Essay MGT5225: Project Management – The Kelmanside Area of Glasgow – Management Assignment Help

Assignment Task:

1. Introduction

The Kelmanside area of Glasgow is home to over 1000 people living in 300 run down and uneconomic flats and houses. The buildings and fittings have become old and require excessive maintenance. The area has been a socio-economic concern for many years, with high crime levels, high unemployment, poor health and social deprivation. The housing stock is essentially sound but years of neglect mean that it is in need of extensive renovation. It is surrounded by an area of derelict industrial land. A plan has been proposed to redevelop the area, this will require a substantial initial investment, but it is hoped that the rental income, proceeds from sale of some properties and the social benefits will ensure the scheme is value for money. The plan provides new rental properties, new properties that will be sold to private buyers, and renovation of the existing rental properties. The plan is to demolish the remaining derelict buildings in the industrial sector, then build a mixture of flats and houses for sale and for rent and renovate the existing housing stock to a high standard. The mixture of properties for private ownership and rent is believed to be an important factor in improving the social mix of the area. The scheme will include small workshop units suitable as premises for small businesses and a community centre with a shop and health centre.

2. Overall Plan

The initial stage of the redevelopment will be to demolish the remaining buildings on the adjacent derelict industrial land. Once this has been completed the building work can begin. The first priority will be to build 300 new rental flats and houses which can be used to temporarily rehouse the current occupants of Kelmanside whilst their existing 300 flats and houses are being renovated. The remaining new build and renovated flats and houses will be offered for rent; existing tenants may choose to move back into the renovated flats or stay in the new flats, the rent will be the same. The scheme will include 200 new build private flats and houses which will be offered for sale, work can start on this once the industrial land is cleared, the funds from the sale of these properties will provide a useful injection of cash to the project. In addition, an enterprise area will be created with workshop units available for rent. The centre piece of the scheme will be a community centre and an outdoor recreation area. Work on the recreation area can start once the road system is in place. MGT5225 Project Management [PP – Engineering Stream] Assignment Resit Diet 2019-2020 Dr James Wilson/Edited by dr. ir. Rob Dekkers Page 2 of 6 Work on the new road system can start once the industrial area is cleared. Most of the building work can start while the road system is being constructed, and the new rental properties are not affected by the road building but private flats and houses will not be sold until the road network is complete. Once all the housing (newly built and renovated), community centre and outdoor recreation area are complete the area will be landscaped. The workshop units are in an area on the perimeter of the site and so will not be affected by the landscaping. The development will be largely car free but linked to the city centre by a regular bus service, once the road network is complete.

3. Employment Opportunities

The provision of employment opportunities in the area is an important factor in the plan. The scheme will include 20 small workshop units available for rent; these will encourage small businesses to move into the area. In addition, a requirement imposed on all contractors tendering for building work will be that they offer unskilled labouring positions to local people. There will also be grants available to the contractors to support a number of apprenticeships in associated building trades, should they employ such staff with more permanent prospects.

4. Funding

If the project is approved, Glasgow City Council backed by a grant from the UK government for regional development will provide funds. They would like the required capital funding to be evenly spread over the construction phase of the project. They require information on the future cash flows, the timing of proceeds from the sale of housing and likely annual rental income once the scheme is fully operational. It may be assumed that proceeds from the sale of properties will be realised 6 months after the building is complete. Rental income will start 3 months after the rental properties are complete. Rental income from the existing tenants will flow throughout the life of the project.

5. Required As a potential project manager of the scheme you are required to undertake an initial feasibility study:

1. This will give guidance on the time scale of the project, including suggested timings for the major building works. The timings for the different activities should also reflect the cash flow objectives outlined in the next section.

a. In particular, the council would like for the project to finish before the November, 2022 date, until which the funding is available.

b. Is it likely that all the expenditure on the project would be completed before the November, 2022 date? If not, how great would be the outstanding expenditure and how long would it take to finish?

c. For budgeting reasons, Glasgow City Council would like a steady expenditure on the project. Compare a project plan that achieves that, in so far as it is possible; with one that starts every activity as early as possible, in consideration of the availability of funding. Are these desires incompatible?

2. You are required to outline the likely costs involved and produce a simple analysis of cash flow over the duration of the project. The objective will be to avoid incurring all the expenditure at the same time and to realise funds from the sale of properties and rental income as soon as feasible.

a. Determine the project’s total cost, and break that down into costs for the rental property, private housing, and the workshops.

b. Determine the costs of the ‘common’ facilities: the roads, community centre, etc. Discuss the issues involved in recovering these — should Glasgow City Council expect its tenants and the property buyers to pay towards these;

c. Determine the income available from the project: what would be the sales income from the private properties sold, the rental income from the residential properties and from the commercial ones?

d. Considering the costs and incomes due to the various developments (rental, private sales and commercial premises) assess their economic attractiveness.

3. In addition, you are required to describe the main social benefits that may come from improving the neighbourhood. The economic value of the likely benefits will be assessed and costed by an economist, BUT this is a specialist task and outside your remit. If any (or all) of these are not financially rewarding (at a minimum, fully recovering their costs, as seen in part d before) what rationales might be made to justify their inclusion?

4. A broad range and variety of risks to the success of the project should be outlined, and ways of mitigating these risks suggested. Consider at least four possible risks. Timing and cost data is provided in the data file Kelmanside.xls. Assume a start date for the project of 1/4/2020.