Uncategorized – GleeYM https://www.gleeym.com GleeYM offers complete risk management , PMO, Mind Mapping, Training and Digital Transformation Servces! Mon, 10 Mar 2025 03:32:10 +0000 en-CA hourly 1 https://wordpress.org/?v=7.0.4 https://www.gleeym.com/wp-content/uploads/2022/01/cropped-gleelogo-1-1-32x32.png Uncategorized – GleeYM https://www.gleeym.com 32 32 166212591 Unlocking the 5 Key Drivers of NPV and Net Income Trends: A Data-Driven Approach https://www.gleeym.com/2025/01/02/npv/ https://www.gleeym.com/2025/01/02/npv/#respond Thu, 02 Jan 2025 21:24:18 +0000 https://www.gleeym.com/?p=7338

Summary

Every business venture relies on a robust financial foundation to ensure its long-term sustainability and profitability. One of the most effective ways to evaluate a project’s viability is through Net Present Value (NPV) and Net Income Analysis. But what truly drives these financial metrics, and how can businesses leverage insights from their data to make informed decisions? Let’s dive into this detailed exploration, using the insights from our analysis and the graphs to uncover actionable opportunities for improvement.

What Does the Data Say?

1. NPV Histogram Analysis

The NPV histogram provides a visual representation of the probability distribution of net present value outcomes. Here’s what stands out:

  • Median NPV: The 50th percentile value stands at approximately $1.39 billion, showcasing a strong central tendency in project returns.
  • Upper Range: The 99th percentile reaches $1.94 billion, indicating potential upside for exceptional scenarios.
  • Lower Range: The left tail suggests that, while the downside risk exists, the likelihood of a negative NPV outcome is minimal in this scenario.

 

Key Insight:

The distribution’s slightly right-skewed shape highlights opportunities to maximize returns by mitigating risk factors affecting the left tail of the curve. Focus on optimizing operational efficiencies and managing unexpected costs to move the curve further to the right.

NPV Analysis - Gleeym

2. Net Income Trend Chart Analysis

The trend chart for Net Income maps the year-by-year evolution of earnings, capturing both the uncertainties and growth potential over time.

  • Initial Dip: The first two years showcase negative net income, reflecting initial investments and capital expenditures.
  • Steady Growth: By 2028, net income enters a steep upward trajectory, driven by increased market volume, higher revenue streams, and controlled operating expenses.
  • Stabilization: After 2034, the trend stabilizes, with consistent growth in net income ranging between $3 billion and $3.7 billion annually.

 

Key Insight:

The trend highlights a critical inflection point in 2027, where profitability overtakes expenses. This reinforces the importance of focusing on early operational efficiencies and revenue acceleration strategies during the initial ramp-up phase.

The 5 Key Drivers of NPV and Net Income

1. Total Revenue Growth

Revenue is the backbone of both NPV and Net Income calculations. Our analysis shows revenue doubling between 2028 and 2040, driven by increased market penetration and higher sales volumes.

Actionable Tip: Focus on sales strategy optimization and market expansion efforts to sustain revenue growth over the project’s life.

2. Cost of Goods Sold (COGS)

COGS plays a pivotal role in determining gross margin. As seen in the data, COGS growth aligns closely with revenue, maintaining a consistent percentage of total income.

Actionable Tip: Implement supply chain optimizations and negotiate better vendor contracts to control COGS inflation.

3. Operating Expenses

Operating expenses, although steadily increasing, remain a smaller proportion of total revenue over time. This reflects disciplined cost management practices.

Actionable Tip: Leverage automation and technology adoption to cap administrative and operational costs in later stages.

4. Taxation and Inflation

The analysis assumes a consistent tax rate of 30% after 2027, providing stability for financial forecasting. 

Actionable Tip: Introduce sensitivity analysis to simulate extreme inflation scenarios and prepare contingency plans.

5. Market Volume and Competitor Dynamics

Market volume and the number of competitors directly affect both revenue and profitability. The addition of competitors in later years is reflected in a slower revenue growth rate post-2032.

Actionable Tip: Diversify product offerings and enhance customer retention strategies to mitigate competitor impact.

Suggestions for Further Improvement

  1. Scenario Planning: Conduct Monte Carlo simulations for more granular insights into worst-case and best-case financial outcomes.
  2. Dynamic Cost Management: Incorporate real-time cost tracking to prevent budget overruns.
  3. Early Investment Efficiency: Optimize capital allocation during the first five years to minimize losses and accelerate breakeven.
  4. Competitor Benchmarking: Regularly benchmark against industry leaders to identify competitive advantages and gaps.

Conclusion

Analyzing NPV and Net Income trends through data-driven tools not only provides clarity on a project’s financial health but also uncovers actionable insights to maximize profitability. The NPV histogram and Net Income trend charts reinforce the importance of strategic decision-making at each stage of the project lifecycle. By focusing on revenue growth, cost control, and market adaptability, businesses can confidently navigate uncertainties and unlock their project’s full potential.

Pro Tip: Use advanced risk modeling tools like ModelRisk to add precision to your financial forecasts and enhance decision-making.

]]> https://www.gleeym.com/2025/01/02/npv/feed/ 0 7338 Summary of “Understanding the Drivers of Transit Construction Costs in Canada: A Comparative Study” https://www.gleeym.com/2024/12/15/summary-canada-a-comparative-study/ https://www.gleeym.com/2024/12/15/summary-canada-a-comparative-study/#respond Mon, 16 Dec 2024 04:00:16 +0000 https://www.gleeym.com/?p=7314

The study explores the escalating costs of transit construction in Canada, particularly in comparison with global benchmarks. The focus is on understanding cost drivers and identifying reforms that could bring costs in line with international standards.

Key Findings:

1. Escalating Costs in Canada:

  • The cost of building transit projects in Canada, particularly in cities like Toronto, has risen dramatically, far exceeding inflation.
  • For instance, Toronto’s transit costs have reached up to $1 billion/km for certain subway projects, significantly higher than international counterparts like Spain and Turkey​.

2. Comparison with Global Peers:

  • Canada ranks as one of the highest-cost jurisdictions globally, averaging $396 million/km, while the global average is $242 million/km.
  • Countries like Spain ($95M/km) and Chile ($89M/km) deliver projects far more cost-effectively.

3. Primary Cost Drivers:

  • Overbuilding and Overdesign: Canadian projects often build larger tunnels and stations with unnecessary design redundancies, driven by risk aversion and stringent safety interpretations.
  • Knowledge Retention Issues: A lack of institutional expertise and reliance on external consultants lead to inefficiencies.
  • Risk Allocation: Risk transfer in public-private partnerships (P3s) results in higher costs, as contractors charge premiums for assumed risks.
  • External Constraints: Political micromanagement, third-party agreements, and high construction market saturation inflate costs.

4. The Anglosphere Cost Premium:

  • English-speaking countries (e.g., Canada, the U.S., Australia) consistently experience higher costs due to insular project delivery practices and governance issues​.

5. Global Best Practices:

Jurisdictions like Spain, Turkey, and South Korea deliver complex projects at lower costs by:

  • Limiting contingency budgets (7-12%).
  • Emphasizing transparency in project delivery and cost benchmarks.
  • Utilizing simpler procurement models and retaining in-house expertise.

6. Recommendations:

  • Reforms in procurement processes, risk management practices, and institutional governance.
  • Adopting global best practices, reducing overdesign, and improving cost estimation transparency​.

Conclusion

The high transit construction costs in Canada are not inevitable but stem from systemic inefficiencies in project delivery, governance, and risk allocation. By learning from global examples and implementing targeted reforms, Canada can reduce costs and deliver infrastructure more effectively.

Reference

Actual Report: 12. (TC to FH) Understanding the Drivers of Transit Construction Costs in Canada: A Comparative Study

]]> https://www.gleeym.com/2024/12/15/summary-canada-a-comparative-study/feed/ 0 7314 Navigating Sales Competition with ModelRisk: A Laptop Retailer’s Journey https://www.gleeym.com/2024/11/11/navigating-sales-competition-with-modelrisk-a-laptop-retailers-journey/ https://www.gleeym.com/2024/11/11/navigating-sales-competition-with-modelrisk-a-laptop-retailers-journey/#respond Mon, 11 Nov 2024 16:35:15 +0000 https://www.gleeym.com/?p=7240

In the rapidly evolving world of electronics retail, predicting future sales is never straightforward—especially when there’s a high chance of new competitors entering the market. For one laptop retailer, the challenge was clear: project sales growth over the next 100 months while preparing for the potential impact of new competitors. By leveraging ModelRisk, a robust risk analysis tool by Vose Software, the retailer was able to simulate multiple competitive scenarios and gain invaluable insights into future sales trajectories.

Using ModelRisk, the I created a trend chart for sales. The chart enabled the retailer to anticipate both the expected growth in sales and potential dips if a competitor were to enter the market. Let’s delve into how they structured their analysis and what they discovered.

Setting the Scene: Inputs and Assumptions

Currently, the laptop retailer enjoys steady monthly sales of about 1,000 units. However, with an 80% chance of a competitor entering the market at some point within the 100-month forecast period, they knew they had to prepare for the possible impact on their sales volume.

Here are the key parameters they used in ModelRisk to set up the simulation:

  1. Probability of Competitor Entry: 80% – Given the high likelihood of new competition, the retailer modeled potential sales loss if a competitor entered the market.

  2. Competitor Entry Time: 38 months – This was the estimated point at which the competitor might enter the market, though simulations allowed for variation in this timing to explore different competitive entry points.

  3. Expected Fraction of Sales Lost Due to Competition: Modeled with VoseUniform(0.1, 0.3) – This parameter enabled the model to simulate a range of sales reductions, from 10% to 30%, representing mild to severe competition.

  4. Current Sales per Month: 1,000 units – Serving as the baseline sales value before any growth or competitive effects were applied.

  5. Expected Growth per Month: Modeled with VoseUniform(1.3, 6) – Reflecting the potential monthly growth rate, this parameter allowed for variability in demand, ranging from 1.3 to 6 units per month.

Using these inputs, the retailer was able to simulate potential sales growth paths while accounting for competitive pressure, resulting in a clearer understanding of possible outcomes.

Modeling Sales Growth and Competitor Impact

The retailer structured the model to capture two critical components of future sales:

  1. Organic Sales Growth: Using VoseUniform(1.3, 6), ModelRisk generated monthly growth rates, capturing both conservative and optimistic growth scenarios. This established a baseline for sales growth in a competitor-free environment.

  2. Competitor Impact: If a competitor entered the market (as determined by the 80% probability and Competitor Entry Flag), ModelRisk applied a sales reduction based on VoseUniform(0.1, 0.3). This represented the possible decline in sales due to increased competition, allowing the retailer to assess the potential range of impacts on sales volume

The Trend Chart: Visualizing Sales Projections

After running the Monte Carlo simulation, ModelRisk produced a trend chart for sales that illustrated various potential sales trajectories over the 100-month period.

In the trend chart, the red dashed line represents the median sales trajectory, showing the expected path if the competitor enters at the anticipated time (around month 38) and causes a temporary dip in sales. The shaded blue areas represent the confidence intervals for projected sales:

  • Light blue band: Represents the range of sales outcomes within the middle 50% of simulations, indicating the scenarios that are more likely.
  • Dark blue band: Encompasses a broader range of possible outcomes, including both optimistic and conservative scenarios.
Sales Trend Chart by gleeym.com as result of Monte Carlo Simulation.

Key Insights from the Trend Chart

The trend chart revealed some valuable insights for the retailer:

  1. Impact of Competitor Entry: Around month 38, the red median line and shaded regions show a noticeable dip, representing the anticipated loss in sales if a competitor enters. This impact is short-lived, with sales growth resuming in the following months.

  2. Sales Growth Despite Competition: Even with the competitor’s entry, sales are expected to continue growing after an initial decline. This upward trend highlights the resilience of organic growth, although the presence of competition tempers it slightly.

  3. Range of Potential Outcomes: The chart’s shaded regions illustrate the wide range of possible sales figures, from the low end (bottom of the dark blue band) to high growth scenarios (top of the dark blue band). This view allows the retailer to understand both best- and worst-case sales scenarios, preparing them for various market conditions.

Strategic Takeaways

Armed with insights from the trend chart, the laptop retailer can make more informed decisions, such as:

  • Enhancing Early Market Share: By focusing on increasing sales early in the 100-month period, they can build a buffer to mitigate potential losses when a competitor enters.
  • Targeted Marketing Efforts: Knowing the likely time of competitor entry (around month 38), the retailer can plan promotions or loyalty programs to retain customers.
  • Risk Management: With the range of potential outcomes shown in the trend chart, the retailer can create contingency plans to handle both conservative and optimistic scenarios.

Reference

Useful time series models – Effect of an intervention at some uncertain point in time | Vose Software

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]]> https://www.gleeym.com/2024/11/11/navigating-sales-competition-with-modelrisk-a-laptop-retailers-journey/feed/ 0 7240 Revolutionize the World with These 7 Cutting-Edge Startup Ideas! https://www.gleeym.com/2023/10/02/startups/ https://www.gleeym.com/2023/10/02/startups/#respond Tue, 03 Oct 2023 02:05:57 +0000 https://www.gleeym.com/?p=6572

Revolutionize the World with These 7 Cutting-Edge Startup Ideas!

There are numerous startup ideas that can be successful in today’s market. Here are some of them, but not limited to:

E-Commerce

With the increase in online shopping, starting an e-commerce business can be a great idea. You can sell anything from clothes, electronics, books, or even homemade goods. As reported by Statista, the total value of worldwide retail e-commerce sales in 2020 was 4.28 trillion US dollars. 

Online Education

The COVID-19 pandemic has increased the demand for online learning. You can start a company that offers online courses or tutoring services. As per a report by Research and Markets, the online education market is projected to reach $350 Billion by 2025.

Revolutionizing Education: How EdTech Startups Are Changing the Game (gleeym.com)

Health and Wellness

With people becoming more health-conscious, businesses in the health and wellness industry are thriving. This could include fitness studios, health food stores, or wellness apps. The global wellness market was worth $4.5 trillion in 2018, according to the Global Wellness Institute.

Green Energy Solutions

As the world is becoming more aware of the impact of climate change, there is a growing demand for green energy solutions. This could involve solar panel installation, energy consulting, or selling eco-friendly products. The renewable energy market is expected to reach $1,512.3 Billion by 2025, according to a new report by Grand View Research, Inc.

Artifical Intellegence and Machine Learning

AI and ML are two of the most trending technologies right now. You can start a company that offers AI-based solutions to businesses. According to a report by Markets and Markets, the AI market is expected to grow to $190.61 billion by 2025.

Food Delivery Services

With the busy lifestyle of people, food delivery services are becoming increasingly popular. You can start a local food delivery service or a meal prep and delivery for health-conscious consumers. The projected growth of the global online food delivery services market indicates an increase from $115.07 billion in 2020 to $126.91 billion in 2021, with a compound annual growth rate (CAGR) of.10.3%, according to a report by The Business Research Company.

Virtual Reality

VR is not just for gaming anymore. It’s being used in various industries like real estate, healthcare, and education. You can start a company that offers VR solutions. The global VR market is expected to reach $57.55 billion by 2027, according to a new report by Grand View Research, Inc.

Startup Ideas categories mindmap GleeYM.
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Unlocking the 5 Key Drivers of NPV and Net Income
Cost of PMT performed by the GleeYM
Summary of “Understanding the Drivers of Transit Construction Costs in
churn Rate for e-commerce startup by GleeYM
5 Data-Driven Insights to Slash Churn and Boost Growth for
]]> https://www.gleeym.com/2023/10/02/startups/feed/ 0 6572 Sink or Swim? Exploring the Hidden Factors that Cause Startup Failure https://www.gleeym.com/2023/08/19/startup-failure/ https://www.gleeym.com/2023/08/19/startup-failure/#respond Sat, 19 Aug 2023 05:33:16 +0000 https://www.gleeym.com/?p=6133

Sink or Swim? Exploring the Hidden Factors that Cause Startup Failure

  1. Summary
  2. Introduction
  3. Startup Failure Reasons
    1. Lack of Market Demand
    2. Insufficient Financial Planning
    3. Ineffective Leadership and Management
    4. Failure to Adopt and Innovative
    5. Inadequate Marketing and Customer Acquisition
  4. Mitigation Strategies
  5. Conclusion
  6. Case Study 1
  7. Startups Fail – HBR Article
  8. Top 20 Reasons Startup Fails

Summary

There are many reasons why startups fail. According to a Harvard Business Review article, two-thirds of startups never show a positive return. The author, Tom Eisenmann, a professor of entrepreneurship at Harvard Business School, set out to discover why so many startups fail. He interviewed or surveyed hundreds of founders and investors, read scores of first- and third-person published accounts of entrepreneurial setbacks, and wrote and taught more than 20 case studies about unsuccessful ventures. The outcome of his research culminates in the publication of a book titled Why Startups Fail. Within its pages, he discerns recurring patterns that shed light on the reasons behind the lackluster performance of numerous startups.

According to the article, many venture capital investors oversimplify the situation by blaming the founders for the failure of the startup. However, Eisenmann identified six patterns of failure, two of which are the most common avoidable reasons why startups go wrong.
Another source, Startups.com, lists the top 13 reasons why startups fail based on an analysis of 101 startup “postmortems” by CB Insights. According to their findings, the number one reason for startup failure is “No Market Need” (42%), meaning that the startup created a product that the market just didn’t want.


These are only a few of the explanations behind the failure of startups. It is a multifaceted problem with numerous contributing factors.

Introduction

Startups are synonymous with innovation, ambition, and the pursuit of entrepreneurial dreams. However, the reality is that not all startups succeed. Many face challenges that lead to failure. In this article, we will explore the common causes of startup failure, supported by statistical data, and provide actionable mitigation strategies for aspiring entrepreneurs.

Startup Failure Reasons

Lack of Market Demand

A significant factor contributing to the failure of startups is the absence of market demand. Without a validated market, startups risk investing time, effort, and resources into products or services that customers do not want or need. Several startups have fallen victim to this, including Juicero (Juicero – Wikipedia), a company that developed an expensive juicer, only to discover that consumers preferred affordable alternatives. According to a study by CB Insights, 42% of startups fail because of this.

Startups Fail blog: https://www.gleeym.com

Insufficient Financial Planning

Inadequate financial planning is a significant contributor to startup failure. Many startups struggle with funding and managing their cash flow, leading to financial instability. According to a report by Small Business Trends, 29% of startups fail due to running out of cash. For example, the company Clinkle (Clinkle – Wikipedia) raised $30 million in funding but failed due to excessive spending without a sustainable revenue model.

Ineffective Leadership and Management

Leadership and management play a pivotal role in the success or failure of a startup. Poor decision-making, insufficient experience, and ineffective team management can have detrimental effects. For instance, Theranos (Theranos – Wikipedia), a high-profile startup, faced significant backlash due to leadership issues and false claims about their blood-testing technology.

Failure to Adapt and Innovate

Startups must be agile and adaptable to survive in a competitive landscape. Failure to adapt to changing market dynamics, emerging technologies, or customer preferences can lead to irrelevance and failure. An example is Blockbuster (Blockbuster (retailer) – Wikipedia), which failed to embrace streaming services like Netflix, resulting in their demise.

Visit the link to read the complete article on Why do startups fail?. The Link is: https://www.gleeym.com/2023/08/19/startup-failure/

Inadequate Marketing and Customer Acquisition

Effective marketing and customer acquisition strategies are crucial for startup success. Inadequate brand positioning, poor targeting, and ineffective marketing campaigns can lead to low customer acquisition rates. For instance, Quibi (Quibi – Wikipedia), a short-form streaming platform, faced challenges in attracting and retaining subscribers due to a lack of compelling marketing strategies. I will discuss more about Quibi in Case Study 1.

Mitigation Strategies

  • Conduct thorough market research to validate demand and identify niche opportunities.
  • Build a strong financial foundation with careful budgeting, securing funding, and monitoring cash flow.
  • Develop strong leadership skills and surround yourself with a competent team.
  • Embrace adaptability and innovation, staying ahead of market trends and customer needs.
  • Invest in effective marketing strategies, brand positioning, and customer acquisition efforts.

Conclusion

Startup failures can be attributed to various reasons, including lack of market demand, insufficient financial planning, ineffective leadership, failure to adapt, and inadequate marketing strategies. By understanding these common causes and implementing mitigation strategies, aspiring entrepreneurs can increase their chances of success. Remember, failure can be a valuable learning experience on the path to achieving entrepreneurial goals. Through careful planning, risk analysis, continuous improvement, and adaptability, startups can navigate the challenges and thrive in the dynamic business landscape.

Case Study 1

One example of a failed startup is Quibi, a short-form, serialized video content platform that was founded and led by a group of knowledgeable and experienced executives. Despite raising a staggering $1.75 billion, Quibi failed to attract a large audience and ultimately shut down.

According to an article on TMS, Quibi launched their app in April 2020, right at the beginning of the Corona pandemic. Quibi offered a monthly subscription plan priced at $5, while an ad-free option was available for $8 per month. Although the COVID-19 lockdowns had impacted the entertainment industry, they were not solely responsible for Quibi’s failure. Right from the start, the project faced insurmountable challenges and despite receiving substantial investments from prominent media companies, it ultimately met its demise.

Strategy Map - https://www.gleeym.com.

Startups Fail - HBR Article

There are many reasons why startups fail. According to a Harvard Business Review article, two-thirds of startups never show a positive return. The author, Tom Eisenmann, a professor of entrepreneurship at Harvard Business School, set out to discover why so many startups fail. He interviewed or surveyed hundreds of founders and investors, read scores of first- and third-person published accounts of entrepreneurial setbacks, and wrote and taught more than 20 case studies about unsuccessful ventures. The outcome of his research culminates in the publication of a book titled Why Startups Fail. Within its pages, he discerns recurring patterns that shed light on the reasons behind the lackluster performance of numerous startups.

According to the article, many venture capital investors oversimplify the situation by blaming the founders for the failure of the startup. However, Eisenmann identified six patterns of failure, two of which are the most common avoidable reasons why startups go wrong.

visit Why Start-ups Fail (hbr.org) to read the complete article.


Another source, Online Startup Accelerator | Startups.com, lists the top 13 reasons why startups fail based on an analysis of 101 startup “postmortems” by CB Insights. According to their findings, the number one reason for startup failure is “No Market Need” (42%), meaning that the startup created a product that the market just didn’t want.
These are only a few of the explanations behind the failure of startups. It is a multifaceted problem with numerous contributing factors.

Top 20- Reasons Startup Fails

GleeYM offers mind mapping to visually envisage your dream. https://www.gleeym.com/2023/08/19/startup-failure/

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]]> https://www.gleeym.com/2023/08/19/startup-failure/feed/ 0 6133 Real Estate Development Project – Better way to Envisage Your Project’s Future. How? 4 Graphs are Enough to Illustrate! https://www.gleeym.com/2021/03/01/realestate/ https://www.gleeym.com/2021/03/01/realestate/#respond Tue, 02 Mar 2021 03:11:52 +0000 https://www.gleeym.com/?p=3244

Real Estate Development Project - Better way to Envisage Your Project's Future. How? 4 Graphs are Enough to Illustrate!

Keywords

Real Estate, Real Estate Development Project, Cost Estimates, Schedule, Construction, Skilled Labor, Construction Equipment, Site Development, House Construction, Bricks, Facilities Development, Landscape, occupational HSE, Camp Site, Bulk Material, Decision Making Under Uncertainty, time-phased cost, Cost breakdown, Direct Cost, Owner Cost, Freight, Fixed Cost, Schedule constraint, Calendar, Activity Sequence, Risk Identification, Uncertainty, Risk Register, Risk Mapping

Summary

While there are many reasons why you might plan to develop a real estate development project, it’s important to understand the many pitfalls that can lead to failure. 

The Risk identification is important and crucial for mega complex construction projects. In this project (case study) the top three (3) risks are:

1- Unavailability of the Skilled labor.

2- Unavailability of Construction Equipment.

3- Delay in Delivery of Bulk Material

Additionally, occupational HSE can be a showstopper. Estimate at Completion (EAC) and Estimate to Complete (ETC) are crucial to know not only for Project Sponsor, but also for the Investors. Each penny counts!

Introduction

For real estate development project, construction processes are a complex interplay of multiple sub-projects that must be carefully coordinated to ensure successful completion. Fortunately, there are planning steps you can take to streamline the mega complex construction project. This article will give you some tips and tricks for real estate construction project.

How much will the new construction of your new real estate development project cost? This is probably one of the most common questions that you’ll be asked by the client or investors. The answer will vary based on several circumstances, such as location, size, complexity, development area and whether you are doing any custom work.

The number-one problem for new real estate development projects is that they fail to achieve their financial goals. With this article, we’ll give you the planning tips you need to succeed when it comes to real estate development project.

Mega Complex Real Estate Development Project Analysis conducted by GleeYM
Pic. 1 - Real Estate Mega Complex Construction Project

Case Study

While there are many reasons why you might plan to develop a real estate development project, it’s important to understand the many pitfalls that can lead to failure.

Real Estate Project by GleeyM
Pic. 2 - Real Estate Development

Project is to develop villas in two (2) phases. Project duration is 1102 days; project completion date is 26-5-2025. Cost estimates are $1.12 B. Schedule is:

Pic. 3 - Real Estate Development Project Schedule

Cost Elements are: 

1- Direct Cost

2- Other Direct Costs

3- Services

4- Owner Cost

Top Risks

    1. External communication issues
    2. Internal communication issues
    3. Design specification change
    4. Subcontractor enters liquidation
    5. Delayed LLI
    6. Frequent Change Request
    7. Unavailability of Construction Equipment
    8. Unavailability of Skilled Labor
    9. Delay in Delivery of Bulk Material
    10. Occupational HSE Issues on Site

Risks and uncertainties were mapped to the activities before performing Monte Carlo Simulation. 

The question is how risks were identified? Answer: The Risk identification is an iterative process. Mostly, Risks are identified in an Interactive way by facilitating Workshop, i.e., Risk workshop. 

Visit Following link for Workshop Facilitation:

Workshop Facilitation

GleeYM Offers Workshop Facilitation to help you to make the best decisions for your business and projects.
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Decision Making Under Uncertainty

Q1 – What are the chances that the real estate development project will complete on deterministic schedule and time?

Schedule Risk Analysis Conducted by the GleeYM
Graph 1 - Probability Distribution Graph for a Schedule

The deterministic project completion date is 26-05-2025. There is only 1% chance to meet the deterministic completion date. There is a 50% (Mean) chance that the project will complete on 11-03-2026 i.e., there will be an additional 257 days more required to complete the project. However, there is 80% chance that the project will be completed on 17-11-26 i.e., 251 days more.  

Project Cost Risk Analysis performed by the GleeYM
Graph 2 - Probability Distribution Graph for a Project Cost

The deterministic project cost estimate  is $ 1.12 B. There is only 2% chance to meet the deterministic project cost. There is a 50% (Mean) chance that the project cost will be $ 222.3 M extra.  However, there is 80% chance that the project cost will be an additional $ 228.5 M required to complete the project.  

Q2 – What will be the probabilistic cash flow (PCF) for a Real Estate Development Project?

The PCF is a Time-phased Cash Flow. The Probabilistic Cash Flow (PCF) is helpful to understand the project expense during each specified period. Cash flow curves encompassing optimistic and pessimistic values. The given below graph is self-explanatory:

PCF performed by the GleeyM
Graph 3 - Time-Phased Cash Flow - Probabilistic Cash Flow (PCF)

Q3 – Why Time-phased cost estimate is important?

The Time-phased cost estimate is providing cash flow visibility. Under services (Cost WBS), the deterministic Project Management Team (PMT) cost is estimated $ 65 M.  The Project Management team (PMT) cost, usually falls under “Owners Cost”, is responsible for managing a project throughout the project life cycle. 

Question: What if the cost of PMT in case of project delay?

Cost of PMT performed by the GleeYM
Graph 4 - Time-phased Cost of PMT

There is 50% (Mean) chance that the PMT cost will be $10.99 M more. However, the 80% chance that the PMT cost will be additional $ 12.92 M. Remember every Penny counts! 

Conclusion

The Real Estate Development mega complex projects delayed in general. It is beneficial to plan well and forecast probabilistic project schedule and cost estimates for decision making under uncertainty, i.e., Risk-based Decision Making.

Note: Weather Risk was not considered in this case study.

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]]> https://www.gleeym.com/2021/03/01/realestate/feed/ 0 3244 5 Ways Risk Management Software Can Help Your Business. Are You Still Not Considering Risk Software? https://www.gleeym.com/2021/02/11/5waysrisk/ https://www.gleeym.com/2021/02/11/5waysrisk/#respond Fri, 12 Feb 2021 03:50:08 +0000 https://www.gleeym.com/?p=2368

Real Estate Development Project - Better way to Envisage Your Project's Future. How? 4 Graphs are Enough to Illustrate!

Keywords

Risk Management Software,  Software Implementation, Risk, Schedule Risk Analysis, Cost Risk Analysis, Monte Carlo Simulation, Risk Register, ERM, Qualitative Risk Analysis,  Quantitative Risk Analysis, Schedule, Cost, Dashboards, Data, Business Risk, Financial Risk

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Summary

Risk software is the most important asset of your business’s overall risk management system. You can’t afford to implement this technology without first understanding how it works, why you need it, and how it fits into your overall risk management strategy?

Mind Map for risk software by GLEEYM
Pic 1- Risk Implementation

Introduction

It’s not always easy to predict what the future will hold, so it can be difficult to understand how to manage risks in your business. However, with a risk management software solution, you’ll save time and money and help your company run more efficiently. 

Before an employee’s fingers hit their keyboard, they must make a decision about what kind of risk management software to use. Here are some tips on how to choose the right risk management software for your business and get started with implementing it.

GleeYM can help you with a valuable service to pick and incorporate risk management software for decision making and meeting strategic goals. Risk management software is critical to meet strategic goals. However, in this era of uncertainties, the best results happen when you implement risk management software that is easy to use, customizable, and fully integrated. While software selection, consider these following five points (5 ways) for more profitability, productivity, and sustainability:

  • Decision Making.
  • Schedule Risk Analysis.
  • Cost risk Analysis.
  • Project, Business and Financial Risk Analysis.
  • Key Risk Indicator.

Whether you want to select and implement a standalone or enterprise level software, we will walk you through the planning process and implementation methodology.

Contact GleeYM for more discussion.

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https://www.gleeym.com/software for details

Uncategorized

Risk software is the most important asset of your business’s overall risk management system. You can’t afford to implement this technology without first understanding how it works, why you need it, and how it fits into your overall risk management strategy.

While software selection, consider these five (5) following points for more profitability, productivity and sustainability:

1- Decision Making

Risk software can help to make decision making under uncertainty. Quantitative Risk analysis software has the capability to specify input and associated uncertainties and risks. After performing Monte Carlo simulation, decision makers can get the numbers to make decision. 

2- Schedule Risk Analysis

Schedule risk analysis helps assign uncertainty and risk(s) to a specific activity. It helps to understand the impact of activity delay and immediate milestone.

visit https://www.gleeym.com/qra

https://www.gleeym.com/blog for more details

3- Cost Risk Analysis

Cost risk analysis helps to identify key cost drivers after performing Monte Carlo simulation. Advanced what-If analysis helps to simulate various scenarios and compare results.

visit https://www.gleeym.com/qra

https://www.gleeym.com/blog for more details

4- Project & Business, Financial Risk Analysis

In this era of 2nd machine age, change is inevitable. Cost of doing business, sustainability and meeting strategic goals are becoming challenging. Therefore, businesses are continuously evaluating uncertainties and risk associated with project and business by assessing NPV, IRR (Discounted cash flows), Loans, Credit risk, currency risk, trading and market risk etc.

visit https://www.gleeym.com/qra

https://www.gleeym.com/blog for more details

5- Monitor Key Risk Indicator (KRI)

Risk software helps to monitor key risk indicator (KRI). Analyzing KRI trends, helps to adapt decisions accordingly. 

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]]> https://www.gleeym.com/2021/02/11/5waysrisk/feed/ 0 2368 Risk Register – Doodle https://www.gleeym.com/2020/07/15/riskrdoodle/ https://www.gleeym.com/2020/07/15/riskrdoodle/#respond Wed, 15 Jul 2020 04:37:03 +0000 https://www.gleeym.com/?p=1557

RIsk Register - Doodle, a Visual illustration! How?

he Risk Register, risk log, a repository to record, analyze and store risk data.

According to IRM’s A Risk Practitioners Guide to ISO 31000: 2018:

“The nature and extent of communication of the information contained in the risk register throughout the risk architecture of the organization also help define the risk management context.”

The Risk register is a proportionate, aligned and dynamic document to tell risk stories to all the stakeholders. contained key risk information for risk assessment.
The risk register communicates and provides information to the stakeholders both ways. Top management looks for project risk (as a whole) and Key performance indicators to visualize overall project health. It is only possible by connecting the dots and present data in the form of interactive charts. Focus on risk analytics to quantify, measure and envisage uncertainties to deal with upcoming challenges of global expansion and fourth industrial revolution or second machine age. Counter challenges of digitizing with digital data. Risk visibility with infographics in risk register can be a game-changer.

GleeYM offers strategic planning with Mind Maps.

Risk Register – Doodle , a visual illustration in an easy way!

Also read: https://www.gleeym.com/2019/11/20/communicate-with-risk-register/

My post related to Risk Register template was viewed by 30,000 people and more than 15,000 people have downloaded the template. I have made this doodle to describe the simple steps required to capture information in the risk register.

QUANTITATIVE RISK ANALYSIS

RISK MANAGEMENT SYSTEM

TRAINING THAT WORKS FOR YOU. HOW? DISCUSSES

MIND MAPPING SOLUTIONS

 

Quantitative Risk Analysis

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]]> https://www.gleeym.com/2020/07/15/riskrdoodle/feed/ 0 1557 Project Risk Management Plan – Mind Map. What? Only 1 Picture! https://www.gleeym.com/2020/02/06/riskmindmap/ https://www.gleeym.com/2020/02/06/riskmindmap/#respond Thu, 06 Feb 2020 16:29:34 +0000 https://www.gleeym.com/?p=1206

Project Risk Management Plan – Mind Map. What? Only 1 Picture!

Standard mind map
Risk Management Plan - MindMap

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