Mini case study – Scottish Parliament: the £431m question

Scotland’s new parliament building cost more than 10 times the original estimate and opened three years behind schedule.

Official cost estimates changed 10 times and ballooned from the initial £40 million estimate to a final £431 million.

The procurement model chosen for Holyrood in early 1998 has emerged as the root of the problem. A fast-track contracting method known as construction management was used to build the parliament. It works by splitting a large building job into numerous smaller packages that are designed, tendered and let independently of one another.

Its main advantage is to speed up construction, because the overall design does not have to be complete before basic building work can begin.

It does not allow a client to know the total cost of a project until well after work has begun. It is considered risky for the client, which is responsible for running each individual package – in this case more than 60.

The project cost escalated from about £40 million in 1997 to £109 million in 1999, £241 million in 2001 and £294 million in 2002, and finally £431 million in February 2004. There were 18,000 design change orders over the five years of construction, combining

to form a three-year delay. Requests for design freezes on three occasions were ignored. The reality is that construction management was the only contract option for a client

wanting to make an early start on a project that was still at the design concept stage.
It is also clear that this was a classic case of procurement expertise being bypassed. The procurement department at the Scottish Office was not involved in the project. It was

not consulted over the procurement model.
There is nothing wrong with construction management as a procurement route. It is

best suited to high-quality, potentially high-cost projects, where the client is fully engaged, has a clear goal and works closely with the supply side team.

Some estimates put the money lost to delays and backtracking over design changes at as much as £100 million. If one trade contractor has a problem, it tends to ripple through all the others and cause delay and changes. The contracts are with the client, so the client picks up the cost of that.

However, between the extremes of fixed speedy construction management, a host of options exist under the heading of ‘conventional’ procurement. Their structures affect the risk and control over the final design that falls to the client.

The ‘design and build’ route would have seen the project management team drawing up a detailed design brief, which the main contractor then builds. It leaves the contractor footing the bill for cost overruns, but freezes the design as well.

A middle-of-the-road option, prime contracting, keeps design more open, but cuts the risk of costs going up if things go wrong. This is because a contractor joins the client’s project management team, and brings its entire supply chain of proven builders and suppliers along.

Then there is management contracting, where the client retains the design brief fully and splits up the project into small packages to be individually let, as in construction management. However, a professional intermediary runs all of the contractors on a daily basis, although they are still contracted to the client, which pays for design alterations.

Management contracting may, it seems, have given a more stable framework to the project by introducing an industry expert to run the many contractors.

Construction management was not the most suitable procurement vehicle. Sir Michael Latham, whose influential 1994 report, ‘Constructing the Team’, called on the construction industry to move towards partnering in the supply chain, says that full partnering should have been used to share the risk between client and contractor.

Discussion Question:

1. What was the nature of the procurement including the organization that conducted it and Who was involved in the procurement?

2. What was the process followed (briefly)?

3. Critique the procedure indicating what went wrong and how costly it was.

4. Suggest necessary improvements.

5. The Argentine peso was fixed through a currency board at Ps1.00/$ throughout the 1990s. In January 2002 the Argentine peso was floated. On January 29, 2003 it was trading at Ps3.65/$. During that one-year period Argentina's inflation rate was 20% on an annualized basis.

Inflation in the United States during that same period was 2.5% annualized.

1. What should have been the exchange rate in January 2003 if PPP held?

2. By what percentage was the Argentine peso undervalued on an annualized basis?

1. What were the probable causes of undervaluation?

After reading Special Topic 5, write a 2-page paper answering the following: Why did housing prices rise rapidly during 2002 - 2005? Why did the mortgage default rate increase so sharply during 2006 and 2007 even before the 2008 - 2009 recession began? What did the Community Reinvestment Act have to do with the housing bubble and collapse? Cite your sources as needed. Use APA formatting. View your assignment rubric.

"A regime of perfectly specified property rights will ensure that 'full-cost accounting' will take place. Indeed, failure to incorporate 'full-cost accounting' in economic decision-making to can be traced to improperly specified property right." G. Weeks, 2002. Assess, within the context of an essay discussing the meaning and significance of "full-cost accounting" to the achievement of efficiency and the challenges presented by the concept of "full-cost accounting" in relation to economic decisions having environmental impacts

Above is how the question was structured

Eleven European countries began using the euro for payments in 1999 and as a physical currency in 2002. Today 19 countries use the euro. Please discuss the benefit of using the euro as well as the reasons to not use the euro. Britain, Switzerland, Denmark and Poland do not use the euro. Why do some countries use the euro and some not? As a major currency of global standing, where else is the euro used, and why?

(300 word minimum, 500 word maximum, please include 1 outside sources)

According to the International Atomic Energy Agency, per capita electricity consumption in Canada was 16,939 kWh in 2002. A random sample of 51 households was monitored for one year to determine electricity usage. If the population standard deviation of annual usage is 3,500 kWh, what is the probability that the sample mean will be each of the following? a.More than 18,000 kWh b.More than 17,500 kWh c.Between 17,000 kWh and 18,000 kWh d.Less than 16,000 kWh e.Less than 15,000 kWh

The director of your accounting department has requested that you conduct research on the Sarbanes- Oxley Act of 2002 (SOX). Discuss what effects SOX has had on improving corporate governance. Then research, identify, and summarize a specific corporate crime case or issue.   

The summary should include a good description of the facts of the case, the issue before the court, and the legal reasoning and decision or outcome (the court’s ruling) of the case, if there is one. Lastly, state whether SOX has created more confidence in the capital markets or not.

Researchers have been studying the association between cigarette smoking and caffeine intake and

Parkinson's Disease for more than 40 years. The results of a study by Checkoway et al. (2002) follow:

Ever having smoked cigarettes resulted with an odds ratio (OR) = 0.5 (95% confidence interval (CI):

0.4, 0.8).

The OR for current smokers was OR = 0.3 (95% CI: 0.1, 0.7).

Among ex-smokers the OR = 0.6 (95% CI: 0.4, 0.9).

Interpret the three ORs (in your own words).

ocate and read the article listed below and answer the following questions. Hall, T. W., J. E. Hunton, and B. J. Pierce. 2002. Sampling practices of auditors in public accounting, industry and govern- ment. Accounting Horizons 16 (2): 125–136. http://www.aaajournals.org/doi/pdf/10.2308/acch.2002.16.2.125 I need better answers then the ones provided by the textbook solutions. a.) What is the issue being addressed in the paper? ☝️Need detail answer on that particular question with example

Ageing changes function of the human body. Discuss two changes in each section of the digestive tract and the associated implications on major function of the digestive system. Provide at least five examples with detail explanation.