The Operational Viability of the Perth Arena - Case Study Example

Business Case for Perth Arena Student’s Name Institution Table of contents 1.0 Executive Summary 2 1.1 Business problem 3 1.2 Scope 4 1.3 Objective 4 1.4 Dependencies 5 1.5 Benefits 7 2.0 Cost and time scales 9 2.1 Project time scale 12 2.1.1 Pert Arena Fact Sheet 12 2.1.2 Main milestone 12 3.0 Risk of not doing the project 13 3.1 The key project risk 14 4.0 Stakeholder Analysis 15 4.1 Key stakeholders 16 4.3 Project communication plan 17 4.3.1 Project Audience 17 4.3.2 Project information 17 4.4 Communication method 18 4.5 The communication matrix 19 Appendix 1: References 21 Appendix 2: Time scale 22 1.0 Executive Summary Earlier before this project was planned and budged from the government had unsuccessful endeavour to construct and work a multi-purpose indoor Arena and games stadium. As a result the then government reported that it would manufacture and own a 'world class' stadium for $160 million. The new Arena would be finished and be at a position to host the Hopman Cup tennis competition. The operational viability of the Perth Arena will make it a commercially viable building for entrainment operations. As a landmark building, it will be in a position to exploit benefits to extended community boundaries and make positive contributions to its place in the public dominion, and offer a connection among the Northbridge precinct. The standards design of the Arena makes it meet the performance and aural entertainment requirements within the events industry, hosting live performances at a large scale, diverse range of world championship sporting events, and the Hopman Cup tennis tournament (Committeeforperth, 2014). Some of the iconic features of the Arena’s design include; has 14 and 12 thousand seats for concerts and sporting events respectively, operating system is a state of the art to permit maximum flexibility, extensive support rooms, corporate seats, retractable roof, and forecourt facility. 1.1 Business problem The stadiums that existed prior to this project used to hold great entertainment shows and tents were used instead. The big shows were held on outdoor venue which had obvious shortcomings like poor audio issues and being open to the weather (committeeforperth, 2014) The initiation of the Perth Arena project is surrounded with controversies in terms of cost from the venue, and the critics that the budget estimates from the projected are likely to coincide with a period of intense industrial action. Project completion delays are likely to affect the implementation of the project. This is taken as a risk factor for the project management team. These may arise from critics the project is receiving from various Stakeholders can lead to cost blowout. The previous entertainment venues have suffered from poor future projection whereby a population increase in Perth has forced some of them to be closed. The closure of these venues left the Perth community with only one indoor stadium and which could not manage to hold a large number of events and sectors demand. The management team is conversant with the issue that is likely to arise from complaints of poor acoustics and sightlines like what other previously built arenas. The issues facing previous arenas’ were based on conveying a low-level guest experience, car parking and outline issue. The issue of Arena making a loss and aging rapidly have surrounded previous entertainment venues an issue that has led to the closure of most of them. Perth Arena will not be immune to some of these issues and problems highlighted above (committeeforperth, 2014). However, with increased oversight and planning through the involvement of all relevant parties, most of these challenges and risks will be avoided fully. The design and plan of the Arena have factored future aspect to save it from being faced out by economic, population growth and developments as a whole. 1.2 Scope There was another Arena which was in existence and was crowded by criticism in bad approach during its construction. The stadium had a continued history of loss-making and continued aging. In 2005 the arena was embarked for destruction to pave the way for car parks and incorporate residential uses. The demolition of this stadium increased the need to have a construction of Perth Arena. After examining the management and planning of the Arena project mainly on aspects such as tendering, construction, contract award. There two key areas of inquiry; one is for risk reduction by the Arena management team to the state. The existing cost and time estimate of the Arena. There is available documentation of the project from the housing department. All the relevant documentations are available which means that the objectives of the project will be met adequately. 1.3 Objective The key objective of the Perth Arena project is to facilitate the construction of a world class and multipurpose indoor facility for entertainment that has the capability of attracting both national and international high profile events. The Arena is planned to cater for up to 13910, 14846, and 15,500 tennis, basketball spectators and maximum Spector’s for the concert respectively. The permanent users of the facility are expected to be home for tennis competition and the Perth basketball team. The existing stadiums in the area were poorly managed and had long history of making losses. Thus the construction of Perth Arena is objected to increasing and improves the economy of the place through a number of ways; the revenue that will be collected from the stadium will facilitate and enable a spur of other novel investments. The increase in the tourism sector will be experienced which will be an advantage to the economy in the long run. The other economic objective is that there will be improvement in the hospitality sectors, increase in employment The other minor goal of construction the stadium is to improve the social life of the local people. This will be enhanced through creation civic pride among the local community especially teams, increased levels of international and nation publicity, the attraction of a wider entertainment option and increased competition, and high chances of increasing the happiness of the local community by providing chances of a wider variety of recreational activates (committeeforperth, 2014). 1.4 Dependencies The project will depend solely on three types of dependencies. These include the mandatory, discretionary, and external dependencies. For the case of mandatory dependency, project aspects that are contractually required or whose determinant is the nature of the task themselves will be applied. The manner in which these project activities follows each other will be determined the order of performance (Kwan, & Leung, 2011). Discretionary dependencies will also be observed as these will be determined by the project manager. These are types of dependencies highly liked in a project because it will boost the project ability to in line with the discretion. This form of dependency will enable the project management team to decide the order of task implementation. The management will take advantage of this dependency to control the project which may as well assist to drive other form of dependencies that they have no control over. In the case of external dependency, this will assist in the approach of tasks that depend on the exterior influences like vendors, the internal information supplying departments or any part that is crucial to the project work. These will not lie on the projects team control as the represent risks to the project schedule. The following are some of the external dependencies that will be related to the completion of this task. As stated earlier these dependencies are not controlled by the project team at all. Project Regulation requirements Utility transfers The resources availability, affordable materials and Construction economy Other competing projects with of the same or higher magnitude of this project Competition of available resources The dependencies will have to be used in order to make sure that there will be order in the project schedule. Most of the times the task involved in a project dictate the implementation order. Among all the three dependencies the most favourable one will be discretionary dependency because the team will be able to move the workload in a manner that suits the resources availability (Rad, & Levin, 2006). The toughest of all dependencies applicable in this project will be the external one as it shows the risk areas in a project and will need additional analysis in order to alleviate the consequences. 1.5 Benefits The detailed economic and social benefits of the project have not yet been analysed, but there is clear evidence that the venue will deliver significant advantages to the local community as well as the economy right after its completion and in the future. The intended benefits from the Arena comprise of the following; The local Community Partner Benefits; these are benefits from the Arena to successful charities that are focused on the donations with the objective of meeting the individual charity goals such as; There will be recognition venue through Perth Arena marketing channels, Venue cost waiver for charity events held in the Arena, Perth Arena event tickets provision for the fundraising resolutions, The Perth Arena database will be used in the promotion events and campaigns Benefits through Place Making; The Field has the ability to of turning into a point of interest working for Perth district. The anticipated configuration and the consideration of the City Link venture interprets infer that Perth Arena later on and the square as well and will end up being some of the most internationally recognized and iconic terminus. In addition, the design of the Arena is approached in a way that the capability of developing the surrounding environment as a lively open space will be empowered through the outside configuration of the building. This is deferent from customary stadiums whose configuration offered a great background of the encompassing open places through a façade variable at an increased human scale. This move will encourage activates around the building instead of repelling it through the overly utilitarian and imposing exterior. The Perth Arena will be able to attract new events in the Perth region as it will welcome the novel period of access to global show visits. The task administration and organizers have probably through the accessibility of top class occasions venue it will be central to attracting these tours to Pert. Patronage and Revenue where the figure is projected to represents around 17% of the entire patronage all across Venues West facilities. The estimated revue once the facility is opened is projected to amount to approximately $4.396 million within the first six months of operation. The management and planning team assumes that this performance will be maintained. Thus the venue has a likelihood of attracting an increasing number of visitors yearly where it will by then be in a position to generate revenue of approximately $6.6 and $7.6 million. On the other hand, the review generation is not incurred without focusing on the annual operating profit which is projected to range between $3.5 and $4 million. As stated above the most relevant benefit is the economic aspect of the project where both the state and local government will benefit from revenue collection and additional income from tourism and sprout of new business within Perth. In summary, the benefits of the Arena are expected to be the following; Presence of civic pride with the Perth community Increased levels of national and international publication Increased chances of attracting a wide variety of entertainments A sense of feeling and happiness with the locals in Perth Region Employment creation and a business boost in the hospitality sector Increase in tourism Increased state and local government revenue and a spur in new investments 2.0 Cost and time scales The total cost of the project is projected to be a total of $160 million, but this budget can be surpassed and make it as an expensive infrastructure. In a project of this magnitude and importance price and time is crucial aspect as they highly determine the success and failure of a project. The original cost of the project is expected to be a total of $160 million, but this figure may rise due to other contributing factors (Auditor General Western Australian, 2010). In comparison with other indoor Arenas in other parts of the world, the cost seems to be in place. These comparisons are based on Arenas that holds the same capacity and functionality aspects like those of the Perth Arena. Some of these facilities have been constructed and are operational. In regard to the comparison done it is clear that the cost of Perth Arena will be slightly high, but this does not make it as the most costly facility of this nature to be constructed. There other projects of the same nature running in different parts of the world the same time as this one and there is an increased likelihood of resources competition, and availability of affordable materials will be a problem as well (Auditor General Western Australian, 2010). There this will probably lead to an increase in estimated budget. However, all necessary measures will be assumed to ensure that this done not turn out to be a reality. The aggregate cost of the whole venture is reasonably practically identical with other arranged and created offices as of late which are of this type and size. This is in line with development cost from other centres with a strong emphasis on the Perth Arena design. The cost of labour expected to be high although the construction period which clearly indicates that the final cost to be used in the construction of the Arena has a likelihood of reflecting numerous variables. Some of these include; projected definition planning during the project commencement, design quality, construction complexity and the prevailing economic conditions during the period that the project will be implemented. There are other associated costs and will include running and pre-opening costs. The operation of the venue is expected to The venue operation has triggered increased amount of cost like those connected with traffic congestion and movements created by the Arena. There are existing figures that shows pre opening and operation cost of the arena. Some costs have not yet been quantified or assessed either. Some other costs are connected with the Arena maintenance at the time of its opening. The net cash to be spent in the operating functions is approximately estimated at $12.005 million. The patronage is presented at 17%of the whole amount of Venues West facility. Some estimates are of the cost of running the facility which is at $2.080 million in approximate in a span of 7 to 8 months period (Auditor General Western Australian, 2010). This is around $260,000 but is expected to keep lower that this was monthly and up to $3.56 in a year. There other cost approximations on the pre-opening of the Perth Arena facility The cost analysis shows that the estimated budget can be surpassed and that will not be the aim of the project. Therefore, agencies that will be involved in the procurement process of capital projects will be expected to put governance structures and management approaches in place such that they reflect complexity and scale of the project. The state and local governments will be issued with complete advice regarding the project risks, status, and all key decisions made. Appropriate legal advice will be followed in order to establish records that are adequate, and that meet the team's involved obligations under the State Records Act 2000. Increased oversight from the Department of Treasury and Finance must be exercised, and the construction project will be able to ensure consistency in the Strategic Asset Management Agenda to all key capital aspects of the project. Finally, the strategic asset management needs to be reinforced by the department to become more rigorous as a staged project process that makes sure a funded project is only that one that is well planned and scoped with announced budgets and timelines that are realistic. For the case of Perth Arena all the risks at every stage of the implementation are addressed, and the management agendas executed by relevant procurement agencies replicate good practice and pellucidity of the development. All these measures will act as a shield to make sure that the estimated budget from the initiation to the completion of the project does not surpass the budget despite all risks that may arise in the course of the project implementation. Table 1: Perth Arena development cost Arena City Function Maximum Capacity Construction period Estimated Cost(million) Perth Arena Perth Multiuse arena 15,500 3 years $160 2.1 Project time scale The project is estimated to run for a span of 3 years right from the project initiation step to the project completion. Time is a crucial factor to plan and observe to make sure that no additional costs are incurred as a result of delayed time towards a project completion. In this project budget estimated is in line with three year from the initiation to the completion of the project. The following is the project fact sheet and Key project milestone. 2.1.1 Pert Arena Fact Sheet The first 12 months will see around 2000 concrete piles driven to the construction site Every pile will stand at a depth of 35m Good and services contracts to be issued are approximated to be 100 The total height of the stadium will be 42 m and have five levels A total of 21 Olympic size pools of concrete will be used in the construction 2.1.2 Main milestone These will be distributed within the five years period and will be broken down as follows; 1st year will involve pouring of concrete slab By the end of 1st year of construction tower, cranes will be in place Early 2nd year the installation of seats and unique bronze façade will start Employment of workers will be undertaken, and the peak of the process will be reached at the end of the 2nd year The 3rd year will see completion of grass playing service 36 months later will bring the construction to an ending during the 3rd year. 3.0 Risk of not doing the project The Perth Arena is intended to be a cutting-edge, multipurpose, indoor arena and a property of the state government, thus a public property. Perth as a growing region there is increased the need to come up with a way that will enable the community to deliver its sporting and cultural amenity that is expected by the future and current generations of a contemporary developing city. This makes the construction of the Arena a success story. Projects of this nature are aimed at bringing the local community together by ensuring that they are positively involved in the game and other entertainment (Elkington, & Smallman, 2002). As stated earlier some of the existing arena was demolished as they failed to add intended value to the society. Therefore, failure to construct the Pert Arena would rise to a number of risk aspects both directly and indirectly. In addition, as a crucial overdue piece of cultural entertainment sports the risks of failing to construct it would be detrimental to the community and the government at large. Some of the possible risks include; Lack of important social benefits: municipal pride, constructing a solid local character, creating positive attention and empowering the city to pull in and appreciate a more extensive assortment and higher quality diversion and entertainment alternatives Security and comfort of the locals and entertainers; The construction of the Arena will help ease the use of tents to host big international entertainments shows; Maintaining security inside an Arena is easier compared to doing so in a tent. In an Arena installation of CCT cameras is possible; the number of security personnel’s is not as high as that of a ten. Decrease in future tourism growth; The Arena is expected to attract high profile events, this will help to boost the tourism sector and the hospitality sector at large. Therefore failure to undertake this project will reduce chances of growing the hospitality sector that employs many youths which may translate to social issues such as increased crime. Decrease in additional future cost; through the construction of the arena issues regarding acquiring of tents to accommodate people during crucial entertainment events will be permanently forgotten Lack of growth for the local sporting teams leading into a disconnected community Constrained number of recreational facilities; the Arena intends to have international standards, thus will be able to attract high profile events which will translate into the increased happiness of the local residents. 3.1 The key project risk The Perth Arena is expected to have international, cultural and entertainment and indoor sporting, facilities standards. In addition, the Arena is expected to create civic pride for the local community, as it will be able to attract and retain local sporting. This forms the key project risk in that in case the Arena fails to attract high profile and local sporting as projected; this will translate into failure in economic aspects employment creation, local tourism and reduced revenue creation Business wise, the Arena will be constructed within the set period and within the specified budget. However, the major risk identified above can result into low business in terms of selling tickets which will eventually lower the revenue collected translating to fall in business to all stakeholders connected directly or indirectly. The economic significance of the Arena will be a key issue to address as it can result in serious risk factors. 4.0 Stakeholder Analysis Perth Arena has a number of stakeholders, and their management is crucial as they play an important role in the success and of the project. Therefore, engaging the right and relevant characters in the right and projected way in the construction n of the Arena will help make a big difference towards its success (Elias, Cavana, & Jackson, 2002). It is notable that the success of a project like this one highly depends on or can be influenced positively or negatively by its stakeholders. A group of committed stakeholders of any project would not side with those criticising the development and implementation of this and any other project. There are those who are fully interested in the project, and feels is necessary, and there are those that does not find any significance in the project and would not work hard to support in its completion Stakeholder analysis 4.1 Key stakeholders State/Local government-Fully aware of the project and supportive Community or local residents-Aware of the project and supportive Local businesses-There is a possibility of resistance among the group in future Local and International sporting bodies-They are supportive of the project Police-These remains neutral In reference to the diagram, high power is those interested in the construction of the Arena are the people that should be fully engaged as they make greatest satisfaction efforts.They include the state and local community. The other group is high in power but less interested.The project should put enough efforts with this group of stakeholders to make sure they remain satisfied; such as Local and International sporting bodies The low power is a group that is just interested in the Arena.This group of people must be adequately informed of the purpose and benefits of the Arena to make sure that there are no key issues that may arise as they are likely to be unsupportive and resist the implementation of the project. The final group is a low power and the groups involved are less and fully not interested in the Arena. These must be monitored and remain updated on the project. It is crucial to make sure that a close monitor will be maintained to make sure that the project management team is conversant with trending and functionality of all the stakeholders in case their interest and position of power changes. 4.3 Project communication plan This design designates that communication method and collaboration during and on the Perth Arena construction project. In any setting the methods of communication used plays a key role to the success and acomplishment of the set goals and objectives. The arrangement recognizes the key gathering of people for the venture the data to impart and specialized strategies to be applied (Fortune, & White, 2006). 4.3.1 Project Audience The construction of Pert Arena is expected to run through a tight schedule and limited project the communication plan involves passage of information to four main audiences. These include; The entire Perth Arena project team including the stakeholders identified above, and all the people that are assigned to work on the project The Metro foundations and local government; this team depend exclusively on the project individuals' monetary commitment to empower the project team to undertake work, research and activities concerning the Arena. Local community; although this, not an important group, communicating with them will make sure that they remain anticipated and supportive of the project from the start to the end. Vendors; these are the project contracts connected with vendors who are involved in the project. 4.3.2 Project information The information required for this project is a lot because it’s a huge project. However, to make sure that it’s that it’s passed smoothly on this project six categories of information will be used in order to simplify the communication process. Perth Arena project is huge and withouth clear identification of the major figures of communication flow it waould be hard to ensure cordination during ist implementation. These include Approval; his form of communication involves representation of information documents; changes requested, request on a budget or mainly the project deliverables that needs the stakeholder's approval. The project status of the stakeholders; this comprises of high-level summaries of the project completed milestone, key project accomplishments, budget performance and existing schedules, any arising issue and encountered risks in the course of the project. Comprehensive project status; this is all about issues that require resolution, progress and completed work, accomplishment of various project teams and any learned lesson from the project Project reference; this information includes all project documents and deliverables based documents Collaboration; information comprises of change request presented risks, issues that emanate from project implementation Publicity: it involves a representation of high-level status and overview 4.4 Communication method The Perth Arena construction is a big project and as stated earlier the number of stakeholders involved is big as well. Therefore, different methods of communication should be used to reach out to all stakeholders. Communication flow in a project of this maginitude is crrucial to ensure that everything goes on as planned. However, the most relevant ones are only four mail; this will be the most preferred mode of communication for information dispatch on what all parties involved are supposed to act on. This method will be used for all official communication involving the project. Voice mail; this will be a secondary mode of requesting action Meeting; although these will be kept to a minimum, they will be the best mode of communication as it will be possible to reach to all stakeholders at the same time. The project website; all updates, work in progress and any other information deemed important will be posted in the Perth Arena official website. The site will be possibly updated on a daily basis. 4.5 The communication matrix As stated earlier the construction of Perth Arena is not a small project and the amount of information about the project is huge. Therefore, the communication is not simple, but to make it simple, it has to fully simplified (Rowland, 1996). All the team leaders in the project will copy emails sent to the teams to the entire team to ensure that they remain informed. The telephone calls and meetings will be documented by the project manager and posting of notes to a central shared workspace. In the Microsoft Office Outlook, a folder will be maintained for all emails correspondence. The project deliverables will be informed of status reports will be released biweekly. These status reports will comprise of works completed on weekly basis task completed and in progress, completed percentages, task that are upcoming, downloadable copies of existing issues defect list, risks encountered, Earned value against project baseline. All of these will be posted in the Perth Arena website to make sure that they are easily accessible to all the stakeholders. In addition, meetings will be held in the course of the project and the same parameters will be presented and discussed. Table 2: The communication matrix Audience Information Method Frequency Responsibility Perth arena project team Detailed project status Email, Voicemail& meeting Weekly and as required Civic institutions and local government works completed task in progress, Meeting & website accessibility Weekly, monthly and upon request Local communities All posted information in the websites raging from work completed to project earned value Website Accessibility Weekly Vendors Detailed project status Email As required and Weekly Appendix 1: References Auditor, W. A., 2010. The Planning and management of Perth Arena, Perth: s.n. Committeeforperth, 2014. What-we-thought-would-kill-us-Perth-Arena-FINAL-electronic.pdf, Perth: insights communications and design. Elias, A. A., Cavana, R. Y., & Jackson, L. S. (2002). Stakeholder analysis for R&D project management. R&D Management, 32(4), 301-310. Elkington, P., & Smallman, C. (2002). Managing project risks: a case study from the utilities sector. International Journal of Project Management, 20(1), 49-57. Fortune, J., & White, D. (2006). Framing of project critical success factors by a systems model. International Journal of Project Management, 24(1), 53-65. Kwan, T. W., & Leung, H. K. (2011). A risk management methodology for project risk dependencies. IEEE Transactions on Software Engineering,37(5), 635-648. Rad, P. F., & Levin, G. (2006). Metrics for project management: Formalized approaches. Management Concepts Inc.. Rowland, C. (1996). Communication matrix. Portland, OR: Design to Learn. Appendix 2: Time scale Activity Year 1 Year 2 Year 3 pouring of concrete slab construction tower cranes will be in place Installation of seats and unique bronze façade completion of grass playing service Project completion and opening of the Arena Read More