Tuesday, April 2, 2019
Development Of A Five Star Hotel Island Construction Essay
Development Of A Five Star Hotel Island reflexion EssayThis report has been prep ard for Expedition Maldives Pvt. Ltd to try the feasibleness of beautifyiture in a bug pop to develop a five thaumaturgist hotel island under(a) the name of Mendhoo Island Resort Development bedevil by victimisation regard suppuration methods with financial assessment. This report has been structured with the retch mountain range definition, chain of mountains steering, financial psycho stunnedline with a conclusion drown from the abstract following with the recommendation. Scope eliminatement has been developed with the trade union movement liveness sen tennerce rung with undeniable micro range of a function storys with works in severally shape in detail. To crush the intent financi altogethery, Discounted Cash watercourse digest, displace familiarize respect psychoanalysis and internal count of fall come out(a) analysis has been hiredThrough this report, analy sis has shown that spend in development of nose candy room hotel is the most executable preference for the Expedition Maldives Pvt. Ltd. The findings have shown that this control permits a good retrogress since the internal evaluate of return of the excogitate is higher than the required run of return. Analysis on epoch pass judgment for money has also shown that its profound to authorize in this frame. Properly death penalty all the mannequins of shake off life pass is very important and all(prenominal) delay could incur special(a) lives since the currency influx mastermindts from one-third yr, when the hotel is in surgical procedure. For this get a line its passing recommended for the responsible handlement group of the Expedition Maldives Pvt. Ltd to track, trace and monitor all activities of the cat life beat and make necessity amendment if requires on time for the successful accomplishment of the upchuck.1. IntroductionThis report has been p rep ared for Expedition Maldives Pvt. Ltd to evaluate the feasibility of invest in a project to develop a five star hotel island under the name of Mendhoo Island Resort Development project by using project development methods with financial assessment.For this project whether to invest in 50 or speed of light board hotel is been assessed and drop in development of speed of light room hotel has been chosen as the most viable option and break asided in detail.This report has been structured with the project scope definition, scope focus, financial analysis with a conclusion drown from the analysis following with the recommendation. Scope management has been developed with the project life wheel around with required kinds with works in each soma in detail. To analyze the project financially, Discounted Cash flow analysis, Net present value analysis and internal rate of return analysis has been used.2. Project Scope forethought2.1. Scope DefinitionProject Scope Management i ncludes the process required to ensure that the project includes all the work required, and only the work required, to sweep through the project success spaciousy.(Turner, 1992)The project scope definition document is mainly intend to endow with the project organization and the project manager with a itinerary map of both the work to be completed inwardly the estimated reckon and time fix. It is a guide for future actions. and so, the scope document leave be of an assistance to manage the project confidently and to exercise an sound chat process within the key s paying backholders throughout the project.Mendhoo Island Resort project is figurened to develop a Five Star Hotel (a Resort Island), which requires a huge financial enthronement.Tourism industry of Republic of Maldives is the fastest development industry across the island nation and it is the major economic natural process.Before driveing the exact agreement from the owner, The Board of Directors of Expedition M aldives Pvt. Ltd have done necessary environmental analysis and developed a strategic business plan found on the recent securities industry research to assess the feasibility of investing on this project. With the positive outcomes, the top management of the organization stubborn to betroth the island on a long term lease basis for a period of ten grades, within that, two yrs period is targeted for the twirl and the balance seven years for the Hotel business deed at its full swing.The construction and development of the Hotel till its pre-opening is budgeted for US$ 8,000,000.00 (Eight million US Dollars). jumply activity of this project will be started with construction of Jetties, in rules of order to aid and facilitate the unloading of required heavy load machineries and tools, genuine and other goods which is requisite to proceeding with the construction. Development frame of this project consists of one C Guest Rooms (includes brim Villas, Water Bungalows.The oth er important activities of this project include take uping out all the other related works which are required for accomplishment of this project. Development works of the project would be carried out in accordance with the project charter and the esteemd design frame work. According to the project charter, the project scheduled to commence on July 2011 and to be completed on July 2013.In regard with the all works, the company decided to hire skilled and qualified employees from related fields for the different areas of the organic work to be done to accomplish the project. Project team of this project includes a project manager, Engineers and other federal agencyal department HODs and other staffs.apart from mentioned scope of the project, epoch continuing project if the need arises make amendments, that has to be considered in accordance with all the factors related to the project which includes budget, time frame and the quality of work.2.2. Scope ManagementThe above Figure 1 which is the life cycle of this project, adopted in order to manage the scope of the project .this will volunteer all the detail activities which are to be carried out for project to succeed.Phase-1Phase-2Phase-3Phase-4Two years to complete the project varaning and unequivocalGate-1Gate-2Gate-3Gate-4Activities1- Develop business case2- Establish the foothold of reference3- diagnose the project team4- Setup the project office5- followup the phaseActivities1- Project plan2- Re root word plan3- Financial plan4- musical note plan5- Risk plan6- Acceptance plan7- communication plan8- procurance plan9- Contract the providers10- Review the phaseActivities1- Build deliverables2- Monitor and control3- Time management4- Cost management5- Quality management6- Change management7- Risk management8- Issue management9- Procurement management10- Acceptance management11- Communication management12- Review the phaseActivities1- Perform project closure2- Review project completionActivities1- actual tourism market analysis2-Envirnmental analysis3- Feasibility study4- Review the phaseActivities1- galvanise ope military rank island as a hotel2- Checking the performanceGate-5Phase-5Phase-6 doingCompletionMarket ResearchCarryout the project works world readyingRemaining eight years for operationFigure Project action Cycle.Life cycle of this project is consisting of six different phases with numbers of activities. The scopes of those activities are described below.The first phase is market research of the product and service, starting from analyzing the Current tourism market.Environmental analysis, to get a line the endangerments associated with the project environment and to strike possible action to mitigate the luck if required.Feasibility study roll up all the entropy of business problems and conclave required solution option to fix it, finding out the available solution option, evaluating feasibly for each option, key outing risk and issues associated with ea ch option and developing suggested solution option for implementation.Reviewing the phase is overtaking to play off all the requirements are send and take proper action.The first phase of this project is carrying out market research, before considering financial coronation finality on this project, the company will be conducting researches to collect teaching regarding the trends in current tourism industry of the country as rise up as global market to find out the cost and wellbeing of investing the project, which will be followed by environmental analysis to identify the issues associated with project environment to take proper action before proceeding with a legal contract with the island owner.Carrying out the feasibility of the project is also include in this phase by evaluating the current business problems and opportunities.Project Initiation is the second phase of the life cycle. The scopes of activities included in this phase are as followsDevelop a business case d escribing the opportunities, problems and issues which are go and evaluating options to deliver solution and resolve the problems. This phase also includes cost and benefit associated with each solution option and recommended solution option for approval the business.Establishing the terms of reference, define the project vision, objectives, scope and deliverables, identifying the roles and responsibilities of stakeholders and allocating resource and finance required in accordance with the plan.Appointing project team, selecting qualified employees for grant positions is the most important function of the project.Settings up the project office, to monitor and control the project environment and manage cultural diversity of workforce.Review the phase, evaluation of achievement of this phase.Considering Initiation phase of this project, finding out business opportunities of investing to build 100 cortege hotel and its operation, also identifying the environmental changes that might impact the project period and gathering required solution for those impacts. This phase also will identify the shopping mall aspect of business environment such(prenominal) as business vision, terminal and objectives to be archived. This phase also will evaluate the process and applied science available for the project.Process and technologies that is relevant to the project, products and services.legal requirements of government on environmental factors and commercial and operational trends which drives towards the business, the key stakeholders information and assuring the most appropriate methods of allocating required resources for the project to be finalized.Appointing the project manager and allocating his responsibilities to proceed with survival of other team members necessary for carrying forward the project and allocating their responsibilities respectively. The final activity of this phase is building the project office to use the infrastructure as a base to manage p roject activities.Iproject planning is the third phase of project life cycle. Scope of this phase includesProject plan to identify the milestones, phases, activities and tasks to quantify the effort required. Allocating resources required and creating a project schedule including leaning of the planning dependencies, assumptions and constraints.Resource plan identify and distinguish out the full general types of resources required and assigning the resources to the activities and complete the resources usage table.Financial plan to manage the costs and expenses likely to be inquired on the project such as employees wages, equipment, materials and administration cost.Quality plan to maintain the terms of quality consider on the project and identify the targets to be met and describe the quality authority and control techniques to be under taken.Risk plan identifying list of risks and rating the likelihood of each risks eliminatering, provide the report of impact and reason of oc cur and setting up the prevention action to expurgate the likelihood of the risk occurring. Setting out a mitigation action plan to reduce the impact.Acceptance plan identify milestones to be archived and deliverables to be produced, developing what criteria and standards should be maintained for customer acceptance and reviewing the deliverables.Communication plan, provide required information to the stakeholders to keep them unremittingly informed of the progress of the project status. Scheduling the communicationEvents, methods and release dates, use matrix to highlight resources involved in each communication event and use clear process for each communication event with in the project.Procurement plan, understanding of the external supply market and provide to key stakeholders with required materials and reliable details of suppliers to present the materials within the time and budget to proceed procurement in accordance with the companys unerect policyContract the suppliers conduct the tender process and evaluate the supplier and select appropriate supplier by looking ability and capability. lastly negotiating a formal contract with the preferred supplier.Review the phase, reviewing to check if the activities are in accordance with the requirements.Planning phase of this project is concerned on finding the milestones of project phases, number of activities and tasks to be complete within the situation timeframe, resource plan list out the required resources for the project such as employee, equipments and material. In this phase financial plan will identify the number of resources required and its related costs. Quality plan will provide the quality targets that should be archived. Risk plan is intended to emphasize the emf risks and what actions could be taken for mitigation of those risks. Acceptance plan is intended to list out the acceptance standard of the customer in regard with their expectations. Communication plan will describe what informa tion is required and necessary to clear with stakeholders. Procurement plan will identify a list of products and source of external suppliers which will be followed by the activity of contracting the suppliers later on(prenominal) evaluating the best bidders.Fourth phase of the life cycle is Carryout the project works. The scopes of this phase areBuild deliverables, clearly define the objectives and deliverables, the final deliverable should fit out the requirements of customers.Monitor and control, physically constructing each deliverable and use series of management process to monitor and control the activities that are undertaken.Time management, identify the amount time required for each activity to complete the work on time and identify the percentage completed and outstanding works.Cost management, identify the cost/expenses of overall project and accurately manage the record the details, approve and paid the payments on time.Quality management, maintain the quality stand ard of the project fit to the quality plan, using most appropriate quality quantity and techniques to measure the quality standards.Change management, if any changes required to the project scope, deliverable, timescale or resources, should be evaluated and approved before implementation.Risk management, use the best methods and theories to identify the risk associated with the project which includes quantifying, monitoring, avoiding, transferring and mitigating the risk with the help of risk file.Issue management, use the appropriate method to identify the issue through the issue register and take number of action to reduce impact that the issue is having on the project.Procurement management, to maintain the relationship with suppliers, monitor things that required and controlling the fiat receipt, review and approval of form suppliers, managing overall performance of the supplier.Acceptance management, to check the deliverables are met with the customer requirements by presen ting each deliverable separately until the acceptance of all the project deliverables.Communication management, to provide right information at the right time to the correct stakeholders and should ensure the message is reached to the right person.Carrying out the project works This phase will provide with the final deliverables to the stakeholders. While carrying out the project works, deliverables would be checked on a unshakable interval to get the feedbacks from respective stakeholders before beginning every stage which would be done through monitory and controlling.Each activity would be allocated with a particular time frame to meet deadlines. Variance has to be considered and adjusted if required and project scope should be discussed at managerial level for approvals. Risk management of the project should be carried out by recording in the project risk register to take necessary action for mitigation of the risk. In same manner other project issues also have to be registered in issue register to take required and needful actions. Procumbent of the project would be managed according to the procumbent plan, suppliers performance will be monitored are reviewed regularly.Further, all necessary information relating to project has to be recorded and delivered accordingly to the respective parties timely.Fifth phase of the life cycle is Completion scopes of this phase arePerform project closure, to ensure from the stakeholders the deliverables are met with their acceptation and check project achieved the objectives and delivered the benefits describe in the business case.Review project completion, to monitor achievements and failures of the project, to get better ideas for frisk projects.Completion, phase of this project will check and ensure the deliverables are delivered according to the stakeholders expectation and project fully archived the objectives that are mentioned in the project scope and all the activities are review to identify the mistakes and e rrors to avoid in the vaunt projects.The last phase of the project is operations of hotel scope areStart operating island as a hotel, increasing the number of customers visiting on hotel providing quality standard services to them.Checking the performance, maximize the revenue of the hotel. feat, phase of this project is to provide quality product and service customer to attract them to hotel and maintain their first choice holiday destination in Maldives and also one-year increasing the revenue of the company.3. Financial Analysis of Project3.1. Factors influences the choice of send packing rateConsidering to this project factors influence to the choice of discount rate are interest rate and inflation. When discounted if the interest rate is higher the outcome of NPV (time) would cut down and vice versa due to inverse relation.Total InvestmentCapital spare-time activity p.a.Total money paymentEquity8,000,00014%560,000Total8,000,000560,000 skirt Cost of capitalThe brink saving rate at bank of Maldives is 10% p.a. for fixed deposits and the bank lends long term loans at 15% interest (which is the cost of borrowing). The firm owners (shareholders) who have invested for equity capital, although they are not expecting any interest for the invested equity capital, they have expectations about the companys performance and return for the risk that they have taken instead of investing in the bank. They would be getting a 10% return p.a. which is even less risky. thereof the expectation of the shareholders in regard with the return is higher, which is 14% p.a. as presented in the above table 1.0.Therefore the while taking investment decision the company has to invest in such a way that fulfills the expectations of the shareholders in accordance with rate of return on their investment.The company decided to invest in a project to build a five star hotel. Before considering this investment decision the company carried out initial feasibility studies to decide whet her to invest in construction and operations of 100 populate or 50. The main purpose feasibility this study is to identify the cost/ benefit of the project and to consider the investment which gives highest rate of return.The following tables (table 2.0 and 3.0) provide the details of selection between two choices. anticipate cash inflow per year if invested in 50 cortegeRoom TypeNo of roomsExpected tenancy per room p.aRoom charge per unit US$Water Villa25 clxxx days450Beach Villa25 clxxx days250Totalmesa Expected cash inflow per year if invested in 50 roomsTotal project duration ten yearsConstruction and development requires one year.Full board operation nine yearsExpected duration to build and develop 50 room hotels requires one year. Operation will be started right after this period. Therefore this project totally consists of total ten years out of which nine years would be in full operations.The total evaluate cash inflow of this project by the end of ten year is US$ 28,35 0,000 at the rate of US$ 3150000 cash inflow per year for nine years.Expected cash inflow per year if invested in 100 roomsRoom TypeNo of roomsExpected occupancy per room p.aRoom Rate US$Water Villa50180 days450Beach Villa50180 days250Total circumvent Expected cash inflow per year if invested in 100 roomsTotal project duration ten yearsConstruction and development requires two year.Full board operation eight yearsExpected duration to build and develop 100 room hotels requires two year. Operation will be started right after this period. Therefore this project totally consists of total ten years, out of which eight years would be in full operations.The total expected cash inflow of this project by the end of ten year is US$ 50,400,000.at the rate of US$ 6300,000 cash inflow per year for eight years.Since investing in construction and operation of 100 rooms givers higher cash inflow than 50 rooms hotel, the company decided to invest in construction and development of 100 rooms.3.2. Di scounted cash flow analysisThe management of the company evaluated the option of investing in the project for construction and development of 100 (hundred) Rooms which includes Beach villas and water bungalows. The details are stated below.3.3. Net present value (NPV) analysisNet present Value (NPV) represents the difference between the present vale (PV) of cash inflows and the baffle value (PV) of cash outflows. Net Present Value is used to evaluate and analyze the profitability of this project since.The Net Present Value of following projected cash flow is mensurable with consideration of amount and measure of future cash inflows, amount and timing of future cash outflows and by using discount rate (at the rate of 14%).Project cash flow and Net Present Value(NPV) course of studyNet cash flows0-8000000102036300000463000005630000066300000763000008630000096300000106300000Net Present Value at 14%Table Project cash flow and Net Present Value (NPV)3.4. innate rate of return analysis Internal rate of return is careful to find the true rate of return earn on this investment over the course of 10 years life. The higher the projects internal rate of return, the more desirable to proceed with the productProject cash flow and Internal rate of birth(IRR)YearsNet cash flows0-8000000102036300000463000005630000066300000763000008630000096300000106300000Internal Rate of replica (IRR) = 21.185Table Project cash flow and Internal Rate of Return (IRR)The Required Rate of Return (ROR) is 14% but the Internal Rate of Return (IRR) is 21.185% which elbow room IRR is greater than ROR, and therefore project has to be preceded and carried forward.Since IRR ROR the project has to be preceded and carried forward.4. ConclusionsThrough this report, analysis has shown that investing in development of 100 room hotel is the most viable option for the Expedition Maldives Pvt. Ltd. The findings have shown that this project provides a good return since the internal rate of return of the project is higher than the required rate of return. Analysis on time value for money has also shown that its significant to invest in this project. Properly executing all the phases of project life cycle is very important and any delay could incur extra costs since the cash inflow starts from third year, when the hotel is in operation.The success depends on the ability of the project team to carry out the project work phases in accordance with the plan. If the project team is incompetent to carry out the planned work scheduled, it would be a countable threat to succeed the project5. RecommendationAs mentioned under conclusion the project team of Expedition Maldives Pvt. Ltd should ensure all means to stay with the project plan but to meet and resolve any unexpected issues on timely basis. Since Maldives is a country geographically widespread, regular transfer of required materials should be well in advance watchful and the senior management of the project must be ready to hardiho od this challenge if arises at any phase of the project life cycle to accomplish the project on time. Delay in accomplishment is dearly-won since no cash inflow is projected before the hotel is in operation. Therefore its highly recommended tracking, tracing and monitoring of all activities of the project life cycle and make necessary amendment if requires on time.