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ASSIGNMENT
NICMAR / SODE OFFICE
1. Course - NCP 29
2. Course Title - Construction Finance
Management
3. Assignment No. - 1
4. Last date of receipt - Of Assignment at O!"
o#ce
u$mitted %&'
Name ( )uls*an
+egistration No. ( 213-,9-31-12 ,,-21 4
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Construction Finance Management & Cost Accounting
NCP 2
Pro!ect Sco"e
An o/er *as $een gi0en $& a C*arita$le Trust to de0elop and $uild a facilit&
on a 1, ,,, s .m of plot in a prime localit& of Pune *ere ,,, s .m of area
ill $e used $& t*e trust for *ousing *ealt* facilities for senior citi ens.
,,, s .m. ill $e gi0en free to t*e de0elopers as a cost of de0elopment
Cost of Land is +s. 1, ,,,5- s .m
6looring speci7cations for 8ooring(
- 1, )ranite
- 4, :ota stone
- , ;osaic cement tiles
!e0elopers ould li
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Cost o Construction
T*e cost of construction includes $ot* t*e initial capital cost and t*e
su$se uent operation and maintenance costs. "ac* of t*ese ma=or cost
categories consists of a num$er of cost components.
T*e capital cost for a construction pro=ect includes t*e e@penses related to
t*e initial esta$lis*ment of t*e facilit&(
Land ac uisition including assem$l& *olding and impro0ement
Planning and feasi$ilit& studies
Arc*itectural and engineering design
Construction including materials e uipment and la$or
6ield super0ision of construction
Construction 7nancing
nsurance and ta@es during construction
" uipment and furnis*ings not included in construction
nspection and testing
T*e operation and maintenance cost in su$se uent &ears o0er t*e pro=ect
life c&cle includes t*e follo ing e@penses(
Land rent if applica$le
Operating sta/
La$or and material for maintenance and repairs
Periodic reno0ations
nsurance and ta@es
6inancing costs
Btilities
T*e magnitude of eac* of t*ese cost components depends on t*e nature
si e and location of t*e pro=ect as ell as t*e management organi ation
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among man& considerations. T*e o ner is interested in ac*ie0ing t*e lo est
possi$le o0erall pro=ect cost t*at is consistent it* its in0estment o$=ecti0es.
t is important for design professionals and construction managers to reali e
t*at *ile t*e construction cost ma& $e t*e single largest component of t*ecapital cost ot*er cost components are not insigni7cant. 6or e@ample land
ac uisition costs are a ma=or e@penditure for $uilding construction in *ig*-
densit& ur$an areas and construction 7nancing costs can reac* t*e same
order of magnitude as t*e construction cost in large pro=ects suc* as t*e
construction of nuclear po er plants.
T*e total cost of t*e pro=ect is calculated as $elo (
Particu$arsRs'/s(' t
Amount
Cost of uperstructure 4 ,24219,,,
Cost of %ric< or< plasteretc 9,
4 43 ,,
Cost of "lectric or< 1,12
,
Cost of Plum$ing 9,4 43 ,,
Cost of 6inis*ing 429, 2,
Cost of )ranite 6looring 13,99 ,
,
Cost of :ota 6looring 4,21 2 ,,
Cost of ;osaic 6looring 4,21 2 ,,
TOTA) COST*+ 2,-.
Dor< c*edule represents t*e necessar& frame or< to permit sc*eduling of
construction acti0ities along it* estimating t*e resources re uired $& t*e
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indi0idual or< tas
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11 2.2 FF+e0ie H 6inali e peci7cations 2,.,,d2G-;a&-2,1,
1 -Iun-2,1,
12 2.3 FF+e0ie H 6inali e ite Plan 1.,,d1 -Iun-2,1,
1G-Iun-2,1,
13 2.4 FFPrint Construction !ra ings .,,d1 -Iun-2,1,
22-Iun-2,1,
14 2. FFAppro0e +e0ised Plans ,.,,d23-Iun-2,1,
23-Iun-2,1,
1 2. FFAppro0e +e0ised peci7cations ,.,,d23-Iun-2,1,
23-Iun-2,1,
1 2.G FFAppro0e +e0ised ite Plan ,.,,d23-Iun-2,1,
23-Iun-2,1,
1G 3., Site 7or1
1 3.1 FFClear Lot 3.,,d24-Iun-2,1,
2 -Iun-2,1,
19 3.2 FF trip Topsoil H toc
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43 . FF et +oof Trusses 2.,,d1,-Aug-2,1,
1,-Aug-2,1,
44 .G FF6rame +oof G.,,d11-Aug-2,1,
1G-Aug-2,1,
4 . FF nstall +oof Pl& ood .,,d1 -Aug-2,1,
22-Aug-2,1,
4 .9 FF nstall Dindo s H !oors 2.,,d23-Aug-2,1,
24-Aug-2,1,
4G .1 FF6rame %asement 3.,,d2 -Aug-2,1,
2G-Aug-2,1,
4 .1 FF6rame %asement %ul
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2,1, 2,1,G, 9.4 FFTele0ision &stem +oug*-in .,,d 1-Oct-2,1, -Oct-2,1,
G1 9. FFAudio Jisual +oug*-in .,,d -Oct-2,1,1,-Oct-2,1,
G2 1,., "lectrical inspection ,.,,d
1,-Oct-
2,1,
1,-Oct-
2,1,
G3 11., 6raming nspection ,.,,d1,-Oct-2,1,
1,-Oct-2,1,
G4 12., Roo:ng
G 12.1 FF+oo7ng Paper nstalled 3.,,d1,-Oct-2,1,
12-Oct-2,1,
G 12.2 FF toc< +oof *ingles 1.,,d12-Oct-2,1,
13-Oct-2,1,
GG 12.3 FF nstall +oof *ingles G.,,d14-Oct-2,1,
2,-Oct-2,1,
G 13., E;terior Finis#es
G9 13.1 FF iding 3.,,d2,-Oct-2,1,
2,-Oct-2,1,
, 13.2 FF"@terior Trim G.,,d2,-Oct-2,1,
2,-Oct-2,1,
1 13.3 FF%ric< Arc* 6orms 1.,,d2,-Oct-2,1,
2,-Oct-2,1,
2 13.4 FF%ric< Jeneer 4 .,,d2,-Oct-2,1,
2,-Oct-2,1,
3 14., Insu$ation
4 14.1 FFCaul< H Air eal 1.,,d2,-Oct-2,1,
21-Oct-2,1,
14.2 FF!raft H 6ire top 1.,,d
22-Oct-
2,1,
23-Oct-
2,1,
14.3 FF nsulation 3.,,d24-Oct-2,1,
2 -Oct-2,1,
G 1 ., F$oor Finis#es 34ARTER+
1 .1 FFCeramic Tile 1 .,,d2G-Oct-2,1,
1,-No0-2,1,
9 1 .2 FF nstall Kard ood 6loor 4.,,d11-No0-2,1,
14-No0-2,1,
9, 1 .3 FF and tain eal Kard ood .,,d1 -No0-2,1,
19-No0-2,1,
91 1 .4 FF nstall Carpet 4.,,d2,-No0-2,1,
23-No0-2,1,
92 1 . FF6inal Coat Kard ood 2.,,d24-No0-2,1,
2 -No0-2,1,
93 1 ., Paint
94 1 .1 FFPrep !r& all for Prime Coat 2.,,d2 -No0-2,1,
2G-No0-2,1,
9 1 .2 FFPrime Paint !r& all 2.,,d2 -No0-2,1,
29-No0-2,1,
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9 1 .3 FFPrep Trim for Prime Coat 2.,,d3,-No0-2,1, 1-!ec-2,1,
9G 1 .4 FFPrime Trim 2.,,d 2-!ec-2,1, 3-!ec-2,1,
9 1 . FF6inis* Coat Trim 1,.,,d 4-!ec-2,1,13-!ec-2,1,
99 1 . FF6inis* Coat !r& all 14.,,d 14-!ec-2,1, 2G-!ec-2,1,1,, 1 .G FFCaul< "@terior Dindo s H !oors 1.,,d
2 -!ec-2,1,
29-!ec-2,1,
1,1 1 .
FF6inis* Coat "@terior Trim Hiding 1.,,d
3,-!ec-2,1,
31-!ec-2,1,
1,2 1G., E;terior )an%sca"ing
34ARTER.
1,3 1G.1 FF+oug* 6inal )rade 1.,,d 1-Ian-2,11 1-Ian-2,111,4 1G.2 FFPatios G.,,d 2-Ian-2,11 -Ian-2,11
1, 1G.3 FFPorc*es .,,d 9-Ian-2,11 13-Ian-2,111,
1G.4 FF ide al
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121 21., Mo6e9in
Financia$ an% economic E6a$uation
Ca"ita$ - %usiness re uires capital. T*e term capital is used di/erentl& in
di/erent conte@ts. t is used in t*e sense of means of production usuall& t*eassets *eld $& t*e 7rm. t is also used in t*e sense of 7nance o$tained $& a
7rm. n accounting capital is used in t*e second sense. A part of t*e 7nance
o$tained $& a 7rm is in t*e form of interest free credit suc* as credit allo ed
$& suppliers of materials or ser0ices and ad0ance pa&ment recei0ed $&
customers. T*e interest free credit is settled in t*e normal operating c&cle of
t*e $usiness and is not included in t*e capital.
Re6enue +e0enue is t*e income t*at arises from e@c*ange transactions
it* customers in t*e course of ordinar& acti0ities of an enterprise. An
entit&Ms re0enue earning acti0ities include selling of goods rendering of
ser0ices and allo ing ot*ers to use entit&Ms resources &ielding interest
ro&alties and di0idends. +e0enue increases t*e e uit& of t*e enterprise. As a
general principle an enterprise recogni es re0enue *en it recei0es cas*
recei0a$les or ot*er consideration in its o n account. 6or e@ample in an
agenc& relations*ip t*e agent recogni es t*e commission as re0enue.
Finance Resource mo i$i=ation +esource mo$ili ation can facilitate t*e
8o of resources from 0arious sources and catal& e t*e 8o of additional
resources from o#cial and pri0ate institutions. 6or pro=ects and programs
t*at are too large to $e *andled $& one funding agenc& mo$ili ing co
7nancing from 0arious funding sources can *elp meet t*ese large resource
re uirements. +esources can $e in an& form suc* as 7nances tec*nolog&
manpo er $ot* s
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7nancial accounting is on t*e ascertainment of pro7t and loss of t*e concern
and not on t*e more important aspects of t*e $usiness i.e. planning control
and decision-ma
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in0estment or pro=ect Tec*ni ues $ased on accounting earnings and
accounting rules are sometimes used - t*oug* economists consider t*is to $e
improper - suc* as t*e accounting rate of return and E return on in0estment .E
impli7ed and *&$rid met*ods are used as ell suc* as pa&$ac< period and
discounted pa&$ac< period
Cas# >o0 orecasting is in a corporate 7nance sense t*e modeling of a
compan& or assetMs future 7nancial li uidit& o0er a speci7c timeframe. Cas*
usuall& refers to t*e compan&Ms total $an< $alances $ut often *at is
forecast is treasur& position *ic* is cas* plus s*ort-term in0estments minus
s*ort-term de$t. Cas* 8o is t*e c*ange in cas* or treasur& position from
one period to t*e ne@t' in t*e conte@t of t*e entrepreneur or manager
forecasting *at cas* ill come into t*e $usiness or $usiness unit in order to
ensure t*at outgoing can $e managed to as to a0oid t*em e@ceeding cas*
8o coming in. f t*ere is one t*ing entrepreneurs learn fast it is to $ecome
0er& good at cas* 8o forecasting.
Pro"ose% Pro!ect Financing
Ca"ita$ structure refers to t*e a& a corporation 7nances its assets
t*roug* some com$ination of e uit& de$t or *&$rid securities . A 7rm s
capital structure is t*en t*e composition or structure of its lia$ilities. T*e
proposed capital structure for t*e pro=ect is as $elo (
http://en.wikipedia.org/wiki/Return_on_investmenthttp://en.wikipedia.org/wiki/Payback_periodhttp://en.wikipedia.org/wiki/Treasuryhttp://en.wikipedia.org/wiki/Investmentshttp://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Cashhttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Assetshttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Hybrid_securityhttp://en.wikipedia.org/wiki/Return_on_investmenthttp://en.wikipedia.org/wiki/Payback_periodhttp://en.wikipedia.org/wiki/Treasuryhttp://en.wikipedia.org/wiki/Investmentshttp://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Cashhttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Assetshttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Hybrid_security8/10/2019 48010087-NCP-29
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Ca"ita$ Structure
Asset , ,,, ,,,.,,
E(uit8 1 ,,, ,,,.,,
De t 4 ,,, ,,,.,,
T*e de$t raised $& t*e promoter is +s 4, lacs. T*e total de$t ould not $e
ta
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A pro7t measure is de7ned as an indicator of t*e desira$ilit& of a pro=ect
from t*e standpoint of a decision ma
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return o0er costE. T*e ++ gi0es t*e return of an in0estment *en t*e capital
is in use as if t*e in0estment consists of a single outla& at t*e $eginning and
generates a stream of net $ene7ts after ards. Ko e0er t*e ++ does not
taA ++? *ic* re8ects suc* policies ma& $e a useful indicator of pro7ta$ilit& under restricted circumstances. %ecause of t*e comple@it& of
7nancing and rein0estment policies used $& an organi ation o0er t*e life of a
pro=ect t*e A ++ seldom can re8ect t*e realit& of actual cas* 8o s.
Ko e0er it o/ers an appro@imate 0alue of t*e &ield on an in0estment for
*ic* t o or more sign re0ersals in t*e cas* 8o s ould result in multiple
0alues of ++. T*e ad=usted internal rate of return is usuall& calculated as t*e
internal rate of return on t*e pro=ect cas* 8o modi7ed so t*at all costs arediscounted to t*e present and all $ene7ts are compounded to t*e end of t*e
planning *ori on.
.' Return on In6estment . D*en an accountant reports income in eac*
&ear of a multi-&ear pro=ect t*e stream of cas* 8o s must $e $ro+O ? as
used $& accountants usuall& means t*e accountant s rate of return for eac*
&ear of t*e pro=ect duration $ased on t*e ratio of t*e income >re0enue lessdepreciation? for eac* &ear and t*e un-depreciated asset 0alue >in0estment?
for t*at same &ear. Kence t*e +O is di/erent from &ear to &ear it* a 0er&
lo 0alue at t*e earl& &ears and a *ig* 0alue in t*e later &ears of t*e pro=ect.
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*' Pa8 ac1 Perio% . T*e pa&$ac< period >P%P? refers to t*e lengt* of time
it*in *ic* t*e $ene7ts recei0ed from an in0estment can repa& t*e costs
incurred during t*e time in uestion *ile ignoring t*e remaining time
periods in t*e planning *ori on. "0en t*e discounted pa&$ac< period
indicating t*e Ecapital reco0er& periodE does not re8ect t*e magnitude or
direction of t*e cas* 8o s in t*e remaining periods. Ko e0er if a pro=ect is
found to $e pro7ta$le $& ot*er measures t*e pa&$ac< period can $e used as
a secondar& measure of t*e 7nancing re uirements for a pro=ect.
