Project Management

1. What is Turner's business strategy? How does it differ from the competition?

Guaranteed Maximum Price: Usually the contracts are negotiated with Cost plus basis up to the guaranteed maximum price(GMP) stipulated in the contract. Turner's fee for managing the project was stipulated and fixed in the contract. Costs in excess of GMP were exclusively absorbed by Turner.

Savings participation: Once the contingency is released as savings, Turner will share the savings with the owner based on the pre-agreed terms.

Risk Management and Sub-contracting: Turners strategy is to concentrate in the risk management side of the business including planning, scheduling and procurement of materials. Most of the projects are awarded to subcontractors and are managed by Turner managers.

Management Expertise and Efficient money management: Turner does not compete solely on price and they compete by showing owners that they have expert managers and they can spend their money efficiently. They realize incentives for careful cost management.

Accurate Project task Estimation: Turner keeps track of the database of IOR style cost report broken down by job detail. This will help them evaluate any new projects using historical information along with the current situations. Doing proper evaluation of the business tasks, providing the best product and best quality are keys to the Turner's business strategy.

Turner's strategy is to make the owner their partner in managing the project. One of the greatest competitive advantages of their strategy is to develop and share accurate information with the owner while a project is in progress. Depending on the experience and demands of the owner they share all or part of IOR cost detail with the owner. Other competitive advantages are their key business strategies - Guaranteed Maximum price and savings participation with the owner.

2. What contingencies could threaten Turner's strategy?

The single most contingency that could threaten Turner strategy is Construction contingency.

Inaccurate Estimates: Inaccurate estimates of the project tasks and C-Holds, E-Holds and construction contingencies could threaten Turner strategy too. The value of the IOR system depends on the quality of the data it contains and the IOR updating process provides the necessary thoroughness. The updating of exposure holds involves a lot of intuition and gut feel and can only be done with real understanding of the project. Since the business model is based on risk management estimating and managing the contingencies play an important role.

Scope Creep: If the owner approves extensive drawing and specification changes and keep redesigning the plan that amounted to more than the estimated construction contingency set side.

Early release of contingencies: Early release of the contingency money is a threat due to potential uncertainties BEFORE the project is complete. This money is a safeguard against scope creep and unforeseen problems. If the contingencies are held for too long, it can threaten relationship with the client. Turner's management can also pressurize to realize earnings from contingency, if the project executives are comfortable. If the contingency dollars are released to an owner prematurely, Turner's business strategy allows the company to dip into fee earnings to complete any unforeseen problems after the release of the money.

3. Examine the IOR system, reports, and meetings. Does the IOR system force managers and the project team to address the contingencies in question # 2?

Yes. IOR