# W13.1_Hassan Albarrami_ SELECTION OF CONTRACT

W13.1_Hassan Albarrami_ SELECTION OF CONTRACT

1. Problem Definition

Every year we are tackling around 15 -20 projects (CAPEX) and this to enhance productivity and reliability of the plant, unfortunately some of those projects are completed over budget. The reason behind that is either wrong estimation or due to contractor. In this blog we are going to explore how to select the right contract type which provides the optimum value for your time and money, and protects your project from any risks. The contract type is determined primarily by scope definition, and here are some real projects in which the “real” or “true” scope definition can be calculated [3] as shown in the table below.

# W13_Hassan Albarrami_ POINT OF TOTAL ASSUMPTION (PTA)

W13_Hassan Albarrami_ POINT OF TOTAL ASSUMPTION (PTA)

1. Problem Definition

To understand the PTA, we need to understand the Fixed Price Incentive Fee Contract (FPIF). In this contract, the buyer agrees to pay a fixed price and a maximum price for cost overruns. This is called the Most Pessimistic View of Costs. The cost rises beyond PTA because of mis-management at the Seller’s end, thus, the seller has to bear all the extra costs beyond this point.

On the other hand the seller will gain if he finishes work at lower cost.

# W12_Hassan Albarrami_ (IRR,ERR,MARR) (2)

W12_Hassan Albarrami_ (IRR,ERR,MARR)

1. Problem Definition

Continue exploring IRR,ERR and MARR discussed in my previous blog (W11). The portfolio of projects (5 no#) were ranked by IRR and ERR and we ended with only one location which can satisfy the hurdle rate. in this blog we are going to do the same but taking the operating cost in consideration. As the idea is to construct a Building of 12 apartments, my experience the average operating cost for an apartment in Salalah is around 30 OMR per month (electricity and water) .

# W11_Hassan Albarrami_ (IRR,ERR,MARR)

W11_Hassan Albarrami_ (IRR,ERR,MARR)

1. Problem Definition

Continue talking about my construction building projects mentioned in W8, W9 and W10 blogs, this time I’m going to take a portfolio of projects (5 no# from my W2.1 blog ) and then rank order them by IRR and ERR . The projects in the portfolio which are not satisfying the hurdle rates (MARR)  should be killed off. Just like I mentioned in W2.1 blog the idea is to construct a Building of 12 apartments in one of the following locations in Salalah (two have been added)

# W10_Hassan Albarrami_ (ERR)

W10_Hassan Albarrami_ (ERR)

1. Problem Definition

Continue talking about my construction building project mentioned in W8 and W9 blogs, this time I’m going to explore ERR method to make sure the project still recommended. Like IRR, ERR is used to evaluate the economic justification of project. But this time ERR is taken into account the interest rate external at which cash flow generated over the lifecycle of project.

# W9_Hassan Albarrami_ (IRR)

W9_Hassan Albarrami_ (IRR)

1. Problem Definition

In this blog I’m going to take the same case study (see W8 blog) but this time, IRR will be calculated for this project to See wither the project still a wise investment or not.

# W8_Hassan Albarrami_ (NPV)

W8_Hassan Albarrami_ (NPV)

1. Problem Definition

NPV is a powerful technique which used to know how much the money in future worth today. For instant \$10000 today does not equal the same amount after 3 years, in fact it worth more in future and this because of investment and interest rate along that period. The figure below illustrates the idea.

# W7_Hassan Albarrami_ Monitoring contractor performance using Earned Value Management (EVM)

W7_Hassan Albarrami_ Monitoring contractor performance using Earned Value Management (EVM)

1. Problem Definition

EVM is a power full technique which used to track project progress and forecast the future performance. It can help in meeting the scope within cost and schedule parameters, reducing or eliminating schedule delays, and reducing or eliminating cost overruns. The table below shows the definition for EV acronym:

# W6_Hassan Albarrami_ prioritizing work orders using Expected Monitoring Value (EMV)

W6_Hassan Albarrami_ prioritizing work orders using Expected Monitoring Value (EMV)

1. Problem Definition

In my previous blog I have showed how to prioritize work orders biased on risk matrix. In this blog expected monitoring value is used to solve the same problem. According to business dictionary EMV is “Total of the weighted outcomes (payoffs) associated with a decision, the weights reflecting the probabilities of the alternative events that produce the possible payoff. It is expressed mathematically as the product of an event’s probability of occurrence and the gain or loss that will result” [4].

# W5.1_Hassan Albarrami_WORK ORDERS RISK MATRIX

W5.1_Hassan Albarrami_WORK ORDERS RISK MATRIX

1. Problem Definition

In my company, maintenance department is scheduling more than 200 preventive maintenance orders per month. Maintenance of equipment should not be done randomly, in fact it should be prioritized in logical biases. In this blog I will show you how to prioritize work orders biased on risk matrix.