Built Enviroment Finance – Major Assignment 1

U3162319 – Thien Tri Tu

All right my name is 10 and this is on tech this is our video presentation for the major project 1 in built environment finance this assignment helped build many skills for the construction industry and especially in procurement contract administrator and project manager roles we learn to communicate and work as a team problem-solve and more the financial side of

Construction we for this assignment we have interviewed past and present workers of the cameras biggest project yet the light rail this summer goes into a more in-depth details about the project that everyone has been talking about in canberra these tasks provided in this assignment will give us a further understanding of the more financial side rather than other

Units where we learn about nails timber north concrete and all that this forms a key part of the project manager role contract administrator our procures and which is what we’re both aiming for so these outcomes of assignment will give us great knowledge and understanding to help us advance in this industry our data was mainly collected from a secondary source

That was published publicly these are pulled from multiple online sources they were available to rather on the internet and camera metros main page we also relied on a structured questionnaires to collect our data use as we have a network of connections that have and will be working on the camera light rail project the current literature tells us that topic is

About the financial side of construction they’re not just about nows and hammer at the end of the day this is a business and the directors are here to make the money everyone in the construction industry needs to know about the financial side and not just how building is raised on-site but behind the scenes in the office the literature tells us that the topic

Is about risk and knowledge needed to start a construction project it talks about conditions or proposed projects feasibility obtaining funding forecasting variable and fixed cost and breakevens all these questions will help you decide if the project is worth your money and time or not these questions are to help us future leaders of this industry understand the

Simple concepts of construction and that we lack of knowledge in wisdom as juniors parametric construction is currently working on cameras light rail stage number one this consists of a 12 kilometer route 13 stops 14 light rail vehicles running from gungahlin all the way into the city the first stage of this project is a public-private partnership business model

Majority of the governments around the world uses business model now because it has a great value for money and has looked after throughout the construction and all the way including operations this business model is between the acd government and the canberra metro this contract between the two is 23 years long including constructions and operations over this

23 years contract the ict government will slowly pay back the camera metro group but not up front but from the earnings during the operations the major companies that form the camera metro group is pacific partnerships cpb contractors john holland ugl mitsubishi corporations aberdeen infrastructure db engineering consulting cfa and the mitsubishi ufj financial

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Group cpp contractors and john john holland are the main contractors for this job they’re outsourced local employees and subcontractors this project is affecting camera in many ways hence why we have chosen this project even canberra no canberra no support is affected by this light rail during constructs in operations either by road changes construction noise

Tax and many other factors that this project has an effect on all king bearings this is why we chose the the project because of how big the effect it has on all of us and we like to research more and get to know something that has such a big role in camera a lot of data collection method was used throughout this report we conducted an informal review as one of our

Co-workers was previously previously working on this project by picking a camera based project we are very familiar with the job and also working in this industry you hear a lot so that’s why campbell project was ideal for this project canberra is a very small city in the construction industry everyone knows someone and someone else who knows a project many online

Sources are available on this project has a very big thing in canberra and it’s happening quite a bit here and there so we have a lot of information online about this we have made a few assumptions along the way but the assumptions are based on our project managers and mentors that have a lot of experience in this interesting industry giving their own opinions and

Advice on this light rail project upon completing the research of the camera metro light rail project we unveiled that a delivery method of this project was a public-private partnership the definition of this is basically the camera metro company which is incorporated with all the contractors at tn stated they are liable for direct cost of construction operating

Maintaining and finding it’s here the light rail system until it is handed over with the high risk associated with this light rail project it is imperative that the canberra metro company ensures that is financially feasible throughout this entire project so they evaluate the financial that validity of the project the data that follows is a the estimated nominal

Cost of the project is 707 million dollars at the commencement of operations in 2019 a city government will make a one-off payment of 375 million to canberra metro to assist in getting started the project as tina said is at the last 20 years and sees completion in 2039 the project milestones of the zoila construction which is to be completed by the end of this

Year and then the operations which will then commence in january 2019 that this camera is this camera used to calculate all the values in this project were 8% is this the most appropriate discount rate for construction projects the five methodologies that we’ll use are the accounting rate of return and net present value and profitability index the payback period

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And the internal rate of return upon the calculations of the accounting rate of return and percentage came back to us at nine point zero one percent this was calculated by using the average cash inflow of the 20 years divided by the initial cost of the investment drifts that and accounting rate of return being greater than the cost of capital which is 8 percent

Per annum this project is considered feasible calculations of the net present value of the lower our project will give us an insight into the amount which will be made by the camera metro company in particular it is relevant to the capital canberra rail project as it provides the calculations or the profit from profitability of the project over the entire 20-year

Duration with the varying annual cash inflows the npv accounts for the time value of money as it discounts cash flows from future years to find the present value in addition the net present value also gives answer these are the risk by applying a discount rate representing the cost of capital the following table shows us the number of varying payments the company

Will receive which comes to a grand total of 1 billion two hundred seventy four million three hundred fifty two thousand over the 20 years rationed as stated before they will receive a three hundred seventy five thousand 305 million payment in january 2019 as a one-off to commence the project the net present value equals the difference between the present value

And the inflows minus the outflows so the initial investment was seven to seven million the print the present value of light rail is nine hundred and thirty two million seven hundred and forty eight thousand you subtract the smaller number from the larger and it comes back with a positive 225 million seven hundred and forty eight thousand according to this

Calculation the light rail is in profit and is therefore considered feasible the profitability index is calculated by dividing the present value of future inflows while the initial investment for the light rail project the pri index is nine hundred and thirty two million seven hundred forty eight thousand divided by the initial investment of seven hundred seven

Million this tells us that we have a profitability index of one point three two if the payoff for a project is greater than one this means the project generates profit and is accepted improved and proceeded with the troezen project a pai of one point three two means for every dollar that he spent a dollar thirty two is money when referring back to the payback

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Period we are talking about the amount of time it takes to generate enough cash flows to reimburse the initial investment for the entire project the short of the payback period the dead of the investment when calculating the pay period for the project it was calculated eight point three or five years this would mean after this everything for camera metro is in

Profits the internal rate of return is a discount rate at which the present value of future cash flows is equal to the cost of the initial investment for this project the internal rate of return is the term when the pv equals 707 million which is the total overall cost the internal rate is calculated through trial and error and the outcome for this project was

Fourteen point one percent when the two percentages were calculated compared the discount rate was 8% and the irr was a fourteen point one which is more favorable when a project has a higher internal rate of return the result is that it is more the silent and it indicates that the project will generate a higher rate of growth also along with the higher internal

Rate of return than cost of capital it shows that the project will meet its financial costings this formula is good when there are two projects being taken into consideration generally the internal rate of return is looked at and the one with the high percentage will be taken and the second project will be left on the table for future reference ii along with all

These benefits there are limitations as well being the cost of capital is not included in all the calculations this rate of return can also be used to make a decisions in different sorts of asset classes with an internal rate of return which will occur on the library project this percentage outperforms the rate of return in the australian residential property

Australian bonds australian shares and cash cash percentages upon completion of all the findings and analysis this project it is appear that there was extensive research down into the campbell around project and that this project has been turned into a success with a positive pr index a higher accounting rate of return than discount rate a very short payback

Period a high internal rate of return and then put a positive net present value this project is a perfect project in terms of profits and cash flows well study this project it is clearly to save large amounts of money our nets are at stake and on a single day can be wasted because in order to make maximum profit laura needs to be writing as soon as possible so

The one-off payment can be made and your opponents can commence this is a great project for the aca and the entire city will eventually reap all the benefits of this light rail system

Transcribed from video
Built Enviroment Finance – Major Assignment 1 By Thien Tu