Group2 Turner 1

turner pt
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  Group2 Rupa Murudkar 092 Ankit Verma 185 Ankur Zutshi 186 Manoj Kumar 210 Chandan Bharambe 078  Introduction: Turner Construction Company 28 territories, each headed by a TGM Autonomy to TGM, imp role: prospecting for new work Project managers---3-6  project executives(each headed 5-6 projects at a time)---TOM-- TGM  —  1/5 VP  —  3 division executive vice-presidents Only 10% own work force Communication with owner, architect, large no. of suppliers and subcontractors Cost estimation by: own estimating staff, subcontractor inputs, database of past experience GMP, turner’s earnings - fixed Gain and decrease in cost methods  Case facts Pressure from Top Management to release contingency to earnings.  Need to meet Turner’s quarterly corporate earnings projections Because of loss of sale of a development  building, division has to come up with additional$200000 earnins in the uarter Savings Participation Contract Once a contingency is released as savings it is shared- 75% to the owner + 25% for Turner as additional project earning Once money is released unforeseen problems and developments can cut into the feeearnings of Turner Project Wants to reinvest in additional project upgrades Unspent contingency reserve not likely to be needed, therefore returned. Kent Square Office Tower One of the biggest construction project at Philadelphia Owner wants Turner to release $500,000 in  projects savings  The $500,000 Dilemma To decide what  portion of $500,000 to  be released to Kent Square Once the earnings are  booked, it will look  bad if the division falls short of  projection in the subsequent quarter Estimated bill of the  project $29 million Remaining Construction Contingency $511,000 = 1.8% of total job cost C holds = $328,000, E holds =$471,000 The scope changes are still taking place $215,000 have already been released from contingency account Possible local strike in one of the trades, legitimate need for extra clean up, several contractors working on the same floor which can get messy- needs E holds for that  New client- so can’t go back to him asking for new money once they return the contingency Its 80% complete and not 95% Turner’s reputation on stake
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