Risk Letter

Format: You are the project manager at ABC Construction. You have been out of school for 5 years and up until now you have been a project engineer on all of your projects. The Sr. Project Manager is turning this project over to you. The Senior PM wants to make sure you are ready to handle this project.

Prepare a letter to the Senior Project Manager at ABC Construction, LLC identifying the risks you expect to encounter and how you intend to handle those risks. The letter should be single spaced in Times New Roman font (no larger than 12 pt) and it should be no more than 2 pages in length.

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It is up to you to research information on these firms using whatever sources you have available.

A good letter does not include a description of all of the background information set forth below.

Background Information: You are responsible for overseeing the construction of a 10,000 square foot commercial office building in the City of Phoenix. The total contract price is $5,500,000.00. The soils report shows rock at 5 feet below existing grade. You excluded hard dig from the bid submitted to the owner.

During the contract negotiations, you asked the Owner to include ABC Construction’s low bid as part of the contract. The Owner refused. The scope of work reads as “construct building per approved construction drawings”.

The Architect who designed the building is from Orcutt Winslow. You have never worked with them before. The project is being managed by CBRE. CBRE is managing the project on behalf of the project owner. This is your first time working with CBRE.

The project was awarded on a low bid basis. The five primary subcontractor will be:

Suntec Concrete (Tilt Panel & SOG) – $1,016,000

Manny’s Air, LLC – $653,000

Plumbing – $432,000

Haskin’s Electric – $789,000

SoCal Excavating (Earthwork, Utilities, Paving) – $268,000

The project will be financed by JPMorgan Chase Bank. The lender is insisting on at least 30 days to review each payment request. The lender has also asked that no contractors serve 20-day notices for the project until after the construction loan is fully funded. If the construction loan is not converted to permanent financing within 12 months, the owner will be required to extend the loan, which may cost the owner additional money.

The end user for this building will be Microsoft (it will be used as a local call center). Microsoft has a local construction manager that will be at the jobsite at least 1 time per week.

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