LIAP #15: REPLACE SIX BRIDGES


 

About 25 years ago, my company was awarded a government project to replace six small bridges along JKR road. It is a small contract costing less than RM10m.

As a project manager, you will undertake the planning of the construction by a normal process according PMBOK.  For me as the business owner of the company, my first priority how to maximise my project profit and finance the project. Both plannings are important-first the technical aspect and second the commercial aspect of the project. It is the two sides of one coin.

How do I maximise my profit? First I do a work breakdown Structure(WBS) of the scope of work.  List all work packages according to margin of profits. Anything above 10% , do it yourself and sub-contact the rest to others. The major cost components are concrete beams and piles.  I took over the supplies and let my subcontractors do the installation work. About 60% goes to me and 40% to them. All minor works like access roads and temporary bridges I subcontract to others. 

A senior government  officer made noise that I did not  do the job and accused me of selling the project. He failed to understand construction contract is not limited to work on site. He only saw what was happening on site.More work and more money  are needed to manage the supply chain part of the project. 

At the end of the day, I must make 20% gross profit. That is above the normal construction profit of only 10%. Even at 10% is good if the contract value is more than RM100m.


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