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[DEVELOPMENT PROCESS]

PERAK, KAMPUS SERI ISKANDAR


ASSIGNMENT 1 : DEVELOPMENT PROCESS
QSD 236 : CONSTRUCTION OF ECONOMICS I

GROUP : AAP1143A
DATE OF SUBMISSION : 01 JULY 2013
LECTURER : PN WAN NORIZAN BINTI WAN ISMAIL
1)
2)
3)
4)
5)
6)

MEMBERS NAME
MUHAMAD AZRI BIN NAWI
HAZWANI IZZATI BINTI ZAIDIN
NAJIHAH BINTI SALMAN
NUR AMILA BINTI SHMSURI
AHMAD FAZLIN BIN AZMI
SITI MAISARAH BINTI ZAKARIA

MATRIC NUMBER
2012483274
2012601888
2012839724
2012828384
2012282074
2012416918

CONTENT

no

Contents

page
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[DEVELOPMENT PROCESS]

Acknowledgement

Introduction

Project background

Modern approach

11

Steps in development process

18

Analysis of developer expenditure

29

Conclusion

30

References

31

ACKNOWLEDGEMENT

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[DEVELOPMENT PROCESS]

Assalamualaikum w.b.t. First of all, Alhamdulillah we praise and thank to


Allah S.W.T with our deepest gratitude for giving us the strength to complete this report in a
given of time although we face some difficulties in completing this assignment.
Besides that, a billion thanks and appreciations we dedicate to our beloved
Construction Economics lecturer, Puan Wan Norizan binti Wan Ismail for all her support and
guidance in helping us to finish our report that really challenged our mentally .Without her help,
we could not finish our report.
Not to forget, a lot of thanks we to Puncak Iskandar Developer of MRCB of
the project, En Badri bin Abian that helps us a lot in this assignment. Our family especially our
parents who always support us physically and mentally during doing this assignment. They also
always support us in studies in order to be a successful quantity surveyor, Insya Allah.
Last but not least, a plenty of thanks we dedicate to all fellow friends
especially this group members Najihah binti Salman, Hazwani Izzati binti Zaidin, Siti Maisarah
binti Zakaria, Nur Amila binti Shmsuri, Muhamad Azri Nawi and Ahmad Fazlin bin Azmi that
always support and share their ideas in order to complete this report. Thanks you very much to
all of you and we love you all.

INTRODUCTION

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[DEVELOPMENT PROCESS]
Development process is the most important aspects of effectively. The development involves
assessing customer needs, developing offerings that meet these needs, testing these products
to make sure they are effective and appealing, and then introducing them to target markets in
interesting and attention-worthy ways.
Research
Marketing research is the first step in the product planning and development process. A
company can do formal marketing research by conducting surveys and polls in person, over the
telephone or online; asking customers what they want in a new product and how a company's
new offerings can most effectively meet their needs. A company also can conduct informal
marketing research simply by speaking to customers through day-to-day interactions and
observing their purchasing behavior. These observations can provide invaluable information
about the features and functionalities that should be integrated into new products.
Budgeting
Planning and developing new products costs money, and a company should embark on

this

process with a budget that provides a clear idea of how much money is available for
researching, developing and marketing. Creating a budget for new product development
involves deciding whether this process will be financed via ongoing company activities, such as
ongoing sales of an existing product line, or whether it is worth taking out a loan, or approaching
investors for additional funds.
Prototypes
The heart of the new product planning and development process involves creating prototypes,
which are sample products that provide real data about how these offerings work and whether
they meet customer needs. The process of creating prototypes involves experimenting with
materials in order to develop a product that can be created within the company's budget. The
prototype phase of product development involves interaction between product developers and
the company's manufacturing department in order to design a product that can be produced on
a larger scale.

DEVELOPER

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[DEVELOPMENT PROCESS]
Definition
An entrepreneur who provides the organization and capital required making building available
in anticipation of requirement of market in return for profit.
He is the one who responsible to carrying out of building engineering, mining or other
operation in, on, over, or under land, or making of any material change in the use of any building
or other.
As for our developer for this case study is MRCB. This company is the one that organize and
provide the capital cost for this construction.

Factors to be consider in every construction


Population and age trends
Each construction depends on the population and age trends near the construction place. Such
an example if the age trends are range between 50 and above, it is not suitable to build gym
there.
For this construction, the majority of population that lives here is university student. So the
residential construction will build are suitable for the population here.
Change in pattern of lifestyle.
Every construction will change in pattern of lifestyle of that area.
The implication for new technology
To conduct a construction, the implication of new technology is necessary. Technology is
needed as it made it easier for the building construction. New invention had been introduced.
The selection of appropriate site
Site should be chooses appropriately. This is because, once the project starts, there is no way
can stop the construction or will experiences big loss.
The choice of appropriate consultant

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[DEVELOPMENT PROCESS]
Consultant board should be chooses carefully to ensure the construction process is going
smooth.
Determine the source of finance
Each construction must have a stable financing cost. This cost must be provided continuously
and the source must be recognized and verify by the local authorities.

Development process use two plan which are :


1.

Traditional or RIBA plan :

The RIBA plan of works, is basically a set of guidelines and sets out the process by which a
construction project should be run. It is set out in stages that are feasibility, design and
construction. The step in RIBA planning :

Figure 1
2.

Modern Approach :

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DESIGN AND COSTING

[DEVELOPMENT PROCESS]
It considers the development in more holistic context which commences from inception and at
demolition of the project for rebuilding purposes. Besides that, it to cost control considers all
cost involved in project lifecycle. The stage in it which is :

INCEPTION

DESIGN AND COSTING

CONSTRUCTION

IN USE

DEMOLITION
Figure 2

The types of construction process that apply in our case study is modern approach. Modern
approach is being used in the construction of semi-d house project. All the process need to be
plan earlier and do an early planning. This construction takes time until 15 months. Each
process needs to be handle carefully and smartly.

Step in development process :

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IN- USE

[DEVELOPMENT PROCESS]
1)

Initiation / site identification

2)

Evaluation

3)

Acquisition

4)

Design and Costing

5)

Implementation and Construction

6)

Sales and Promotion

7)

Development Permission and Approval

PROJECT BACKGROUND
The project that we found to do for our assignment is Cadangan Membina 16 Unit Rumah
Berkembar Satu Tingkat Jenis B-T Di Atas Lot 762-77, 20 Unit Rumah Berkembar Satu Tingkat
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[DEVELOPMENT PROCESS]
Jenis B-M Di Atas Lot 778-797, 12 Unit Rumah Berkembar Satu Tingkat Di Atas Lot 716-827.
This project is for the development phase 2A at half of scheme combination development at
government land which size 53.05 acres at Seri Iskandar City. Besides that, it also for Tetuan
Seri Iskandar Development Sdn. Bhd.
The main contractor companies that is involved in this construction project is Pembinaan
Khuang Seng Sdn. Bhd which address at No 51-A Laluan Pinji Seni 4, Taman Pinji Seni, 31650
Ipoh, Perak .Next for this project the contract sum is RM 6122 330.00. Date of commencement
this project is 28 January 2010 and for date of completion is 27 April 2011. The project took 15
months to finish.
SITE ORGANIZATION CHART
PROJECT MANEGER: TAN CHOR HENG

SITE AGENT: KEW KEIN


HONG
SAFTY OFFICER:
NG TIE HUA
SITE SUPERVISOR: NG TIE
HUA
MECHANICAL &
ELECTRICAL

STRUCTURAL

ARCHITECTURAL

CIVIL

Figure 3

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[DEVELOPMENT PROCESS]

Figure
4
CLIENT AND LIST OF CONSULTANT
CLIENT:
ADRESS:
PHONE:
EMAIL:
ARCHITECT:
ADRESS;
PHONE:
MOBILE:
CIVIL ENGINEER:
ADRESS:
PHONE:
FAX:
STRUCTURAL ENG:
ADRESS:
PHONE:
FAX:
M & E:
ADRESS:
PHONE:
FAX:

SERI ISKANDAR COPARATION SDN. BHD.


KM 36, JALAN IPOH LUMUT, BANDAR SERI ISKANDAR
32600, BOTA PERAK DARUL RIDZUAN
605-3712188
sidec@tm.net.my
AHMAD FADZLI MOHAMAD ARCHITECT
NO. 13B, JALAN BRP 1/4 , BUKIT RAHMAN PUTRA
47000 SG. BULOH, SELANGOR DARUL EHSAN
603-61409953
012-2972355
KHAIRI CONSULTANT
93A, JALAN WIRA JAYA, TAMAN IPOH JAYA,
TIMUR 1, 31350, IPOH PERAK DARUL RIDZUAN
605-3114020
605-3114020
PERUNDING AMARBINA SDN. BHD.
NO. 4 LALUAN MERU INDAH C4, TAMAN MERU INDAH
BANDAR MERU RAYA, 30020 IPOH
605-5261208
605-5261461
THAM ZAMIN BERSEKUTU
53-A, JALAN KLEDANG 21, TAMAN ALKAFF
SILIBIN, 30100, IPOH PERAK
605-5268366
605-5264767

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QS:
ADRESS:

KAS JURU UKUR BAHAN SDN. BHD.


16A, JALAN DESA AMPANG
TAMAN RASI AMPANG, 31400 IPOH
605-3113950
019-5100083

PHONE:
MOBILE:

Figure 5

MODERN APPROACH

Inception

Design & Costing

Stage
1
Stage
2

Construction

Stage
3

In-use

Stage
4

Demolition

Stage
5
Stage 1 Inception

The project construct 48 unit of semi-d house at the Bandar Seri Iskandar, Perak.
First the developer appoint land survey to do Feasibility Study.
The site is suitable for construct residential building because near with;
i.
Town and village.
The site is near with the town of Bandar Universiti, Seri Iskandar and near with
ii.

Kampung Bota
Educational building.
Educational building that near with the site which are UITM Seri Iskandar, UTP
Teronoh and SK Seri Iskandar.
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iii.

Commercial Building
The commercial building that near with the site which are Tesco, Billion, Aeon

Manjung and others.


The objective for the projects established is to provide the rental house for students, to
provide house for who working at near Seri Iskandar because the job opportunities at
here is high.
The duration of inception take 1 years to make sure the site is suitable for the
construction.

Figure 6

Figure 7
Stage 2 Design & Costing

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The client, Seri Iskandar Development Corporation SDN.BHD appoint the design team
of the project which are :
i.
Architect Ahmad Fadzil Mohamad Architect
ii.
Civil Engineer Kahiri Consult
iii.
Structure Engineer Perunding Amarbina Sdn. Bhd
iv.
Mechanical & Electrical Tham Zamin Bersekutu
v.
Quantity Survey Kas Juruukur Bahan Sdn. Bhd
vi.
Main Contractor Pembina Khuan Heng Sdn. Bhd
The lump sum cost for this construction is RM 6, 122, 330.00
The client will send the Certificate of Completion and Compliance letter to the Building
Control and Public Safety to make sure the construction is safe.
The Architect will agree with the quality and standard of construction and it will proceed
with construction process.
The duration taken for design and costing the project is 5month.

Figure 8

Stage 3 : Construction

The phase of the project are project planning, installation and commissioning
The duration of the project is 2 1/2 years

Date of commencement
Date of completion

28th January 2010


27th April 2011
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Completion period

15 month

Figure 9
Task of the project: project was completed on time within budget and specified quantity.
Period ->1 June 2010 22 June 2010
1) 16 units B-T
a) Block 3a
- Gred Beam R.C. Works is completed.
- Underground soil pipe and piping works is in progress, will be completed by end of
-

this month.
Gred floor slab backfill and concreting works will be start by first of July and complete

b)
-

by middle of July.
Gred column R.C works will be start after completion floor slab.
Block 3b
Gred beam R.C. works is in progress, will be complete by middle of July.
Underground piping works will be start by middle of July.

2) 20 units B-M
a) Block 2a
- Ground beam R.C. Works is in progress, will be complete by first of July.
- Underground piping works will be start on July and complete by week of July.
- Ground floor slab backfill and concreting works will be starts by second week of July.
- Ground beam R.C. Works will be start after completion floor slab.
b) Block 2b
- Pipe cap R.C. Works is in in progress, will be completed.
- Ground beam R.C. Works is in progress, will be complete by middle of July.
- Underground piping works and floor slab backfill works will be start by middle of July
and complete by end of July.

3) 12 units B-T
a) Block 1a & b
- Pile cap R.C. Works is in progress, will be complete by end of this month.
- Ground beam R.C. Works will be start by first of July and complete by end of July.

The project does not have any delayed time because the project is on the time.
The project is within the budget that is RM 6,122 330.00.

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Stage 4 : In-use

The project have maintenance for about 1 to 1 years period.


Also have repair and modification within the period of warranty.
The period of maintenance is 18 months.
The defect that will required maintenance such as :
i)

Cracks

ii)

Broken tile or glasses

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iii)

Piping leakage

iv)

Electrical problem

Feedback from project appraisal in practice will help to reduce possible defects.

Stage 5 : Demolition
Demolition is the tearing-down of buildings and other structures. Demolition contrasts
with deconstruction, which involves taking a building apart while carefully preserving
valuable elements for re-use.

Figure 10
A wrecking ball in action at the demolition of the Rockwell Gardens

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But our project have a long life span between 80 to 100 years.
So, no need demolition until there are any worst condition.

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[DEVELOPMENT
PROCESS]
STEPS
IN DEVELOPMENT
PROCESS

1. Site
identification

2. Evaluation

3.
Acquisition

7. Sales and
promotion

6.
Implementation
& construction

4. Design
and costing

5. Development
permission &
approval

Figure 11

1. Site identification
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The location of the site is being identify. Place to build the building should be concern
as after the building constructed, it is difficult to change another site. This could lead

to demolition that can waste the money that being invested.


For this project, it took time to identify the suitable site until they decide to conduct a
construction lot 778-797 and Lot 716-827

2. Evaluation
Research is being conducted during this step. Evaluations on market research. This means
about the age and population of the people who live nearby the area. The feasibility study is
been studied on the profit that will be gain from the building. The cost of the development is
reasonable and the economic viability of the project can be attained.
o

As an example: our construction building study is located in Puncak Seri Iskandar.


The type of building that constructed is residential building as this area had a large
population of university student. Such as students from Universiti Teknologi Mara
(UiTM) and there is also University Teknologi Petronas (UTP). The kind of land is
hilly land.

Figure 12

figure 13

3. Acquisition
o There is several types of acquisition:
Private treaty

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This kind of sale comprise of individual assets, production lines or entire


facilities. Discussion and negotiation between the buyer and seller takes
place in this kind of acquisition. This private treaty is conducted in long term.
Besides that, estates agents also prepare for descriptive information and
quoting the prices. Later, the information will be viewed by the potential buyer
and decide. In short explain, this private treaty is a sale of property at a price
agreed on by the seller and buyer without intervening agency.

Figure 14

figure 15

Formal tender
Formal tender is any formal letter that set out in writing. The advantages of
formal tender are it is more certainty than private treaty, and it is more
flexibility and discretion than selling by public auction.
Public auction
There are ways to conduct public auction
i.
All leasing by public auction shall be by oral or by sealed bid.
ii.
The auction is conducted under the direction of the department or by
iii.
iv.

the auditor of the land to be leased is located.


A person who conducting this auction is called an auctioneer.
An auctioneer is someone that had a certificate than he qualify to be
an auctioneer and not everyone can be an auctioneer.

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Figure 16

figure 17

Joint venture
A contractual agreement joining together two or more parties for the purpose
of executing a particular business undertaking. All parties agree to share in

the profit and losses of the enterprise


Some of the advantages of joint venture:
i.
Sharing the economic risk with co- venture. It means it pays to have
someone sharing the responsibility with you in case you end up in
deep troubles. When sharing assets, the risk of losing a great deal of
ii.

money is divided into both parties.


Widening economics scope fast. Building reputation is often difficult,
not to mention time consuming and expansive. In this joint venture,
you are able to widen your economic scope without spending to much

iii.

money and waiting for a long time.


Accessing additional financial resources. Asset sharing is one of the
benefits in joint venture. Since the need to use larger funds to in the
construction, this joint venture will increase the profit margin and

increase the revenue potential.


There is also some disadvantages in this joint venture:
i.
Shared profit. Since the sharing of assets, the profit also being
shared. The profit will divided based on the size of the share to the
ii.

venture or based on the agreement.


Diminished control over some important matter. In joint venture, the
operational control and decision making are sometimes compromised
in it. Since there is an agreement between both parties, for the one
who take control over particular thing the other may not satisfied with
how the thing.
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iii.
-

Uncontrolled or unmonitored increase in operating cost. Defined the

control over the operation


For our development process, the types of acquisition are joint venture. The joint
venture is between the government and MRCB Company. The MRCB Company
had a larger share in the building.

Figure 18

figure 19

4. Design and Costing


The next step is to do the design and costing of this construction. These jobs are the
responsibilities of many sectors who are the developer , consultant ( architect, engineers,
quantity surveyors, land surveyor, town planner ) and project manager. Every sector has their
own works and responsibilities in this step.

Sector
Owner/Developer

Duties
The person who wishes to have a
development project constructed on a

piece of land.
They employ

various

consultants,

contactors and supplies the necessary


fund to implement the project.

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Consultant
Architect

Among other things, he usually submits


the

application

on

owner/developer

behalf

of

to

the

obtain

development order and designs and


submits building plans for approval by
the various approving authorities and
supervises
completion

the
of

execution
the

projects

and
and

administers the contract between the

employer and the contactor.


A person who practices the profesion
of either civil, structural, mechanical or

Engineer

electrical engineering.
Usually designs and submits plans for
approval by the approving authorities
of his specific area of specialization
and

supersizes

the

execution/installation and completion of

the works under his care.


A person who practices the profession
of quantity surveying and building

economics.
He prepares bills of quantities , tender
and contract documents, normally calls

and processes tenders , evaluates

Quantity Surveyor

interim/progress payment and prepares

final accounts of the project.


A person who practices land surveying.
He carries out boundary and contour
surveys and other surveys on land ,
submit surveys plans for amalgamation
and sub-division f land , applies on
behalf of owner for qualified titles and
final titles from the land office.

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Land Surveyor

A person who practices the profession


of country planning covering land use,
zoning ,density, the type , mode and
form of development traffic pattern
,infra-structural requirement, impact of
development with other development in
the vicinity.

Town planner

A person or a group of persons


practicing the profesion of project
management functions.

The work involved ranges from


feasibility report, financial projection ,
design of management system ,
evaluation designs, prepared by
consultants, co-coordinating work of
consultants , acting as owners
knowledgeable agent, planning and

Project Manager

monitoring implementation of a
development project.

5. Development Permission and Approval

Application and approval by Securities Commissioner


Application and approval for the conversion and subdivision of land.
Application and approval for developer license and advertising permit
Application and approval for bridging and end financing.

The application approval for this project made by Jabatan Kerja Raya (JKR) , Indah Water , Fire
Fighter , Tenaga Nasional Berhad (TNB) , Majlis Daerah, Pejabat Tanah and Lembaga Air.
Approval Authorities

Approving Section
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Jabatan Kerja Raya

Jabatan Kerja Raya Perak Tengah

maintain public infrastructure :

federal and state routes, government


buildings, electricity, water

Indah Water

Indah Water Konsortium Sdn. Bhd.

Fire Fighter

Application on sewerage system

Application on fire resistance of the building

Balai Bomba dan Penyelamat Sri


Iskandar

Tenaga Nasional Berhad

TNB Sri Iskandar

Majlis Daerah

Pejabat Tanah Daerah Perak Tengah

Lembaga Air

transmission and distribution of electricity.


Application on the building development

Majlis Daerah Perak Tengah

Pejabat Tanah

Application on generation,

Lembaga Air Sri Iskandar, Perak

Application on the land use to construct the


building
Application on administration, management
and supervision of all work in the area of water
supply pumping.

However, for this project , the architect is responsible for the development permission and
approval. The architect will check the form and determine the approval whether it is approved or
denied.

The process of the application is shown below :

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The form report of


the project is
submitted.

The approval
authorities will
check and observe
the form report.

The application
result :
Approved or Denied

Figure 20
6. Implementation and Construction

Deals with the physical aspects of the development.


The infrastructures and building construction are began.
The contractor who is appointed by the client starts his works. They interpreted the
building from the drawing to the real building. They are divided into 3 categories :

Type of contractors
Main Contractor

Responsibilities
Specializes either in building or civil
engineering works or both , enters into
a main contract with the owner for the
execution and completion of the

construction project.
Enters into contracts with nominated
sub-contractors and nominated
suppliers and be responsible for due

Nominated Sub-Contractor

Other sub-contractors

performances of such contracts.


Piling
Plumbing
Air-conditioning
Lift and escalator
Firefighting and fire prevention
Electrical
Generator and high tension
Road work and drain work
Pre-stressing and post-tensioning
Main contractors usually have their own
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sub-contractors to execute work of a

minor nature or of certain limited trades.


It is also normal that the main
contractors employ labour subcontractor to supply the necessary
workers to site.

7. Sales and Promotion

It is an essential and integral part of the development process. The disposal whether

through sales or letting.


The promotion is made based on the market research undertaken during the evaluation

process.
For this project , the developer decides to make banners to promote the development of
the building. The banners are hang in the middle of the town so that people could see
there is a development of houses to sale. Figure shows an example of banner to
promote the house that need to be sold.

Figure 21
Besides that , radio , internet (blog & website ) also have been used in as an alternative
to promote the residential building. Next, they also open their booth at the Tesco nearby
to promote this project. So the customers who want to buy the house can discuss with
the promoters of the project . Figure 2 shows an example of booth open to promote the
residential project development.
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Figure 22

Analysis of Developer Expenditures

Types of Cost

A)

Land Cost

Calculation & Explanation

53.03

acre x RM120 000.00 = RM6 366

000.00
B)

Construction Cost

For 1 unit Semi-D house

It includes the cost for machineries,

= RM 127 548.54

labour and material.

For 48 unit Semi-D house


= RM 127 548.54 x 48 unit
= RM 6122330.00

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C)

Professional Fees

D)

Architect ( 10% from construction cost)


Engineer ( 5% from construction cost)
QS ( 2% from construction cost)

12% x RM 6122 330.00 = RM 612233.00


5% x RM 6122330.00 = RM 918 349.50
2% x RM 6122330.00 = RM 12446.60

Management Cost

5% x RM 6122330.00

(Usually 2%- 5% from construction cost)

= RM 918 349.50

This project : 5% from construction cost

E)

Financing Cost

This

Interest Rate
Connection with the borrowing of funds
Known as borrowing cost

project

financing

cost

is

private

confidential

CONCLUSION

In conclusion, our group choose the project of Cadangan Membina Rumah Berkembar 1
Tingkat Jenis B-T di Atas Lot 762-777, 20 unit Rumah Berkembar 1 Tingkat Jenis B-M di Atas
Lot 778-798 and 12 Unit Rumah Berkembar 1 Tingkat Jenis B-T di Atas Lot 716-827.
This project is modern approach type. There are 5 stages in this type which are
inception , design and costing, construction , in-use and demolition. Besides that , there are 7
steps of development process for this construction which are site identification , evaluation,
acquisition , design and costing, development approval and construction , implementation and
construction and sales and promotion. Every stages and steps have their own function.
Besides that, there are an analysis of development expenditures. There are 4
development expenditures which are land cost , construction cost, professional fees ( architect,

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engineer and quantity surveyor fees) , management cost and financing cost basically. Every
cost has their own rate/per cent from the construction cost obviously.

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http://www.google.com/search?
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http://en.wikipedia.org/wiki/Demolition / 26 JULY 2013
http://jointventure.swimintheincomestream.com/the_advantages_and_disadvantages_of

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http://www.taskmanagementguide.com/glossary/what-is-process-development.php/ 27
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