PROJECT MANAGEMENT FOR RENOVATING A HOSTEL

Department Of Business Administration

Turiba University

Professor
Ivars Linde

Prepared By: Abens Anna Jacob

Group: UMA1V22

CONTENT
1. Project Summary

1.1 Project Scope

1.2 Project Justification and Main Problem
1.3 SWOT Analysis

2. Alternatives

2.1 Evaluation of Alternatives

2.2 Choosing the Best Alternatives

3. Development of Concept (WBS)

3.1 Workbreak down Structure – Alternative A

3.2 Workbreak down Structure – Alternative B
3.3 Schedule Planning
3.3.1 CPM for Alternative A
3.3.2 CPM for Alternative B

4.1 Cost Estimates for Alternative A (with Gantt chart)

4.1.1 Cost Estimates for Alternative B (with Gantt chart)

5. Comparison of Profitability

6. Strategic Analysis

7. Risk Analysis

7.1 Conclusion about selecting best alternatives

8. Project Description

9. Conclusion
1. PROJECT SUMMARY:

The basic idea is to initiate and develop this project is mainly based on the
merging needs of stay in Riga. It has been observed that now a day more and
more trend of hostelling has been found in twin cities. Hence, it’s creating a
business opportunity for many organizations in the near future it’s gone be a
profitable business field.

According to the data of the Central Statistical Bureau (CSB) in 2015, 2.1

million foreign visitors stayed in Latvian accommodation establishments,
which is 2.0 % more than in 2014. As compared with 2014, the number of
foreign visitors grew by 3.1 %, reaching 1.5 million. The average length of a
stay of foreign visitors in accommodation establishments was 2 nights.
Of all foreign visitors “79.1% stayed in Riga”, 8.2 % - in Jūrmala, 1.7 % - in
Sigulda county, 1.5% - in Ventspils, 1.5% - in Liepāja.

Although the issue of safety and security remains the primary reason which
keeping people to avoid hostel. As the recent trend shows that people are
gaining more confidence about staying in hostel especially solo travelers.
From 2011 to 2014, for example, SITA World Tours’ solo traveler bookings
increased by nearly 64%, generating an increase of more than 90% in sales,
the company said. Although a good hostel should present the following
factors to the customers for better usability:
* 24 hour reception;
* Transfer from/to airport
* Laundry facilities
* Printing
* Two common rooms;
* Party room;
* Fully equipped kitchen;
* City maps;
* Wi-Fi;
* TV & DVD;
* Personal Computer;
* Tourist Information;
* Hairdryers;
* Iron and ironing board;
* Hot beverages and milk;
* Board games;
* Parking place;
* Book exchange shelf;
* Lockers;
* Front door keys;
* Luggage storage;
* Bed linen;
* Towels;
* Slippers;
* Baby cot;
* Ear plugs;
* Bicycle rent (seasonal)

1.1 PROJECT SCOPE:

Since most people only rate a hostel by it look, facilities, amenities and its
location and etc… So it is important to select a good site which is really close
to city and easy to connect with other places. Therefore, we have selected a
place in Riga Town because it is really close to supermarkets, restaurants,
the train station, the bus station, airport etc….

Renovating a 2 story – building to hostel requires a considerable amount of

money. We need to make a good impression by choosing an exterior product
and style that will give a good appeal to the hostel. So, it is very important to
design the hostel in such a way that it can deliver all the needs of our
customers. Total area covered for this project is 35,000 sq.ft. It is very
important to decide how many rooms we want give for rent and how much
spacious we need the room to be. Consider how much money you have in
the bank and how much you are willing to borrow when deciding which floor
plan to go for.
We can easily add more rooms in second floor by adding more room
partitions and same time we can reduce the number of rooms by removing
the partition. Which allow you to give more single occupancy rooms for solo
travelers who prefer to stay alone.
1.2 Project Justification and Main Problem

One of the biggest problems which are often faced by the travelers is
feeling lonely and getting lost in their way. Therefore it is important to offer
them help in social and practical integration process by organizing cultural
and social events in order to ensure that the travelers learns to adopt the
new local necessities and becomes integrated into the new social network.
Anna Builders Pvt. LTD is a reliable construction company. Recently we have
signed a contract of renovating a 2 story - building to hostel with modern
facilities in Riga town with Mr. Frank Marc. Therefore Anna Builders (Pvt.)
Limited will complete the renovation of the hostel as per the requirements and
specifications provided by the client.
The duration decided for this project is 8 months with basement, first floor and
second floor.

1.3 SWOT analysis

STRENGTH: WEAKNESS:
 Location
 Famous and busy destination
 Reasonable and Flexible
pricing  Rely heavily on tourism
 Heritage & Museums  Diversity
 Night life  Things you need to improve
 Transportation

SWOT
OPPORTUNITIES: THREATS:

 Business Hub  Pandemic issues

 Surge in tourist arrivial  Strong competion
 Seasonality
 2. Alternatives

For the attainment of the whole development of the project is influenced by the selection of
the outstanding alternative which fits better into criteria such as budget, time management,
etc. In the course of our research three convenient alternatives emerged that may meet
the requirements of our client. In the process within the alternatives there is no distinction
between different locations or transport companies etc., but rather between the project
team. The three alternatives are described as follows:

 Alternative A: The whole renovation will be well planned, designed and organized within
the company with a project team. The team has to be determined.

 Alternative B: Each distribute task of the construction of hostel to different organization,

which has to be decided, made agreement and charged first. But the construction will be
monitored by us.

 Alternative c: The entire hostel will designed, planned and organized by ourselves

2.1 Evaluation of alternatives

BENEFITS LIMITATIONS COSTS RISKS

A Chance to Payment of Intermediate  Diversity of
distribution wages to project project
of task team team
within the  Difference
project team of opinion
within the
team
B Better  Takes time High  If the
prices & to find an agency
service for agency does not
the client. meet the
 Usually expectation
high
commission  Chance of
costs not finding
an
accurate
agency
C Give us Requires more Low Overload of work
 flexibility time by over
during the estimating our
entire own capabilities
procedure

2.2 Choosing the best alternatives

We decided not consider alternative B because
 Time consuming
 High risk
 Close monitoring is needed
 Expensive

3. Development of concept

3.1 WORK BREAK DOWN STRUCTURE – ALTERNATIVE A.

 Hostel

1.1 Intiation 1.2 Project Plan 1.3 Design 1.4 Construction

1.1.3
1.1.1 1.1.1.1 Selection Allocating 1.2.1 1.4.1
Contract Of Team a Project Interior Electrical
team
1..1.1.2 Hiring Of
Design 1.4.2
1.1.2 Project Planning 1.1.4 Budgeting
Skilled Person Plumbing
1.2.2 1.4.3 Adding more
1.1.3 Exterior room in second flo
1.1.5 Resource Design
Requirement by using partition
Allocation
Gathering
1.4.4 Install
Kitchen
1.2.3Design
Approval 1.4.5 Install
Sanitary facilities

1.4.6 Lay
floors

1.4.6 Put up Wall

paers

1.4.7 Exteri

3.2 WORK BREAK DOWN STRUCTURE – ALTERNATIVE B.

 Hostel

1.1
Intiation 1.2 Strategy 1.3 Design 1.4 Construction 1.5 Start -
Up
1.1.1 1.2.1 1.4.1 Electrical
Contract 1.1.3 Resource Interior
planning 1.5.1 Test
1.1.2 Project Design 1.4.2 Plumbing Installion
Planning
1.1.4 Budget 1.2.2
Exterior 1.4.4 Install
1.1.3 Planning
Design Kitchen
Requiremen 1.5.2
t Gathering 1.1.5 1.4.5 Install Sanitary Hire
Resource facilities Staff
Allocation 1.2.3Design
Approval
1.4.6 Lay floors

1.5.3
1.4.6 Put up Wall paers Move in

1.4.7 Exterior Painting

3.3 SCHEDULE PLANNING

3.3.1 CRITICAL PATH ANALYSIS ALTERNATIVE A:

 F K
A
G J L N O P
B D E
START

H M
C
I

3.3.2 CRITICAL PATH ANALYSIS ALTERNATIVE B:

 E J
A
F I K M N O
START

B C D
G L
H

4.1 Cost Estimates for Alternative A:

 Net
salary Total
for salary
Salary/ Workin Work Social with
Project Team month Salary/Day g days days Tax Tax
             
Project Manager 800,00 26,67 24 640,08 128.02 768.1
Assitant 400,00 13,33 25 333,25 66.65 399.9
Designer/architect 600,00 20,00 10 200,00 40 240
             
Total       1173,33 234,67 1408,00
             
             
Working Net Tax Total
Internal Cost/day days costs VAT Cost  
             
Electrical 250,00 10 2500,00 50,00 2550,00  
Plumbing 300,00 13 3900,00 60,00 3960,00  
Walls 112,00 8 896,00 22,40 918,40  
Flooring 83,00 14 1162,00 232,40 1394,40  
Install roof drains 200,00 4 800,00 160,00 960,00  
Install tile in toilet rooms 50,00 3 150,00 30,00 180,00  
Paint walls 40,00 6 240,00 48,00 288,00  
Ceiling tile 200,00 5 1000,00 200,00 1200,00  
Carpet 85,00 14 1190,00 238,00 1428,00  
Install electrical fixtures 150,00 3 450,00 90,00 540,00  
Install kitchen fixtures 75,00 3 225,00 45,00 270,00  
Install sanitary fixture 60,00 3 180,00 36,00 216,00  
             
Total         13904.8  
             
             
             
total
Event costs/day tax VAT costs      
             
Transport 250,00 50,00 _      
Decorations 40,00 8,00 _      
Location 250,00 50,00 _      
Pour 200,00 40,00 _      
Steel columns 300,00 60,00 _      
Beams 85,00 17,00 _      
             
Total Net 1063,33   Gross 1310,29  
             
             
Duratio
n in
Alternative A Start Date End Date weeks      
24.July.201
  1.May.2016 6 12      
16623.0
Total Cost         9  

4.1.1 COST ESTIMATES FOR ALTERNATIVE B:

 Net
salary Total
for salary
Salary/ Workin Work Social with
Project Team month Salary/Day g days days Tax Tax
             
Project Manager 800,00 26,67 35 933,45 186,69 1120,14
Assitant 400,00 13,33 40 533,2 106,64 399,9
Designer/architect 600,00 20,00 10 200,00 40,00 240,0
             
Total       1666,65 333,33 1760,04
             
             
Working Net Tax Total
Internal Cost/day days costs VAT Cost  
             
Electrical 100,00 15 1500,00 300,00 1800,00  
Plumbing 110,00 18 1980,00 396,00 2376,00  
Walls 60,00 12 720,00 144,00 864,00  
Flooring 83,00 14 1162,00 232,40 1394,40  
Install roof drains 200,00 4 800,00 160,00 960,00  
Install tile in toilet rooms 50,00 3 150,00 30,00 180,00  
Paint walls 20,00 10 200,00 40,00 240,00  
Ceiling tile 200,00 5 1000,00 200,00 1200,00  
Carpet 85,00 14 1190,00 238,00 1428,00  
Install electrical fixtures 60,00 5 300,00 60,00 360,00  
Install kitchen fixtures 30,00 7 210,00 42,00 252,00  
Install sanitary fixture 15,00 8 120,00 24,00 144,00  
             
11198,4
Total         0  
             
             
             
total
Event costs/day tax VAT costs      
             
Transport 250,00 50,00 _      
Decorations 40,00 8,00 _      
Location 250,00 50,00 _      
Pour 200,00 40,00 _      
Steel columns 300,00 60,00 _      
Beams 85,00 17,00 _      
             
Total Net 1063,33   Gross 1310,29  
             
             
Duratio
n in
Alternative A Start Date End Date weeks      
08.Oct.201 22 W
  1.May.2016 6 6D      
14268,7
Total Cost         3  

5. COMPARISON OF PROFITABILITY

Alternative - A   2017 2018 2019 2020

           
Income without tax          
           
Project development cost excl -
VAT 16623.1        
           
-
Cash Flow 16623.1 60000 80000 70000 85000
Corporate Tax (15%)   9000 12000 10500 12750
Cash without tax   51 000 68000 59500 72250
           
Total cash flow   34376.9 51376.9 42876.9 55626.9
            
           
Discount Factor 10% 0.909 0.826 0.751 0.683
32200.5 37993.1
PV   31248.6 42437.3 5 7
15577.4 21370.0
NPV   14625.5
25814.2 5 7
           
Discount Factor 20% 0.83 0.694 0.579 0.482
28532.8 24825.7 26812.1
PV   3 35655.5 2 6
11909.7 10189.0
NPV   3 19032.4 8202.6 6
           
Discount Factor 30% 0.769 0.592 0.455 0.35
PV   26435.8 30415.1 19508.9 25287.5
NPV   9812.7 13792 2885.88 8664.4

IRR = r1 + NPVr1 (r2-r1)

NPVr1 – NPVr2

R1 = 0.1; R2 = 0.2
IRR = 63.8%

Alternative - B   2017 2018 2019 2020

           
Income without tax          
           
Project development cost excl -
VAT 14268.7        
           
-
Cash Flow 14268.7 50000 75000 83000 85000
Corporate Tax (15%)   7500 11250 12450 12750
Cash without tax   42 500 63750 70550 72250
           
Total cash flow   28231.3 49481.3 56281.3 57981.3
           
           
Discount Factor 10% 0.909 0.826 0.751 0.683
25662.2 40871.5 42267.2 39601.2
PV   5 5 5 2
11393.5 26602.8 25332.5
NPV   5 5 27998.5 2
           
 Discount Factor 20% 0.83 0.694 0.579 0.482
34340.0 32586.8 27946.9
PV   23431.9 2 7 8
20071.3 18318.1 13678.2
NPV   9163.2 2 7 8
           
Discount Factor 30% 0.769 0.592 0.455 0.35
29292.9 20293.4
PV   21709.8 2 25607.9 5
15024.2 11339.2
NPV   7441.16 2 9 6024.75

IRR = r1 + NPVr1 (r2-r1)

NPVr1 – NPVr2

R1 = 0.1; R2 = 0.2
IRR = 61.08%

4.1.2 TASK PLAN

 6. Strategic analysis

Weighted Weighted
Criteria Alternative A Alternative B
Score Score
1. Observance of time
20% 4 0,8 3 0,6
schedule
2. Simultaneous
15% 4 0,6 2 0,3
processing of tasks
3. Level of influence by
10% 2 0,2 4 0,4
stakeholders
4. Provides appropriate 30% 3 0,9 5 1,5
5. Sponsorships 25% 5 1,25 5 1,25
100% 3,75 4,05

7. Risk analysis

SCALE LOW MODERATE SIGNIFICANT HIGH

0-5 6-10 11-15 16-20

Alternative A
Typesofrisks Risks Evaluation Activity
1. Ongoing information
1. Delay in funds exchange with sponsors
2. Wrong budget calculation 2. Rechecking event budget
economic 4
3. Underestimation in terms of calculation
required time 3. Observance of time
management plan
1.Decision-making without
social 1.5 1. Arrange regular stakeholder
informing Stakeholder

1. Machinery does not work 1. Purchase new machinery or

technical 2
properly backup machinery

Alternative B

Types of
Risks Evaluation Activity
risks
1. Monitoring the work progress
1. Working overtime which and observance of time
leads to increased salaries schedule
Economic 4.5
2. Delay in funds 2. Time to time project progress
3. Wrong budget calculation update with stakeholders
3. Rechecking budget calculation

1. Internal diversity within 1. Conducting regular team

project team meetings
Social 2. Project Manager could 3 2. Manager update project
take autonomous knowledge with other team
decisions members

1. Reserve extra material to

technical 1. Inflation 2 handle this risk

7.1 Conclusion about selecting best alternative

Alternatives economic social Technical sum

A 4 1.5 2 7.5
 В 4.5 3 2 9.5

Project Description:

During the renovation of the building we can expect to accumulate many documents
ranging from floor plans to inspirational photographs, product catalogs and design ideas.
The Home Building Organizer is a flexible 3-ring binder that includes detailed budget
worksheets, product ideas and organizational tools to assist in managing your entire home
building process. This binder will prove to be invaluable in helping you stay organized. It
also makes a great scrapbook.

When deciding on the design of hostel, we need to take note of the rooms and features the
client included. Having all single occupancy rooms on the second floor also gives privacy
and all double occupancy rooms on first gives easy accessibility. Consider all single
occupancy rooms on first floor which gives more flexibility and greater view of the city from
balcony.
First Floor: 35000 Sq.Ft
No rooms: 6 double rooms
Second floor:
No rooms: 8 single rooms
The scope of this Project includes: • developing the construction plans, the grading plans and the
landscape plans acquiring all required permits and approvals installation of the water well and a
water system including a pump and all required piping installation of a properly designed and the
garage with a parking area adequate for at least 6 average sized vehicles the parking area.

Title Alternative A

Construction of a Hostel

Main Problem:

There are numerous important challenges facing today's construction

industry. Some of the construction issues include workforce
considerations, safety, time constraints, and the changing nature of the
work. Non-construction challenges that construction industry faces that
are part of the business landscape include legal issues, government
regulations, environmental concerns, and socio-political pressures. Also
in addition to these challenges, the construction industry is highly
 competitive, and firms must continually improve their productivity to
remain competitive.  The identification of material, identifying materials
moving flow in logistics and tracking materials location are needed for
successful project management in construction.

•A positive image of the construction industry as a career choice.

•The transfer of skills from other sectors, such as agriculture, fishing,

aquaculture and forestry, to the construction industry.

•Local employers able to effectively compete for the large scale construction
contracts.

Realization
In order to bring them together and to get to know each other it seems obvious
to organize a special event for it. The fact that will not have many contacts in the
beginning of construction will make it all the more important to get business use
social media and online sites for marketing the hostel. The successful
completion of this project depends upon the following external processes: The
contracted Home Builders must complete construction of the hostel no later than
the date to which they have agreed with the client.
Project duration(12 weeks, registration period excluded):

Starting:01.05.2016

Ending:24.07.2016

Project budget(€):
20000.00 €

Total Costs:
16623.09 €

Conclusion:
In the years ahead, the construction industry must has to overcome
different challenges with respect to building environment, transportation,
power or natural hazards. The Construction industry is comprised of
clients, designers and contractors. But in the modern industrialized world,
construction usually involves the translation of designs into reality. A
formal design team may be assembled to plan the physical proceedings,
and to integrate those proceedings with the other parts. The outstanding
performance under demanding situations in the past will stand in good
stead and give confidence to the construction industry to bring about an
overall development in the infrastructure of the nation. The gains of large
investments in the mega-projects eventually will feedback to the
construction industry itself in the form of better economy and improved
work conditions.

As efficiency codes have come into effect in recent years, new

construction technologies and methods have emerged. New techniques of
building construction are being researched, made possible by advances
in 3D printing technology. In a form of additive building construction,
similar to the additive manufacturing techniques for manufactured
parts, building printing is making it possible to flexibly construct small
commercial buildings and private habitations in around 20 hours, with built-
in plumbing and electrical facilities, in one continuous build, using large 3D
printers.

In the current trend of sustainable construction, the recent movements

of New Urbanism and New Classical Architecture promote a sustainable
approach towards construction, that appreciates and develops smart
growth, architectural tradition and classical design.