MMP732 Diversification in The International Construction Business Assignment Sample

Property Development

Table of Contents

Introduction.

Task A..

Site summary and overview..

HBUA for the selected site.

Proposed development

Financial evaluation.

Task B: Profit analysis.

Conclusion.

Recommendation.

Reference list

Executive Summary of Diversification in The International Construction Business

This report has been prepared for the analysis of selected sites for construction purposes. The report has been developed based on Assignment 1 which has been done for the market analysis. 0 Roberts Street, Norseman WA 6443 is the selected site of this report. In the introduction, the purpose and outline of the report have been mentioned. After that, the initial investigation was done based on the Site investigation report. After that (Highest and Best Use Analysis) HBUA analysis has been done which has informed that the plan is quite legally, financially, physically feasible, and minimally productive. However, the costing factor has been identified as quite higher for the construction. Hence recommendation regarding local sourcing and ethical sourcing has been done for sustainable development. 

Introduction to Diversification in The International Construction Business

The selection of site and development of construction over the same is not a very simple task as it demands a collection of information in multiple aspects and analysis of that information as well. A construction project initially demands the selection of a suitable site and analysis of the suitability of that selected land plot for the development of a building over the same. The total area along with the availability of groundwater, soil condition, and history of the plot along with the current condition and ownership of the site should be analyzed. The aspect of the cost of construction and selling of the same is also tagged with the profitability of a construction project. The purpose of this report is to analyze the feasibility of a construction project over a selected plot in West Australia. This report outlines the analysis of the site inspection report, HBUA (Highest and Best Use Analysis) anal profit analysis of the project.

Diversification in The International Construction Business - Task A

1. Site Summary and Overview

In the assessment-1, market analysis has been done about the construction industry of Australia. After that initial inspection of the site has been done over the selected land plot. The selected land plot for the construction is 30 Roberts Street, Norseman WA 6443. Hence, it can be mentioned that the selected site for construction is not at any cosmopolitan city of Australia but in the Norseman own of West Australia.

On the above figure, the satellite view of the selected plot has been shown which indicates that, despite being located at the Norseman town, the plot is not secluded and has high rises around it. Hence, from this angle, it can be analyzed that this area is suitable for constructing high-rises and buildings. As per the official website of environmental regulation, it is always better to prepare a PSI (Preliminary site investigations) before executing any project over a selected plot (der.wa, 2014). Additionally, PSI is desktop research which includes the analysis of site-related information collected initially from both the secondary and primary sources. As per the viewpoint of Ashour et al. (2016), the collection of information by site inspection is associated with primary sourcing of data. In this case, the same thing has been done. The site investigation has informed that the area of the selected land plot is 1012 square meters which are quite adequate to develop a building along with a lawn and parking plot around it (on the house, 2020). The investigation regarding this real estate property has been done.

Lots 30 Roberts street, has been used for residential purposes, and currently, the area is unoccupied. The current house standing over this plot was made 100 years back, probably in 1920 (Domain, 2020). The timeline of the prosperity has been published on the website of the real estate market of Australia which informs that the house has been last sold in November 1990. The valuation of the property at that time is about 16,000 dollars. The current owner of this house has provided a valuation of about 119,000 dollars for reselling (onthehouse, 2020). From this data, it can be mentioned that the property is quite high priced. However, it is not that much high priced in comparison with the land plots of cosmopolitans of Australia. This site is quite suitable for the development of residential construction as Norseman apartment is located near this property and district schools, hospitals are also located near this plot. The council area of this site is Dundas and the distance from Perth is about 496 Km.

HBUA for The Selected Site

The analysis of the feasibility of the plan to develop a building on the selected plot of Norseman is needed after analyzing the primary information of the plot. As per the idea of Gylfason, Tómasson, and Zoega (2016), Irving Fisher has conceived the idea of highest or best use which is the basic concept of maximum use or productivity. Every resource should be utilized to the utmost degree and this is the key idea associated with maximum productivity. Bates (2015) has mentioned that HBU analysis can be done with the basic four parameters namely legal, financial, and physical and productivity. This framework should be applicable for the analysis of the Lots 30 Roberts Street of Norman town.

Legal aspect

Property law and rights of ownership are some of the major factors that are tagged with the legal aspect of a property. The initial investigation and desktop research have shown that no such legal issue is pinned with the selected site. As per the viewpoint of Ye et al. (2018), in major cases, a legal dispute regarding ownership has been noticed for real estate property and land plots. The absence of such an issue indicates that this site and the plan for building construction are legally permissible. Additionally, as per the environment protection protocol of Australia, the investigation of a site includes its contamination aspect. The official report has mentioned that the Contaminated site Act 2003 has enforced the investigation regarding any chance of source of contamination associated with a site (der.wa, 2014). In this case, being residential property for 100 years, no such potent source of contamination has been noticed. Additionally, the issue of groundwater contamination is not associated with the site of Australia. Hence, from this angle, it can be mentioned that this site is legally permissible to process with the plan of construction.

Physically possible

In the previous section of this report, the area of the land plot has been mentioned which is about 1012 square meters. This area is quite adequate to develop a multistorey building for residential purposes and also for commercial purposes. Hence, from this angle, it can be mentioned that this site is suitable and the plan is physically possible. 

Financially feasible

The financial aspect is one of the major factors which determine the successful execution of any project. The construction related project always demands allocation of a high amount of financial resources as it includes multiple aspects like labor costs, demolition cost, construction cost, and purchasing cost as well. However, the price of the plot is not that high for Norseman, as there are certain issues like the availability of groundwater, low rainfall, and lack of proper fertile area for agriculture (Aussie Towns, 2020).

In the above graph, the fluctuation of the price of the land plot of Norseman has been shown. The graph is prominently showing that after 2013, the price of land sites has decreased. This indicates the financial feasibility of this plan.

Productivity

A project can be turned maximally productive with the minimization of the risks associated with the same. The risks tagged with this project should be analyzed in the upcoming section of the SWOT analysis. Additionally, the financial resource management and formulation of an effective pricing strategy for the building will make this project maximally profitable. 

SWOT analysis

Strength ? Low priced area ? Preferred by the middle-income population	Weakness ? Climatic Condition
Opportunity ? The low price of the plot	Threat ? Availability of groundwater

Table 1: SWOT analysis

(Source: Researcher)

Strength

This plot is located at Norseman which is recently in the tp positioning regarding purchasing and selling of real estate. Hence, more people are making decisions in settling down at Norseman rather than cosmopolitans for the issue of the cost of living. This is one of the major strengths which should be utilized to enhance profitability in this project.

Weakness

The climatic condition of Norsemen is a weakness in the sustainability of the project. As per the official report, Norseman is located in the Goldfields-Esperance, which is mainly tagged with gold, nickel, and uranium mining and has a scanty annual rainfall of about 276 mm (Aussie Towns, 2020). The lack of availability of groundwater and scanty rainfall is one of the major weakness which may prevent the customers to move to Norseman.

Opportunity

The fall of the price of real estate and land at Norseman is one of the major opportunities to develop the profitability of the entire project. As per the official statistics, it has been noticed that the price of land from 90,000 dollars has been lowered down to 60,000 dollars (onthehouse, 2020). This is one of the major opportunities to enhance profitability in front of construction business companies. Hence, from this angle, it can be mentioned that this land plot is favorable to construct a building over the same.

Threat

There is a safety issue associated with this plot. As per the viewpoint of Reid and Beilin (2015), bush firing is one of the major social issues which impart a threat to the safety of the building of Australia. The sky view has proved that this land plot is not far from the bushland of Norseman. Hence, the system of management of fire should be installed with the building.to manage this threat. Additionally, the lack of groundwater may invoke issues in the availability of water.

3. Proposed Development

Planning is one of the major aspects tagged with the successful accomplishment of a construction project. This construction has the target to address the middle-income population of the Australian market. Hence, the construction of the house should be done based on that target customer group. The total area of the selected land plot is about 1012 sq. meter, which is needed to be converted to sq. ft. (1012 * 3.25)= 10373 sq. ft. and this is the total area of the plot.

A 10 storied building should be constructed along with a parking lot on the ground floor. 8 flats with 800 sq. feet each should be constructed. This is the approximate building size.

The flood plan for each flat ort residential unit includes a balcony of 40 sq. ft. Living and dining room of 500 sq. ft. A bedroom with 120 sq feet should be included. Bathrooms with 40 sq. feet should be prepared. Another office room for professional work should be kept with 100 sq ft. This is the basic floor design of this construction. The parking lot on the ground floor should be of 5000 sq feet area which should provide parking facilities to residents of the house. The rest part should be turned into a small community hall for any cultural or occasional use. 

 In front of the housing, open space should be left for fresh and for leisure walking purposes. As per the viewpoint of McLennan, Paton, and Wright (2015), the incidence of bush firing is associated with bushland and this invokes major safety crises. Hence, a well-developed system of fire management should be installed in the building along with the fundamental safety tools like fire alarms.

The idea of the development of such a floor is quite feasible and will be more acceptable to the population of Australia as each and every residential unit is quite spacious and there is a scope of availability of fresh air. The residential units in the high rises of the cosmopolitan cities like Melbourne are not as spacious and more costly as well. Hence, this plan will be more acceptable to the population of Australia.

4. Financial Evaluation

Initially, the purchasing value of the site needs to be considered. The current owner has provided the price of 119,000 dollars. Hence, this is the initial costing. As per the idea of Reed and Sims (2014, p. 114), in the case of construction projects, the cost of demolition of the existing building is needed to be considered. In this case, the cost of demolition should be considered as a residential house already standing over the plot. Hence, the cost of demolition will be 55,000 dollars. After that, the material and labor cost is associated with the construction of the entire building. The payment of the manager, observer, and the engineer should also be done. All these factors should be considered while calculating the price of each residential unit of the building. This will help in the identification of the profitability of the project. 

Task B: Profit Analysis

The analysis of the cost aspect includes the purchasing, demolition, construction of buildings, and more. Initially, the availability of the financial resource of 174,000 dollars is needed for the purpose of purchasing the plot and demolishing it. As per the official report of the current architectural cost Guide, it can be mentioned that concrete roofing demands 75 dollars for every square ft. (Archi centre Australia 2019). Hence, roofing for the entire building demands about 4320,000 dollars. Additionally, The plumbing cost will take about 100,000 dollars and plaster will take about 150, 60,000 dollars. Hence, the price for each residential unit will be calculated as per the construction cost. The net profit will be 100,000 dollars from this project if it is planned with a medium pricing strategy. However, the pricing can be minimized with the implementation of the ethical sourcing.

Conclusion on Diversification in The International Construction Business

At the end of the study, it can be concluded that inspection of a site, analysis of the information regarding the suitability of that site for construction purposes is quite a critical task. Initially, market analysis is highly needed to conduct the same. Additionally, the development of a PSI with initial site inspection is needed to be done to evaluate the potentiality of a site to construct buildings over it. In this case, 30 Roberts Street, Norseman WA 6443, is the selected site that is legally, financially, and physically permeable to utilize the same for constructing a 10-storied building. The target has been kept over the middle-income population of Australia and this will helps to get more customers to purchase the residential units of the buildings. The analysis of financial profit has ensured the success of the project. However, the issue of climatic condition and scarcity of groundwater is needed op be solved, to make the plan more feasible

5. Recommendation on Diversification in The International Construction Business

The construction cost has been identified as quite higher for this project. It can be managed with the implementation of the strategy of ethical sourcing. As per the idea of Russell, Lee, and Clift (2018), the involvement of the local people for the management for the process of construction and supply of raw material can be done. The inbound logistics like purchasing of materials can be done from the local suppliers. This will help in the minimization of the cost burden of the entire project. As per the viewpoint of Brooks and Rich (2016), ethical sourcing helps in the implementation of sustainable growth. Initially, the cost burden can be minimized which will provide appreciable minimization of the involvement of financial resources. 

Additionally, the involvement of local people, as laborers for construction will help in the availability of cheap labor. This will act as a multi-beneficial strategy for this program. The physical development of the local people will take place along with the minimization of the labor cost of the authority. This will helps in the minimization of the price of the residential units and that will helps in the targeting of the middle-income group of the country.

Reference List for Diversification in The International Construction Business

Archi centre Australia, 2019, Cost Guide 2019. Archi centre Australia, retrieved17 September 2020, <https://www.archicentreaustralia.com.au/wp-content/uploads/Cost-Guide-2019.pdf>

Ashour, R., Taha, T., Mohamed, F., Hableel, E., Kheil, Y.A., Elsalamouny, M., Kadadha, M., Rangan, K., Dias, J., Seneviratne, L. and Cai, G., 2016, October. Site inspection drone: A solution for inspecting and regulating construction sites. In 2016 IEEE 59th International Midwest Symposium on Circuits and Systems (MWSCAS) (pp. 1-4). IEEE. https://doi.org/10.1109/MWSCAS.2016.7870116

Aussie Towns, 2020, Norseman, WA. Aussie Towns, retrieved17 September 2020, <https://www.aussietowns.com.au/town/norseman-wa>

Bates, C.S., 2015. Measuring Price Activity in the Art Investment Market. In Proceedings of the 1984 Academy of Marketing Science (AMS) Annual Conference (pp. 422-426). Springer, Cham. https://doi.org/10.1007/978-3-319-16973-6_91

Brooks, A. and Rich, H., 2016. Sustainable construction and socio?technical transitions in London's mega?projects. The Geographical Journal, 182(4), pp.395-405. https://doi.org/10.1111/geoj.12167

der.wa, 2014, Assessment and management ofcontaminated sites Contaminated sites guidelines. Australia Government, retrieved17 September 2020, <https://www.der.wa.gov.au/images/documents/your-environment/contaminated-sites/guidelines/Assessment_and_management_of_contaminated_sites.pdf>

Domain, 2020, 30 Roberts street Norseman WA 6443. Domain, retrieved17 September 2020, <https://www.domain.com.au/30-roberts-street-norseman-wa-6443-2016367549?utm_source=onthehouse.com.au&utm_medium=referral&utm_content=HistoryTop>

Google Map, 2020, 30 Roberts St, Norseman WA 6443, Australia, Google Map, retrieved17 September 2020, <https://www.google.com/maps/place/Roberts+St,+Norseman+WA+6443,+Australia/@-32.1921773,121.778377,332m/data=!3m1!1e3!4m5!3m4!1s0x2a51d226ef3bfea5:0x854f9bbf9c793fc8!8m2!3d-32.1963786!4d121.7804302>

Gylfason, T., Tómasson, H. and Zoega, G., 2016. Around the world with Irving Fisher. The North American Journal of Economics and Finance, 36, pp.232-243. https://doi.org/10.1016/j.najef.2016.01.004

McLennan, J., Paton, D. and Wright, L., 2015. At-risk householders' responses to potential and actual bushfire threat: an analysis of findings from seven Australian post-bushfire interview studies 2009–2014. International Journal of Disaster Risk Reduction, 12, pp.319-327. https://doi.org/10.1016/j.jdrr.2015.02.007

onthehouse, 2020. 30 Roberts Street Norseman WA 6443. onthehouse, retrieved17 September 2020, <https://www.onthehouse.com.au/property/wa/norseman-6443/30-roberts-st-norseman-wa-6443-8765929>

Reed, R. and Sims, S., 2014. Property development. Routledge, Abingdon

Reid, K. and Beilin, R., 2015. Making the landscape “home”: Narratives of bushfire and place in Australia. Geoforum, 58, pp.95-103. https://doi.org/10.1016/j.geoforum.2014.10.005

Russell, E., Lee, J. and Clift, R., 2018. Can the SDGs provide a basis for supply chain decisions in the construction sector?. Sustainability, 10(3), p.629. https://doi.org/10.3390/su10030629

Ye, M., Lu, W., Flanagan, R. and Ye, K., 2018. Diversification in the international construction business. Construction management and economics, 36(6), pp.348-361. https://doi.org/10.1080/01446193.2017.1388530

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