subcontractors makes it possible for SFC to tackle multiple new construction projects simultaneously. Being responsible for management of the subcontractors requires the general manager to posses keen multitasking skills. He also must ensure that the all the subcontractors are focusing on quality and high craftsmanship that are expected in the high-end residential housing market. Being reliant upon the craftsmanship and dependability of subcontracts translates into a hefty amount of risk and stress for the general contractor (Stoneman 2005).

Deliverables 2,500 sqft 3- Bedroom, 2.5- Bath 3 Vehicle Finished Garage Kitchen Appliances High-Efficiency Gas Furnace The Czopeks have asked SFC to building them a 2,500 square foot, 3 bedroom and 2.5 bath home. The also need a 3 vehicle garage the is able to accommodate their 2 8foot motor home. Since they will be storing their motor home in the garage during the harsh winter months; they need the garage to be fully insulated and sheetrocked. SFC will finish the kitchen with a stove, oven, microwave, and dishwasher. A refrigerator will be provided by the client once the project is complete, along with the landscaping. SFC will also, install a high-efficiency gas furnace was with a programmable thermostat. The air conditioning is not included in the budget; however the house will be prewired for future installation (Larson 2011).

Project Milestones July 5th July 12th September 25th November 7th Permits Approved July 12th Foundation Poured September 25th “Dry-In” – framing, sheathing, plumbing, electrical, and mechanical inspections passed November 7th Pass Final Inspection The project will have several milestones. All of the permits need to be approved by July 5th. The foundation needs to be finished by July 12th. On September 25th all of the “dry- in” work needs to be completed. This includes the framing, sheathing, pluming, and mechanical inspection passed. Finally, on November 7th the final inspection are due. In a construction project all of these milestones are contingent upon each other. One milestone cannot begin until the preceding milestone is accomplished. Therefore, if a milestone is achieved after the scheduled date, the projected completion date will be in jeopardy.

Risk Assessment Silver Fiddle Construction must determine: All possible risk events Likelihood those events will occur Impact of the potential risk Risk detection difficulty Time of occurrences All of the risks for the project need to be determined. Possible risks must be identified from all angles of the project and contingency plans must be developed for every different potential hiccup in the project. SFC must identify all possible risk events, the likelihood those events will occur, the potential impact of those risk events and the difficulty of the detection of said risk. They must also determine when the project each risk event is expected to arise. “The risk evaluation attributes are selected taking into consideration the interests and goals of the stakeholders as well as factors that have influence on the construction process efficiency and real estate value” (Tamosaitiene, Turskis and Zavadskas 2010).

Risk Events Blown Budget Blown Schedule Likelihood: Moderate Impact: High Detection: Moderate When: Final Stages Blown Schedule Likelihood: High Impact: Moderate Detection: Moderate When: Final Stages Some of the possible risks include: going over budget and over schedule, substandard quality, volatile resources, and only having a part-time bookkeeper. The most obvious risk that we are facing is not completing the project within the scheduled time frame, and exceeding the advertised budget. Like I mentioned before, home construction must be competed in a specific order. The schedule on new construction projects can be very volatile. This is because the work must be completed in phases and each contractor is dependent upon each other. “Each project has dependences that need to be mapped out” (Los 2005). For example, the dirt work must be complete before the foundation can be poured, and foundation must be finished before the framers can begin. There is high chance that the project may be extended. This is largely due to the dependency on multiple contractors to attempting to unify into a single operating unit.

Risk Events Continued Quality Standards Volatile Resources Likelihood: Low Impact: High Detection: Low When: Inspections Volatile Resources Likelihood: Moderate Impact: Moderate Detection: High When: Duration Another risk is not meeting the quality standards that are require for high-end custom houses in the Grand Junction are. Quality must be the up most priority for the subcontractors that will be hired to execute the field work. Quality must be the up most priority for the subcontractors that will be hired to execute the field work. Being reliant upon the craftsmanship and dependability of subcontracts translates into a hefty amount of risk and stress for the general contractor (Stoneman 2005). The product the subcontractors produce will have a direct reflection on SFC business, and their work performance will impact the future success of Silver Fiddle Construction. The resource necessary for new home construction can be very volatile. The prices of lumber, plywood and other construction material can fluctuate with the supply and demand from around the world. For example, if a hurricane wreaks havoc on the coastal area of southern Texas and Louisiana; the price of material in Colorado will increase as the supply decreases and demand increase. Other resources that are needed to complete this project are the subcontractors that offer their specialized trades to contribute to the completion of the Czopeks dream home. The responsibility of the resources is managed by each subcontractor. Each subcontractor is responsible for including all the resources (labor, material, equipment, etc.) that will be required to complete their particular job within the original job estimate. The subcontractors are specialist in their particular field of expertise; therefore, they are expected to know exactly what resources are required to complete the job.

Risk Events Continued Part-Time Bookkeeper Likelihood: High Impact: Moderate Detection: Low When: Duration The final risk we are face with is the likelihood that the bookkeeper will become over worked. It this time she is only working part-time, and she is responsible for the accurate and timely bookkeeping of the activity at SFC. SFC will have to make the decision of: hiring an additional bookkeeper, making the current bookkeeper into a full-time employee, or if they will simply accept the risk and make no changes.

Cost: More than a Number Nonmonetary Cost that Devastate Reputable Companies Poor Quality Unsatisfied Client Over Extended (taking on too much work) Poor Management of Subcontractors When analyzing the success of a project, there is more to cost than just a dollar figure. The cost associated with a high-end custom home construction begins with dollars and cents but end with satisfaction of the client. If the client’s needs and expectation where not meet, then the project is ultimately a failure. Custom homes are designed based on the needs of the future home owner; and if these needs are expressed and not fulfilled, the reputation of the builder, Silver Fiddle Construction, is spoiled. For this reason, the home owner needs to be actively involved in the planning and design stages. The client also needs to be consulted periodically throughout the project and intricately involved with any decision making dilemmas. This will prevent the client from being surprised by any unknowns once the project is complete. Another aspect that can negatively impact a company is taking on too much work too fast and not being able to service all of the project effectively. This will lead to the mismanagement of subcontractors and could possible lead to declining quality standards.

Methods of Tracking Cost Performance Index (CPI) Schedule Performance Index (SPI) Estimated Cost at Completion (EAC) Balanced Scored Card Method The CPI is “the ratio of work performed to actual cost” (Larson 2011). This tracking method lets the project manager know if the amount of money spent to date is in line with the amount of work that is complete. Silver Fiddle Construction would benefit from using this tracking method because it would show them if they are spending their money efficiently, and it would give the general contractor plenty of time to make the necessary adjustments to counter act any budgetary issues that may arise. The CPI can be reported on a daily basis and will show trends that are developing within the cash flow of the project. As general contractor the scheduling performance index (SPI) needs to be utilized. The SPI is “the ratio of work performed to the work scheduled” (Larson 2011). If the schedules and critical task of subcontractors were monitored and defined more accurately there would be more consistency overall. The tracking tool will allow Silver Fiddle Construction to gain the upper hand over the subcontractors, thus providing them with a tool that show if each subcontractor is working within the guideline of the schedule. It also provides the general contractor with the required information to measure the relevancy of the project’s schedule. The estimated cost at completion (EAC) is great tool when tracking project.  The client is very concerned with the budget and knows if their home is still project to be completed within the advertised budget. The estimated cost at completion tells if the project is still projected to finish within the scheduled budget.  The estimated cost at completion takes the sum of actual work completed to date plus the estimated cost to complete the remaining work.  I like this tracking measure because it let you know what you final cost is expected to be. Finally, the balanced score card method would be useful for Silver Fiddle Construction because, where it may not show immediate benefits for this particular project, it does allow SFC to gauge how the company is performing over a longer period of time. This is accomplished by compiling all the projects that SFC completes over a span of 10 – 15 years and analysis the data to gain a larger perspective of how the projects performed. It measures the results of major activities that supports the overall mission, goals and vision of the organization (Larson, 2011). The Balanced Scorecard model answers of the questions of: were the correct projects selected and did those projects follow the mission of the organization

Successful Delivery to the Client Increase Future Workload Conclusion Successful Delivery to the Client Positive Referrals Good Reputation Increase Future Workload Increase Profits A successful delivery of the Czepeks dream home will pay dividends towards the success of SFC, however, a failure could damage their reputation, thus affecting their bottom line. Success is very obtainable for SFC if they properly assess their risks, and ensure that every possible step has been taken to address each risk. In say this, with sound business decisions and tight management; Silver Fiddle Construction has the groundwork established to produce an outstanding product, satisfied client, and attractive profits. I want to thank for you time and I hope you enjoyed this presentation.

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