Business Case For A Carpark Development

Table of Contents 1.

EXECUTIVE SUMMARY............................................................................................................. 4

2.

PROJECT SUMMARY .................................................................................................................. 5 2.1.

Project Description.................................................................................................................. 5

2.2.

Objectives ............................................................................................................................... 5

2.3.

Scope ....................................................................................................................................... 5

2.4.

Anticipated Outcome .............................................................................................................. 6

2.5.

Stakeholders and Consultation ................................................................................................ 7

2.5.1.

Stakeholders .................................................................................................................... 7

2.5.2.

Consultation .................................................................................................................... 7

3.

APPROACH ................................................................................................................................... 7

4.

STRATEGIC ALIGNMENT .......................................................................................................... 8

4.

4.1.

Definition and Purpose of Strategic Alignment ...................................................................... 8

4.2.

Strategic Alignment Perspective ............................................................................................. 8

4.3.

Organisational Strategic Alignment ........................................................................................ 8

4.3.1.

Strategy Execution .......................................................................................................... 8

4.3.2.

Technology Potential ...................................................................................................... 8

4.3.3.

Competitive Potential...................................................................................................... 9

ALTERNATIVES........................................................................................................................... 9 4.1.

4.1.1.

Option One ...................................................................................................................... 9

4.1.2.

Option Two ................................................................................................................... 10

4.2. 5.

Financial Alternatives ............................................................................................................. 9

Operational Proposal ............................................................................................................. 10

PROJECT RISK ASSESSMENT ................................................................................................. 12 5.1.

Risk Management System Description ................................................................................. 12

5.2.

Risk Management Process .................................................................................................... 13

6.3.

Risk Identification................................................................................................................. 13

6.3.1.

Risk Management team composition ............................................................................ 13

6.3.2.

Key findings and their categorisation ........................................................................... 14

6.3.2.1.

List of Risks .................................................................................................................. 14

6.3.2.2.

Categorisation of Risks ................................................................................................. 14

6.4.

Risk Assessment ................................................................................................................... 15

6.4.1.

Qualitative method risk assessment .............................................................................. 15

6.

BENEFIT/COST ANALYSIS ...................................................................................................... 16 6.1.

Project Analysis .................................................................................................................... 16

6.1.1.

Project Expenditure ....................................................................................................... 16

6.1.2.

Expected Income from Project Operation ..................................................................... 17

6.1.3.

Income and Cash Flow Statements ............................................................................... 19

6.1.3.1.

NPV Summary .......................................................................................................... 19

6.1.3.2.

Income Statement and Cash Flow Statement ............................................................ 19

6.1.4. 6.2.

Option Analysis .................................................................................................................... 21

6.2.1.

Optimistic Option.......................................................................................................... 21

6.2.1.1.

Underlying Assumptions............................................................................................... 21

6.2.1.2.

Project Expenditure ....................................................................................................... 21

6.2.1.3.

Expected Income from Project Operation ..................................................................... 22

6.2.1.4.

Income and Cash Flow Statement ................................................................................. 24

6.2.1.4.1.

NPV Summary .......................................................................................................... 24

6.2.1.4.2.

Income Statement and Cash Flow Statement ............................................................ 24

6.2.1.5.

Benefit-Cost Ratio......................................................................................................... 25

6.2.2.

Pessimistic Option......................................................................................................... 26

6.2.2.1.

Underlying Assumptions............................................................................................... 26

6.2.2.2.

Project Expenditure ....................................................................................................... 26

6.2.2.3.

Expected Income from Project Operation ..................................................................... 27

6.2.2.4.

Income and Cash Flow Statements ............................................................................... 29

6.2.2.4.1.

NPV Summary .......................................................................................................... 29

6.2.2.4.2.

Income Statement and Cash Flow Statement ............................................................ 29

6.2.2.5. 7.

Benefit-Cost Ratio......................................................................................................... 20

Benefit-Cost Ratio......................................................................................................... 30

IMPLEMENTATION STRATEGY ............................................................................................. 31 7.1.

Purpose of the Implementation Plan ..................................................................................... 31

7.2.

Implementation Plan ............................................................................................................. 31

7.2.1.

Project personnel ........................................................................................................... 31

7.2.2.

Training ......................................................................................................................... 31

7.3.

Implementation Timeline ...................................................................................................... 31

7.4.

Project Structure and Reporting ............................................................................................ 32

8.

CONCLUSION AND RECOMMENDATION ............................................................................ 33

9.

BASIS OF ESTIMATE ................................................................................................................ 34 9.1.

CAPEX ................................................................................................................................. 34

9.2.

OPEX .................................................................................................................................... 34

9.3.

DISCOUNT RATE ............................................................................................................... 34

9.4.

INCOME CALCULATION ................................................................................................. 34

9.5.

INCOME AND CASH FLOW CALCULATION ................................................................ 35

Figure 1:NPV Chart of Option One ........................................................................................................ 9 Figure 2: NPV Chart of Option Two .................................................................................................... 10 Figure 3: NPV Chart of Operational Proposal ...................................................................................... 11 Figure 4: Risk Management framework (Victorian Government) ........................................................ 12 Figure 5: NPV of the project ................................................................................................................. 20 Figure 6: NPV of Optimistic Option ..................................................................................................... 25 Figure 7: NPV of Pessimistic Option.................................................................................................... 30 Table 1: Categorisation of Risks ........................................................................................................... 14 Table 2: Risk Assessment ..................................................................................................................... 15

1. EXECUTIVE SUMMARY This document sets out the policy and implementation plan for the development of a carpark facility undertaken by Auckland Construction Contractor Corporation at Griffith University on its Southbank Campus, Brisbane, Australia. Griffith University is a public university with five campuses based in Brisbane and on the Gold Coast in Southeast Queensland, Australia. The University is regarded as one of Australia's most innovative tertiary institutions and one of the Asia-Pacific region's most influential universities. Due to its current rapid expansion as well as the predicted future growth in size and the number of student enrolments, the University has recently approached Auckland Civil Construction Corporation (ACCC) for a new construction of a carpark facility at one of its campuses in Brisbane to accommodate the demand from its staff and students. This is one major development which will establish ACCC’s presence in one of the fastest growing regions in Australia. Therefore all aspects of the project have been looked at and carefully analysed to effectively assist the Corporation Board’s decision making process. Areas which have been identified as being critical include: • • • •

Corporation’s long term strategic goals Feasibility of the Project in term of cost Opportunity to increase Corporation’s public image through commercialisation Operational options and opportunities after the completion of project construction

Consultation has been undertaken with all parties likely to be affected by the development. This includes: • • • • •

Letters to all potential affected parties Follow up phone calls Meeting with regulatory authorities Preparation of project brochures Public notification on popular media

A detailed description of consultation taken in relation to the project is contained in the subsequence section. The Implementation Plan has also been developed to establish the methodologies under which project procedures will be carried out. It also sets out the roles and responsibilities to appropriate authorities throughout the economic life of the project.

2. PROJECT SUMMARY 2.1. Project Description The project will be developed in Southbank which is located in the centre of Brisbane and is one of the University’s main campuses in this city. It has been identified that majority of the 5,500 students attending this campus live in nearby suburbs and most of whom drive to the University. There is also 700 full-time staff on this campus and the current capacity of the University carpark is 300 spaces and 12 visitor spaces. This has caused a major inconvenience for the University personnel and its students for some time. The proposed development will consist of a 1200 carpark facility which has the pay-and-display ticketing method with the flat hourly charge of $1.50 on everyday of the week. The University will not provide any funding for this development. However, ACCC and Griffith University have come to an agreement with the main conditions are as follows: • The main contract between the organisations is the Build-Own-Operate-Transfer contract where ACCC will collect all revenues and is liable for all risks and costs associated with the facility • The University will lease the land it owns to ACCC at the rate of $1 per annum • At the end of the concession period of 20 years, the ownership of the carpark facility is to be transferred to the University for a pre-agreed sale price of $1 2.2. Objectives The primary objective of the development is to provide more options to staff and students of the Griffith University by increasing the capacity of the University’s current carpark. The project will also meet the increasing demand for parking spaces from the growth of University in the future. With the successful delivery of this development, students who attend the University have an opportunity to reduce the cost of parking by diverting from more expensive nearby commercial carparks in the Brisbane City Centre. This project also provides ACCC a valuable opportunity to expand its business to one of the fastest growing regions in Australia. By developing a strong reputation through this project, ACCC will establish its presence in the region and build a foundation for future expansion in this part of Australia. The company is therefore keen on developing a good relationship with the Client-Griffith University by committing its resources and expertise in the field of carpark facility development to successfully delivering the project. 2.3. Scope The existing carpark at Griffith University comprise 300 on grade parking spaces for students and staff and 12 visitor spaces. The current capacity of the facility is inadequate to accommodate the growing demand from students attending the University. A forecast carried out by the University recently indicates a strong growth in the number of enrolments in a near future partly due to the

economic crisis, but mostly due to a growing demand from employers of qualified staff. This has put an immense pressure on the capacity and infrastructure of the existing facility. The new carpark facility development at Griffith University will consist of 1,200 parking spaces for all university staff and its students. The total area available for this development is 33,000 m² exclusive of additional facilities, i.e. 27.5m² per carpark. From our experience in designing and constructing multi-storey carpark facilities, ACCC has estimated that the base rate of construction cost is $600 per m². It has also been predicted that an investment of $1,000,000 will be required for a major refurbishment in year 10 in the life of the project. This reflects the commitment of ACCC to maintain the integrity of the facility throughout the functional life of the project. The location of development will have some implications on the project’s logistic and operational requirements. The construction during the academic year will have to be undertaken at a manner which minimises any adverse effects on the convenience of University staff/students and on the operations of nearby businesses as well as any major disruptions on the local transport network. As a consequence, there are several related costs associated with the development of the project. They include the consent and legal costs as well as the development levies required by the Brisbane City Council. ACCC, however, is committed to comply with all requirements for the development of the project and is willing to provide the authority with necessary assistance to get the project off the ground. 2.4. Anticipated Outcome As noted earlier, majority of students attending the Southbank Campus live in nearby suburbs and use private vehicles as the main mean of transport to the University. The limited capacity of the existing carpark has forced a significant number of students into using public transport or other means of transportation and this has caused some major inconvenience for these individuals because of the inconsistency of the public transport network in the City. Those who drive to the University have to park their vehicles at more expensive commercial carparks in the City Centre. This also affects the financial positions of these individuals and can also cause some inconvenience to them due to the distance from these carparks to the University. The decision to develop a carpark on the University ground is to counteract these problems that Griffith University students face. ACCC and Griffith University expect the development will provide staff and students of the University with more options and convenience in term of transportation modal choices and parking facility. The developers also hope to attract more students to attend the University through this project as it also aims at meeting the expected growth in student enrolments to the University in a near future. From a business point of view, it is also a good business venture, because along with the increase in usage of the facility, the potential for a good income offered to the University after the handover or the Operator(s) also increases. Given the number of students parking their vehicles at more expensive commercial carparks in the City, after the completion of the project, these individuals will be more than happy to utilise the University facility, which offers reasonable price as well as convenience. This expectation is one of the main reasons that ACCC is interested in the development of this

project, as it can provide the organisation a significant income during the operational life of the project (19 years). 2.5. Stakeholders and Consultation 2.5.1.

Stakeholders

The main stakeholders in this project have been identified as follows: 1. 2. 3. 4. 5. 6. 7. 8.

Griffith University Brisbane City Council Brisbane Regional Council Southbank Business Association Southbank Recreation Association Brisbane Transport Agency Queensland Transport Agency Queensland Rail

Each of these stakeholders is either directly or indirectly affected by this project. Appropriate consultation strategies have been or will be carried out accordingly to address any new developments in the project in a timely manner. 2.5.2.

Consultation

The purpose of the consultation is to support authorisations required under the Queensland State law and under the Australian Federal law. The Consultation Strategy identifies the stakeholders considered to have an interest in this project as well as directly affected parties and parties affected by proximity to the proposed works. A database of these parties and stakeholders has been developed. All parties and key stakeholders in the database have been contacted regarding the project with the main communication channel being: • •

Media release and Advertising: prepared and distributed by authorised agents on popular media and on publications Brochure: project specific brochure has been produced and utilised to serve as a basic outline of the project

ACCC and Griffith University will continue to liaise and communicate with these parties, stakeholders and the wider community during the project to mitigate the effect of the construction.

3. APPROACH The approach of this business case is comprehensive and involves a process which looks beyond financial estimates. Although financial estimates are of critical importance, they do not capture certain issues. At the same time it is important to understand that the estimates, financial and other, which are used for investment evaluation, are always opinions about the future and are thus not as accurate as is suggested or thought. The basic steps of the business case process include the following: 1. Identify viable alternatives that solve the decision-making problem.

2. Analyze the alignment of the alternatives to strategic objectives at the Government, Ministry and Program levels. 3. Review all stakeholders that have an interest in either alternative. 4. Complete a Quantitative and Qualitative cost/benefit analysis. 5. Complete a Risk Assessment to develop a Risk Factor. 6. Final Recommendation.

4. STRATEGIC ALIGNMENT 4.1. Definition and Purpose of Strategic Alignment Strategic alignment is the process of linking innovation strategies with corporate vision, goals, objectives, and strategy. When alignment is attained firm gains competitive advantage and increase performance. The cost and time required to create a new product or service are so large that lack of a perfectly aligned and executed innovation strategy can be extremely wasteful. Strategic alignment creates a directional beacon that defines which domains to explore and which ones to avoid. 4.2. Strategic Alignment Perspective The Strategic Alignment model of developed by Venkatraman, Henderson and Oldach, which is a framework to Aligning Business and IT Strategy, has been utilised by ACCC in the organisation’s Development Plan. It contains three main points: 1. Strategy Execution 2. Technology Potential 3. Competitive Potential 4.3. Organisational Strategic Alignment This document tries to capture the essential points in the ACCC Development Plan which may be relevant and applicable to this development and are beneficial to the organisation. The reader can refer to the ACCC Development Plan for more in depth discussions on the overall organisational goals and strategies for the organisation’s future developments. 4.3.1.

Strategy Execution

Decision on undertaking the construction of the carpark facility at Griffith University had been thoroughly considered at all managerial levels, by appropriate authorities at ACCC. The project aligns with the overall growth plan of the Corporation. ACCC aims at expanding the business to Australia, because the country has long been identified as an ideal market for the Corporation’s long-term future growth, based on its economic growth and the booms in property developments in recent years. Southeast Queensland in particular is the main focus of ACCC as it has been the fastest growing region in the entire country. This project provides an opportunity to for ACCC to establish the presence in this State, which will in turn assist the organisation to grow in the future.

4.3.2.

Technology Potential

ACCC has recently commissioned a research to develop a new type of structural beam to column connection for carparks. The research has yet to complete, but the Corporation is confident in the success of the research. The successful development of this mini project will see its implementation to this development, which in turn will reduce the entire project construction cost by 1% to 2%. 4.3.3.

Competitive Potential

ACCC has significant experience in development and management of carpark facilities in Australasia. Along with the success of the research project, the Corporation can provide a distinctive advantage in this sector.

4. ALTERNATIVES The project has been seriously considered by the Board of ACCC. This development is ACCC’s first Design-Build-Operate-Transfer projects in Australia. Therefore, many alternative approaches regarding the project’s financial matters as well as its operational options have been looked at. These matters have been thoroughly discussed and carefully planned by the Corporation’s authorised personnel and their Consultants. The following are options and their proposed mitigations plans developed after a series of such meetings. 4.1. Financial Alternatives One serious problem faced by ACCC in this project is that 80% of the Capital Outlay comes from debts. In addition to this, the Client, Griffith University does not provide any funding for this project. It is therefore essential that the financial matters must be effectively and successfully managed if the Corporation is to make profits from the project. From this realisation, there have been many proposed financial management methods put forward to ensure profitability for ACCC is made while paying off the principal loan in a timely manner. These are the options which have been looked at. 4.1.1. Option One Option One suggested that the Corporation should pay off the principle loan in year 10, after some profits have been realised while keep paying the interests on the loan at the agreed rate in prior years. The effect of this proposed method is shown in the analysis below:

Figure 1: NPV Chart of Option One

The graph shows a significant drop in the Corporation’s cash flow due to the outgoing of a substantial amount of money. This effect will nonetheless produce a negative view of the Corporation to the investors and its shareholders. In order to avoid this effect, an alternative method has been proposed. 4.1.2.

Option Two

This option looks at another approach which ACCC can take to reduce its loan repayments and loan interest without causing significant changes to its net cash flow over the life of the project. It is proposed that ACCC should make a payment to the bank on top of the interest payment. This means the Corporation will make a payment at the 30% rate of the Corporation’s PBIT (inclusive of the 9% interest charge). The implication is that the excess 21% from this will go towards the loan repayment. It has been estimated that it will take ACCC 9 years from its first year in operation (i.e. at the end of year 10) to complete this repayment. From this time to the end of the concession period, ACCC will not have to make any payments to the bank. The following graph shows the effect of this approach:

Figure 2: NPV Chart of Option Two

The kink at year 10 is not as steep as the one shown previously. Furthermore, the net present value of the whole project is always in the positive domain. This will provide ACCC’s investors and shareholders a more positive expectation than the previous case does. 4.2. Operational Proposal The main proposal which has been put forward is the idea of commercialising the carpark facility during the holiday of the academic year. Parking spaces in the City Centre of Brisbane has always been a major problem in the city. During holiday period of the academic year, even though the number of attendance at the University is lower than any other time of the year, the average number of trips to the city taken by workers remains constant. This provides an opportunity for ACCC to make a profitable income from these individuals by commercialising the carpark during the week. This means the capacity of the facility will be fully utilised and this in turn will have a significant impact on the net cash flow of the Corporation. The graph below illustrates the effect of the idea if it is successfully implemented.

Figure 3: NPV Chart of Operational Proposal

The graph shows a significant increase present value in the cash flow in year 10 from the previous cases (from -$3,827,338.65 to $1,386,585.72 to $2,716,543.25). This illustrates the positive effects that the commercialisation of the carpark facility during the holidays contributes to the organisational income of ACCC.

5. PROJECT RISK ASSESSMENT 5.1. Risk Management System Description A Risk Management system has been set up to identify, analyse, evaluate and mitigate any adverse events efficiently and effectively should they occur during the development of the project. This system is based on the framework recommended in the Australian/New Zealand Risk Management Standard 2003. The overall process is presented by the following diagram:

Figure 4: Risk Management framework (Victorian Government)

5.2. Risk Management Process According to the Australian/New Zealand Risk Management Standard, the risk management process is comprised of five phases: establishing the context, risk identification, risk assessment, risk evaluation and risk treatment, along with the continuous monitoring process. The following sections describe the suggested risk management process, which can be tailored to best meet the needs of the project and/or satisfy the customer. •

•

•

•

•

•

Establishment of context: Project objectives, such as organisational goals, priorities, can be extracted from the general purpose of the project in order to understand what kind of risks to care about. Risk management context, structure of the risk assessment process and their criteria must also be stated to build a structured risk management system Risk identification: There should be an involvement of a range of interested parties. Critical questions can be asked and open discussions are encouraged in order to find risks which otherwise may be overlooked Risk analysis: Risks must be categorised and ranked systematically so that quantitative analysis method can be easily carried out. The purpose of the analysis is to find the potential impacts that these risks have on the project Risk evaluation: The goal of this stage is to compare the output of the risks analysed earlier with the set criteria and to prioritise them accordingly. Any risks require treatments will be carried on to the next stage Risk treatment: This stage develops and implements specific cost-effective strategies and action plans for increasing potential benefits and reducing potential costs. In this process, ownerships of the risks can also be assigned to appropriate parties Risk monitoring: This is a continuous process in the overall risk management framework. It tracks progress against action plans and established metrics to ensure timely completion of actions.

6.3. Risk Identification Risk identification is the process of examining the project areas and each critical technical process to identify and document the associated risks. The identification of potential issues, hazards, threats and vulnerabilities that could negatively affect work efforts or plans is the basis for the risk management strategy. 6.3.1. • • • • • • •

Risk Management team composition

Mr. Van Tran-Project Manager Mr. Aman Kumar-Risk Manager, Fulton Hogan Mr. John Smith-Regional Manager, Queensland Transport Agency Ms. Joan Smyth-General Manager, Southbank Business Association Mrs. Amanda Cranston-Community Manager, Brisbane City Council Mr. Ron McDowall-Chief Commissioning Engineer, Beca Mr. Garry Miller-Facilitator, Griffith University

6.3.2.

Key findings and their categorisation

The findings and their respective categories are given below. The results has been summarised after sessions of brainstorming activity undertaken by appropriate personnel and representatives from associated parties. 6.3.2.1. List of Risks 1) 2) 3) 4)

Noise pollution Vibration Air pollution (dust, burnt fuel) Contractors not following designed specification 5) Change in Government policies 6) Inflation 7) Project going over budget 8) Lack of skilled workers 9) Employment strike 10) Breach of Contract 11) Failure in Quality Management system 12) Tendering process failure 13) Lack of motivation from workers 14) Corruption (bribery) 15) Change in project scope 16) Delay in material

6.3.2.2. Categorisation of Risks Environmental Risks

Societal Risks

Operational Risks

Financial & Political Risks

Noise pollution

Damage to heritage sites

Delay in material

Tendering process failure

Vibration

Corruption

Change in project scope

Change in Government policies

Air pollution

Damage to businesses around site

High turnover of employees

Inflation

Lack of skilled workers

Project going over budget

Contractors not following designed specification

Breach of Contract

Employment strike Failure in Quality Management system Table 1: Categorisation of Risks

6.4. Risk Assessment Risk assessment is the process of analysing known risks and prioritising the based on their threat in the attainment of project goals. During the assessment phase, the project analyses each risk to isolate its cause and to determine it effects. The project rates the risk in terms of its probability of occurrence and its severity of impact to cost (i.e. dollars), schedule (i.e. time), and technical performance, as applicable. The probability of a risk issue is the chance that the risk will materialise as a real project problem. This probability is expressed in quantitative (in the scale from 1-5 or 1-7) and qualitative terms (high, medium or low, etc.), with each scale factor corresponds to a measured level. The risk impact is a measure of how the project is affected if the risk issues materialise. Overall risk assessment is the product of combining the probability of occurrence with the severity of impact as follows

6.4.1.

Qualitative method risk assessment

All risks are ranked qualitatively at this stage. The format for the assessment is given in the table below: Probability of occurrence

Severity of impact

High High Medium High Low Medium Medium Low Low

High Medium High Low High Medium Low Medium Low

Overall project risk

High

Medium

Low

Table 2: Risk Assessment

All risks identified above will be carefully assessed and their respective recommendations will be made available to appropriate personnel in the Management Team in a separate report.

6. BENEFIT/COST ANALYSIS Total carparks Time 1 hour 2 hours 3 hours 4 hours 8 hours Fine

1,200.00 Cos t $ 1.50 $ 3.00 $ 4.50 $ 6.00 $ 12.00 $ 40.00

6.1. Project Analysis 6.1.1. Project Expenditure OPEX Carpark operating cost Salary Overheads Initial working capital Total OPEX Year 1 Total OPEX in consecutive Years

$ $ $ $ $ $

50,000.00 25,000.00 10,000.00 50,000.00 135,000.00 85,000.00

CAPEX Area of parking (m2) Construction cost per m2 Total Construction cost Professional fees (%) Professional fees ($) Research and Development Other costs Consents Legal Cost Development Levy Total CAPEX

$ 33,000.00 $ 600.00 $ 19,800,000.00 10.00 $ 1,980,000.00 $ 600,000.00 $ 100,000.00 $ 100,000.00 $ 300,000.00 $ 22,880,000.00

Depreciation

$ 1,144,000.00

Major refurb in Yr 10

$ 1,000,000.00

Inflation rate Cost of Debt Tax rate Return rate on Equity Debt Funding GST

0.035 0.09 0.30 0.20 0.80 0.10

Total Debt (D) Total Equity (E)

$ 18,304,000.00 $ 4,576,000.00

6.1.2.

Expected Income from Project Operation

Term-40 weeks Profile

Day

Time during the week

Weekday

Percentage Number of occupancy in 1 hour

Evening Weekend

Night

Weekday

Weekend

Weekday

Weekend

75 900.00

40 480.00

60 720.00

30 360.00

5 60.00

2 18.00 10.00 14.40 576.00 115,200.00 206,592.00

2 9.60 10.00 7.68 307.20 24,576.00

2 14.40 10.00 5.76 230.40 46,080.00

2 7.20 10.00 2.88 115.20 9,216.00

2 1.20 10.00 1.44 57.60 11,520.00

882.00 7,056.00

470.40 3,763.20

705.60 2,822.40

352.80 1,411.20

58.80 705.60

1 2 3 4

10 40 40 10

10 40 40 10

30 40 20 10

30 40 20 10

25 25 25 25

1 2 3 4

705.60 2,822.40 2,822.40 705.60 7,056.00

376.32 1,505.28 1,505.28 376.32 3,763.20

846.72 1,128.96 564.48 282.24 2,822.40

423.36 564.48 282.24 141.12 1,411.20

176.40 176.40 176.40 176.40 705.60

Percentage of defaulters Number of defaulters in 1 hour Percentage of defaulters will pay fines Number of defaulters will pay fines in 1 day Amount of fines in 1 day Yearly income from fines Total income from fines Number of paid occupants in 1 hour Number of paid occupants in a day

0 2 10.00 -

-

Usage profile percentage-hours 25 25 25 25

Distribution-hour

Total Income from carpark activity Time-hour 1 2 3 4

$ $ $ $ 1,058.40 $ 564.48 $ 8,467.20 $ 4,515.84 $12,700.80 $ 6,773.76 $ 4,233.60 $ 2,257.92

Yearly Sub-total

$ 5,292,000.00

Yearly Income-Academic term

$ 9,290,486.40

$ 1,128,960.00

$ $ $ $ $

$

1,270.08 3,386.88 2,540.16 1,693.44

$ 635.04 $1,693.44 $1,270.08 $ 846.72

$1,778,112.00

$ 355,622.40

-

$ $ $ $ $

264.60 529.20 793.80 1,058.40

$$$$-

$ 529,200.00

$ -

Holiday-12 weeks Profile

Day

Evening

Time during the week

Weekday

Percentage Number of occupancy in 1 hour

Weekend

Night

Weekday

Weekend

Weekday

60 720.00

30 360.00

40 480.00

20 240.00

2.00 14.40 10.00 11.52 460.80 27,648.00 44,236.80

2.00 7.20 10.00 5.76 230.40 5,529.60

2.00 9.60 10.00 3.84 153.60 9,216.00

705.60 5,644.80

352.80 2,822.40

1 2 3 4

10 40 40 10

1 2 3 4

564.48 2,257.92 2,257.92 564.48 5,644.80

Percentage of defaulters Number of defaulters in 1 hour Percentage of defaulters will pay fines Number of defaulters will pay fines in 1 day Amount of fines in 1 day Yearly income from fines Total income from fines Number of paid occupants in 1 hour Number of paid occupants in a day

Weekend 0

0

-

-

2.00 4.80 10.00 1.92 76.80 1,843.20

2.00 10.00 -

2.00 10.00 -

470.40 1,881.60

235.20 940.80

-

-

10 40 40 10

30 40 20 10

30 40 20 10

282.24 1,128.96 1,128.96 282.24 2,822.40

564.48 752.64 376.32 188.16 1,881.60

282.24 376.32 188.16 94.08 940.80

423.36 3,386.88 5,080.32 1,693.44

$ 846.72 $ 2,257.92 $ 1,693.44 $ 1,128.96

$ $ 423.36 $1,128.96 $ 846.72 $ 564.48

$ 254,016.00

$ 355,622.40

$ 71,124.48

Usage profile percentage-hours 25 25 25 25

25 25 25 25

Distribution-hour

Total Income from carpark activity Time-hour

$ 1 2 3 4

Yearly Sub-total

$ 846.72 $ 6,773.76 $ 10,160.64 $ 3,386.88 $ 1,270,080.00

Yearly Income-Academic Holiday

$ 1,995,079.68

Total Yearly Income

$ 11,285,566.08

$ $ $ $ $

$

-

-

-

$ $$$$-

$ -

$-

$ $ $ $ $

6.1.3.

Income and Cash Flow Statements

6.1.3.1. NPV Summary Year 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 11.00 12.00 13.00 14.00 15.00 16.00 17.00 18.00 19.00 20.00 Total NPV

Cash flow DR=12.54% -$ 22,880,000.00 1 $ 0.8885730 $ 5,494,224.15 0.7895619 $ 5,518,724.15 0.7015833 $ 5,518,724.15 0.6234080 $ 5,518,724.15 0.5539435 $ 5,518,724.15 0.4922192 $ 5,518,724.15 0.4373727 $ 5,518,724.15 0.3886375 $ 5,518,724.15 0.3453328 $ 4,518,724.15 0.3068534 $ 7,393,605.93 0.2726616 $ 7,393,605.93 0.2422797 $ 7,393,605.93 0.2152832 $ 7,393,605.93 0.1912948 $ 7,393,605.93 0.1699794 $ 7,393,605.93 0.1510391 $ 7,393,605.93 0.1342093 $ 7,393,605.93 0.1192547 $ 7,393,605.93 0.1059665 $ 7,393,605.93 0.0941590

PV -$ 22,880,000.00 $ $ 4,338,030.01 $ 3,871,844.92 $ 3,440,416.67 $ 3,057,061.20 $ 2,716,421.89 $ 2,413,739.02 $ 2,144,783.21 $ 1,905,796.34 $ 1,386,585.72 $ 2,015,952.43 $ 1,791,320.80 $ 1,591,719.21 $ 1,414,358.64 $ 1,256,760.83 $ 1,116,723.68 $ 992,290.46 $ 881,722.46 $ 783,474.73 $ 696,174.45 $ 14,935,176.69

6.1.3.2. Income Statement and Cash Flow Statement Income Statement Year 1 Revenue GST (10%) Operating Cost Rent Gross profit Depreciation PBIT Interest & Loan Repayment (30%) Profit before Tax Tax (30%) Profit after Tax Retain Profit

-

Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 11,285,566.08 11,285,566.08 11,285,566.08 11,285,566.08 11,285,566.08 11,285,566.08 11,285,566.08 11,285,566.08 11,285,566.08 1,128,556.61 1,128,556.61 1,128,556.61 1,128,556.61 1,128,556.61 1,128,556.61 1,128,556.61 1,128,556.61 1,128,556.61 135,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 10,022,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 1,144,000.00 1,144,000.00 1,144,000.00 1,144,000.00 1,144,000.00 1,144,000.00 1,144,000.00 1,144,000.00 1,144,000.00 8,878,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 2,663,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 6,214,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 1,864,381.78 1,874,881.78 1,874,881.78 1,874,881.78 1,874,881.78 1,874,881.78 1,874,881.78 1,874,881.78 1,874,881.78 4,350,224.15 4,374,724.15 4,374,724.15 4,374,724.15 4,374,724.15 4,374,724.15 4,374,724.15 4,374,724.15 4,374,724.15 4,350,224.15 4,374,724.15 4,374,724.15 4,374,724.15 4,374,724.15 4,374,724.15 4,374,724.15 4,374,724.15 4,374,724.15

Cash flow Statement

Capital Outlay Cash from sales of asset Gross profit Interest paid Tax Net Cash Flow

Year 0 Year 1 22,880,000.00

- 22,880,000.00

Year 2 -

10,022,008.47 2,663,402.54 1,864,381.78 5,494,224.15

Year 3

Year 4

10,072,008.47 10,072,008.47 2,678,402.54 2,678,402.54 1,874,881.78 1,874,881.78 5,518,724.15 5,518,724.15

Year 5 10,072,008.47 2,678,402.54 1,874,881.78 5,518,724.15

Year 6 10,072,008.47 2,678,402.54 1,874,881.78 5,518,724.15

Year 7 10,072,008.47 2,678,402.54 1,874,881.78 5,518,724.15

Year 8

Year 9

10,072,008.47 10,072,008.47 2,678,402.54 2,678,402.54 1,874,881.78 1,874,881.78 5,518,724.15 5,518,724.15

Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 11,285,566.08 11,285,566.08 11,285,566.08 11,285,566.08 11,285,566.08 11,285,566.08 11,285,566.08 11,285,566.08 11,285,566.08 11,285,566.08 1,128,556.61 1,128,556.61 1,128,556.61 1,128,556.61 1,128,556.61 1,128,556.61 1,128,556.61 1,128,556.61 1,128,556.61 1,128,556.61 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 1,144,000.00 1,144,000.00 1,144,000.00 1,144,000.00 1,144,000.00 1,144,000.00 1,144,000.00 1,144,000.00 1,144,000.00 1,144,000.00 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 8,928,008.47 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93 6,249,605.93

Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 1,000,000.00 1.00 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 10,072,008.47 2,678,402.54 1,874,881.78 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 2,678,402.54 4,518,724.15 7,393,605.93 7,393,605.93 7,393,605.93 7,393,605.93 7,393,605.93 7,393,605.93 7,393,605.93 7,393,605.93 7,393,605.93 7,393,606.93

Figure 1: NPV of the project

6.1.4.

Benefit-Cost Ratio

In order for the project to go ahead, a Feasibility Study commissioned by ACCC has found that the BCR has to be at least 1.0. This is to ensure that the investment provides the Corporation enough benefits throughout the economic life of the project. The following results have been obtained from our analysis: • • •

Tangible Net Present Value: $14,935,176.69 Intangible Net Present Value: $8,750,000 Total Cost of the Project: $22,880,000

It is therefore concluded that the development should be undertaken by ACCC, as it ensures the Corporation with a decent return.

6.2. Option Analysis 6.2.1.

Optimistic Option

6.2.1.1. Underlying Assumptions The Optimistic Options assesses the effects of all positive contributions from activities taken by the organisation or from assumptions which will materialise during the life of the project from its conception to completion. The following assumptions are made for this option: • The research which has been undertaken by ACCC is successful and contributes to the reduction of 2% from the projected construction cost • All those who default pay their fines in full • Successful commercialisation of the facility during the academic holiday period and the levels of occupancy on weekdays and weekends are 100% and 90% respectively 6.2.1.2. Project Expenditure OPEX Carpark operating cost Salary Overheads Initial working capital Total OPEX Year 1 Total OPEX in consecutive Years

CAPEX Area of parking (m2) Construction cost per m2 Construction cost Construction cost saving (%) Amount saved on Construction cost Total Construction cost Professional fees (%) Professional fees ($) Research and Development Other costs Consents Legal Cost Development Levy Total CAPEX

$ $ $ $ $ $

50,000.00 25,000.00 10,000.00 50,000.00 135,000.00 85,000.00

$ $ $

33,000.00 600.00 19,800,000.00 2.00 396,000.00 19,404,000.00 10.00 1,980,000.00 850,000.00

$ $ $ $ $ $ $

100,000.00 100,000.00 300,000.00 22,734,000.00

Depreciation

$

1,136,700.00

Major refurb in Yr 10

$

1,000,000.00

Total Debt (D) Total Equity (E)

$ $

18,187,200.00 4,546,800.00

6.2.1.3. Expected Income from Project Operation Term-40 weeks Profile

Day

Time during the week

Weekday

Percentage Number of occupancy in 1 hour

Evening Weekend

Night

Weekday

Weekend

Weekday

Weekend

75 900.00

40 480.00

60 720.00

30 360.00

5 60.00

2 18.00 100.00 144.00 5,760.00 1,152,000.00 2,065,920.00

2 9.60 100.00 76.80 3,072.00 245,760.00

2 14.40 100.00 57.60 2,304.00 460,800.00

2 7.20 100.00 28.80 1,152.00 92,160.00

2 1.20 100.00 14.40 576.00 115,200.00

882.00 7,056.00

470.40 3,763.20

705.60 2,822.40

352.80 1,411.20

58.80 705.60

1 2 3 4

10 40 40 10

10 40 40 10

30 40 20 10

30 40 20 10

25 25 25 25

1 2 3 4

705.60 2,822.40 2,822.40 705.60 7,056.00

376.32 1,505.28 1,505.28 376.32 3,763.20

846.72 1,128.96 564.48 282.24 2,822.40

423.36 564.48 282.24 141.12 1,411.20

176.40 176.40 176.40 176.40 705.60

$ 1,058.40 8,467.20 12,700.80 4,233.60

$ $ 564.48 $ 4,515.84 $ 6,773.76 $ 2,257.92

$ 1,270.08 3,386.88 2,540.16 1,693.44

$ $ 635.04 $ 1,693.44 $ 1,270.08 $ 846.72

$ $ 264.60 $ 529.20 $ 793.80 $ 1,058.40

Percentage of defaulters Number of defaulters in 1 hour Percentage of defaulters will pay fines Number of defaulters will pay fines in 1 day Amount of fines in 1 day Yearly income from fines Total income from fines Number of paid occupants in 1 hour Number of paid occupants in a day

0 2 100.00 -

-

Usage profile percentage-hours 25 25 25 25

Distribution-hour

Total Income from carpark activity Time-hour 1 2 3 4

$ $ $ $

$ $ $ $

Yearly Sub-total

$ 5,292,000.00 $1,128,960.00 $1,778,112.00 $ 355,622.40 $ 529,200.00 $

Yearly Income-Academic term

$ 11,149,814.40

-

$ -

Holiday-12 weeks Profile

Day

Time during the week

Weekday

Percentage Number of occupancy in 1 hour

Evening Weekend

100 1,200.00

Percentage of defaulters Number of defaulters in 1 hour Percentage of defaulters will pay fines Number of defaulters will pay fines in 1 day Amount of fines in 1 day Yearly income from fines Total income from fines Number of paid occupants in 1 hour Number of paid occupants in a day

Night

Weekday

90 1,080.00

Weekend

40 480.00

Weekday

20 240.00

2.00 24.00 100.00 192.00 7,680.00 460,800.00 737,280.00

2.00 21.60 100.00 172.80 6,912.00 165,888.00

2.00 9.60 100.00 38.40 1,536.00 92,160.00

2.00 4.80 100.00 19.20 768.00 18,432.00

1,176.00 9,408.00

1,058.40 8,467.20

470.40 1,881.60

235.20 940.80

Weekend 0

0

-

-

2.00 100.00 -

2.00 100.00 -

-

-

Usage profile percentage-hours 1 2 3 4

10 40 40 10

10 40 40 10

30 40 20 10

30 40 20 10

25 25 25 25

25 25 25 25

Distribution-hour 1 2 3 4

940.80 3,763.20 3,763.20 940.80 9,408.00

846.72 3,386.88 3,386.88 846.72 8,467.20

564.48 752.64 376.32 188.16 1,881.60

$ $ 1,411.20 $ 11,289.60 $ 16,934.40 $ 5,644.80

$ $ 1,270.08 $10,160.64 $15,240.96 $ 5,080.32

$ $ 846.72 $ 2,257.92 $ 1,693.44 $ 1,128.96

Yearly Sub-total

$ 2,116,800.00

$ 762,048.00

$ 355,622.40

Yearly Income-Academic Holiday

$ 4,042,874.88

Total Income from carpark activity Time-hour 1 2 3 4

Total Yearly Income

$ 15,192,689.28

282.24 376.32 188.16 94.08 940.80

-

$ $ $ $ $

$

423.36 1,128.96 846.72 564.48

$ 71,124.48

-

$ $ $ $ $

$ -

$ $ $ $ $

-

6.2.1.4. Income and Cash Flow Statement 6.2.1.4.1. Year

Total NPV

NPV Summary Cash flow DR=12.54% PV -$ 22,734,000.00 1 -$ 22,734,000.00 1.00 0.8885730 2.00 $ 7,213,542.48 0.7895619 5,695,538.24 3.00 $ 7,238,042.48 0.7015833 5,078,090.02 4.00 $ 7,238,042.48 0.6234080 4,512,253.44 5.00 $ 7,238,042.48 0.5539435 4,009,466.36 6.00 $ 7,238,042.48 0.4922192 3,562,703.36 7.00 $ 7,238,042.48 0.4373727 3,165,721.84 8.00 $ 7,238,042.48 0.3886375 2,812,974.80 9.00 $ 9,852,903.55 0.3453328 3,402,530.56 10.00 $ 8,852,903.55 0.3068534 2,716,543.25 11.00 $ 9,852,903.55 0.2726616 2,686,508.46 12.00 $ 8,813,615.23 0.2422797 2,135,360.26 13.00 $ 8,813,615.23 0.2152832 1,897,423.37 14.00 $ 8,813,615.23 0.1912948 1,685,999.09 15.00 $ 8,813,615.23 0.1699794 1,498,133.19 16.00 $ 8,813,615.23 0.1510391 1,331,200.63 17.00 $ 8,813,615.23 0.1342093 1,182,868.87 18.00 $ 8,813,615.23 0.1192547 1,051,065.28 19.00 $ 8,813,615.23 0.1059665 933,948.18 20.00 $ 8,813,615.23 0.09 829,881.09 $

27,454,210.28

6.2.1.4.2. Income Statement and Cash Flow Statement Income Statement Year 1 Revenue GST (10%) Operating Cost Rent Gross profit Depreciation PBIT Interest & Loan Repayment (30%) Profit before Tax Tax (30%) Profit after Tax Retain Profit

Year 2 -

Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 15,192,689.28 15,192,689.28 15,192,689.28 15,192,689.28 15,192,689.28 15,192,689.28 15,192,689.28 15,192,689.28 15,192,689.28 1,519,268.93 1,519,268.93 1,519,268.93 1,519,268.93 1,519,268.93 1,519,268.93 1,519,268.93 1,519,268.93 1,519,268.93 135,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 13,538,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 1,136,700.00 1,136,700.00 1,136,700.00 1,136,700.00 1,136,700.00 1,136,700.00 1,136,700.00 1,136,700.00 1,136,700.00 12,401,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 3,720,515.81 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 8,681,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 12,451,719.35 12,451,719.35 2,604,361.06 2,614,861.06 2,614,861.06 2,614,861.06 2,614,861.06 2,614,861.06 2,614,861.06 3,735,515.81 3,735,515.81 6,076,842.48 6,101,342.48 6,101,342.48 6,101,342.48 6,101,342.48 6,101,342.48 6,101,342.48 8,716,203.55 8,716,203.55 6,076,842.48 6,101,342.48 6,101,342.48 6,101,342.48 6,101,342.48 6,101,342.48 6,101,342.48 8,716,203.55 8,716,203.55

Cash flow Statement

Capital Outlay Cash from sales of asset Gross profit Interest paid Tax Net Cash Flow

Year 0 Year 1 22,734,000.00

- 22,734,000.00

Year 2 -

Year 3

Year 4

13,538,419.35 13,588,419.35 13,588,419.35 3,720,515.81 3,735,515.81 3,735,515.81 2,604,361.06 2,614,861.06 2,614,861.06 7,213,542.48 7,238,042.48 7,238,042.48

Year 5 13,588,419.35 3,735,515.81 2,614,861.06 7,238,042.48

Year 6

Year 7

13,588,419.35 13,588,419.35 3,735,515.81 3,735,515.81 2,614,861.06 2,614,861.06 7,238,042.48 7,238,042.48

Year 8

Year 9

13,588,419.35 13,588,419.35 3,735,515.81 2,614,861.06 3,735,515.81 7,238,042.48 9,852,903.55

Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 15,192,689.28 15,192,689.28 15,192,689.28 15,192,689.28 15,192,689.28 15,192,689.28 15,192,689.28 1,519,268.93 1,519,268.93 1,519,268.93 1,519,268.93 1,519,268.93 1,519,268.93 1,519,268.93 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 1,136,700.00 1,136,700.00 1,136,700.00 1,136,700.00 1,136,700.00 1,136,700.00 1,136,700.00 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55

Year 18 Year 19 Year 20 15,192,689.28 15,192,689.28 15,192,689.28 1,519,268.93 1,519,268.93 1,519,268.93 85,000.00 85,000.00 85,000.00 1.00 1.00 1.00 13,588,419.35 13,588,419.35 13,588,419.35 1,136,700.00 1,136,700.00 1,136,700.00 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 12,451,719.35 3,735,515.81 3,735,515.81 3,735,515.81 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55 8,716,203.55

Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 1,000,000.00 1.00 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 13,588,419.35 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 3,735,515.81 8,852,903.55 9,852,903.55 9,852,903.55 9,852,903.55 9,852,903.55 9,852,903.55 9,852,903.55 9,852,903.55 9,852,903.55 9,852,903.55 9,852,904.55

Figure 1: NPV of Optimistic Option

6.2.1.5. Benefit-Cost Ratio The following results have been obtained from our analysis: • • •

Tangible Net Present Value: $27,454,210.28 Intangible Net Present Value: $8,750,000 Total Cost of the Project: $22,734,000

It is therefore concluded that the development should be undertaken by ACCC, as it ensures the Corporation with a decent return.

6.2.2.

Pessimistic Option

6.2.2.1. Underlying Assumptions The Pessimistic Options assesses the effects of all negative contributions from activities taken by the organisation or from assumptions which may materialise during the life of the project from its conception to completion. The following assumptions are made for this option: • The research which has been undertaken by ACCC is successful but does not contribute to the any reduction from the projected construction cost • There is an increase in number of defaulters (from 2 % to 5%). Plus all those who default will not pay their fines • No commercialisation of the facility during the academic holiday period and the levels of occupancy on weekdays and weekends remain the same 6.2.2.2. Project Expenditure OPEX Carpark operating cost Salary Overheads Initial working capital Total OPEX Year 1 Total OPEX in consecutive Years

CAPEX Area of parking (m2) Construction cost per m2 Construction cost Total Construction cost Professional fees (%) Professional fees ($) Research and Development Other costs Consents Legal Cost Development Levy Total CAPEX

$ $ $ $ $ $

50,000.00 25,000.00 10,000.00 50,000.00 135,000.00 85,000.00

$ $ $ $

33,000.00 600.00 19,800,000.00 19,800,000.00 10.00 1,980,000.00 850,000.00

$ $ $ $ $

100,000.00 100,000.00 300,000.00 23,130,000.00

Depreciation

$

1,156,500.00

Major refurb in Yr 10

$

1,000,000.00

Total Debt (D) Total Equity (E)

$ $

18,504,000.00 4,626,000.00

6.2.2.3. Expected Income from Project Operation Term-40 weeks Profile

Day

Time during the week

Weekday

Percentage Number of occupancy in 1 hour Percentage of defaulters Number of defaulters in 1 hour Percentage of defaulters will pay fines Number of defaulters will pay fines in 1 day Amount of fines in 1 day Yearly income from fines Total income from fines Number of paid occupants in 1 hour Number of paid occupants in a day

Evening Weekend

Night

Weekday

Weekend

Weekday

Weekend

75 900.00

40 480.00

60 720.00

30 360.00

5 60.00

-

5 45.00 -

5 24.00 -

5 36.00 -

5 18.00 -

5 3.00 -

-

855.00 6,840.00

456.00 3,648.00

684.00 2,736.00

342.00 1,368.00

0

5

57.00 684.00

-

Usage profile percentage-hours 1 2 3 4

10 40 40 10

10 40 40 10

30 40 20 10

30 40 20 10

25 25 25 25

25 25 25 25

Distribution-hour 1 2 3 4 Total Income from carpark activity Time-hour 1 2 3 4 Yearly Sub-total

Yearly Income-Academic term

$

684.00 2,736.00 2,736.00 684.00 6,840.00

364.80 1,459.20 1,459.20 364.80 3,648.00

$ $ 1,026.00 $ 8,208.00 $ 12,312.00 $ 4,104.00

$ $ 547.20 $ 4,377.60 $ 6,566.40 $ 2,188.80

$ 5,130,000.00

$ 1,094,400.00

8,805,816.00

820.80 1,094.40 547.20 273.60 2,736.00

$ $ $ $ $ $

$ $ $ $ $

1,231.20 3,283.20 2,462.40 1,641.60

1,723,680.00

$

410.40 547.20 273.60 136.80 1,368.00

171.00 171.00 171.00 171.00 684.00

615.60 1,641.60 1,231.20 820.80

$ $ 256.50 $ 513.00 $ 769.50 $ 1,026.00

344,736.00

$ 513,000.00

-

$ $ $ $ $

-

$ -

Holiday-12 weeks Profile

Day

Time during the week

Weekday

Percentage Number of occupancy in 1 hour

Evening Weekend

Night

Weekday

Weekend

Weekday

Weekend

60 720.00

30 360.00

40 480.00

20 240.00

-

-

5.00 36.00 -

5.00 18.00 -

5.00 24.00 -

5.00 12.00 -

5.00 -

5.00 -

684.00 5,472.00

342.00 2,736.00

456.00 1,824.00

228.00 912.00

-

-

1 2 3 4

10 40 40 10

10 40 40 10

30 40 20 10

30 40 20 10

1 2 3 4

547.20 2,188.80 2,188.80 547.20 5,472.00

273.60 1,094.40 1,094.40 273.60 2,736.00

547.20 729.60 364.80 182.40 1,824.00

273.60 364.80 182.40 91.20 912.00

820.80 2,188.80 1,641.60 1,094.40

$ $ 410.40 $ 1,094.40 $ 820.80 $ 547.20

Percentage of defaulters Number of defaulters in 1 hour Percentage of defaulters will pay fines Number of defaulters will pay fines in 1 day Amount of fines in 1 day Yearly income from fines Total income from fines Number of paid occupants in 1 hour Number of paid occupants in a day

0

0

Usage profile percentage-hours 25 25 25 25

25 25 25 25

Distribution-hour

Total Income from carpark activity Time-hour 1 2 3 4

$ $ 820.80 $ 6,566.40 $ 9,849.60 $ 3,283.20

Yearly Sub-total

$ 1,231,200.00

Yearly Income-Academic Holiday

$ 1,891,123.20

Total Yearly Income

$ 10,696,939.20

$ $ $ $ $

$ $ $ $ $

410.40 3,283.20 4,924.80 1,641.60

$ 246,240.00

$

344,736.00

$

68,947.20

$ $ $ $ $ $

-

-

-

$ $$$$-

-

$ -

6.2.2.4. Income and Cash Flow Statements 6.2.2.4.1. Year

Total NPV

NPV Summary Cash flow DR=12.54% PV -$ 23,130,000.00 1 -$ 23,130,000.00 1.00 0.8885730 2.00 $ 5,241,014.70 0.7895619 4,138,105.47 3.00 $ 5,265,514.70 0.7015833 3,694,197.39 4.00 $ 5,265,514.70 0.6234080 3,282,563.88 5.00 $ 5,265,514.70 0.5539435 2,916,797.47 6.00 $ 5,265,514.70 0.4922192 2,591,787.34 7.00 $ 5,265,514.70 0.4373727 2,302,992.13 8.00 $ 5,265,514.70 0.3886375 2,046,376.51 9.00 $ 5,265,514.70 0.3453328 1,818,354.82 10.00 $ 4,265,514.70 0.3068534 1,308,887.54 11.00 $ 5,265,514.70 0.2726616 1,435,703.67 12.00 $ 5,265,514.70 0.2422797 1,275,727.45 13.00 $ 5,265,514.70 0.2152832 1,133,576.90 14.00 $ 7,026,521.00 0.1912948 1,344,137.19 15.00 $ 7,026,521.00 0.1699794 1,194,363.95 16.00 $ 7,026,521.00 0.1510391 1,061,279.50 17.00 $ 7,026,521.00 0.1342093 943,024.26 18.00 $ 7,026,521.00 0.1192547 837,945.85 19.00 $ 7,026,521.00 0.1059665 744,576.02 20.00 $ 7,026,521.00 0.09 661,610.11 $

11,602,007.45

6.2.2.4.2. Income Statement and Cash Flow Statement Income Statement Year 1 Revenue GST (10%) Operating Cost Rent Gross profit Depreciation PBIT Interest & Loan Repayment (30%) Profit before Tax Tax (30%) Profit after Tax Retain Profit

Year 2 -

10,696,939.20 1,069,693.92 135,000.00 1.00 9,492,244.28 1,156,500.00 8,335,744.28 2,500,723.28 5,835,021.00 1,750,506.30 4,084,514.70 4,084,514.70

Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 10,696,939.20 10,696,939.20 10,696,939.20 10,696,939.20 10,696,939.20 10,696,939.20 10,696,939.20 10,696,939.20 1,069,693.92 1,069,693.92 1,069,693.92 1,069,693.92 1,069,693.92 1,069,693.92 1,069,693.92 1,069,693.92 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 1,156,500.00 1,156,500.00 1,156,500.00 1,156,500.00 1,156,500.00 1,156,500.00 1,156,500.00 1,156,500.00 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 2,515,723.28 2,515,723.28 2,515,723.28 2,515,723.28 2,515,723.28 2,515,723.28 2,515,723.28 2,515,723.28 5,870,021.00 5,870,021.00 5,870,021.00 5,870,021.00 5,870,021.00 5,870,021.00 5,870,021.00 5,870,021.00 1,761,006.30 1,761,006.30 1,761,006.30 1,761,006.30 1,761,006.30 1,761,006.30 1,761,006.30 1,761,006.30 4,109,014.70 4,109,014.70 4,109,014.70 4,109,014.70 4,109,014.70 4,109,014.70 4,109,014.70 4,109,014.70 4,109,014.70 4,109,014.70 4,109,014.70 4,109,014.70 4,109,014.70 4,109,014.70 4,109,014.70 4,109,014.70

Cash flow Statement

Capital Outlay Cash from sales of asset Gross profit Interest paid Tax Net Cash Flow

Year 0 Year 1 23,130,000.00

- 23,130,000.00

Year 2 -

9,492,244.28 2,500,723.28 1,750,506.30 5,241,014.70

Year 3 9,542,244.28 2,515,723.28 1,761,006.30 5,265,514.70

Year 4 9,542,244.28 2,515,723.28 1,761,006.30 5,265,514.70

Year 5 9,542,244.28 2,515,723.28 1,761,006.30 5,265,514.70

Year 6 9,542,244.28 2,515,723.28 1,761,006.30 5,265,514.70

Year 7 9,542,244.28 2,515,723.28 1,761,006.30 5,265,514.70

Year 8 9,542,244.28 2,515,723.28 1,761,006.30 5,265,514.70

Year 9 9,542,244.28 2,515,723.28 1,761,006.30 5,265,514.70

Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 10,696,939.20 10,696,939.20 10,696,939.20 10,696,939.20 10,696,939.20 10,696,939.20 10,696,939.20 10,696,939.20 10,696,939.20 10,696,939.20 1,069,693.92 1,069,693.92 1,069,693.92 1,069,693.92 1,069,693.92 1,069,693.92 1,069,693.92 1,069,693.92 1,069,693.92 1,069,693.92 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 85,000.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 1,156,500.00 1,156,500.00 1,156,500.00 1,156,500.00 1,156,500.00 1,156,500.00 1,156,500.00 1,156,500.00 1,156,500.00 1,156,500.00 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 2,515,723.28 2,515,723.28 2,515,723.28 5,870,021.00 5,870,021.00 5,870,021.00 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 8,385,744.28 1,761,006.30 1,761,006.30 1,761,006.30 2,515,723.28 2,515,723.28 2,515,723.28 2,515,723.28 2,515,723.28 2,515,723.28 2,515,723.28 4,109,014.70 4,109,014.70 4,109,014.70 5,870,021.00 5,870,021.00 5,870,021.00 5,870,021.00 5,870,021.00 5,870,021.00 5,870,021.00 4,109,014.70 4,109,014.70 4,109,014.70 5,870,021.00 5,870,021.00 5,870,021.00 5,870,021.00 5,870,021.00 5,870,021.00 5,870,021.00

Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 1,000,000.00 1.00 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 9,542,244.28 2,515,723.28 2,515,723.28 2,515,723.28 2,515,723.28 1,761,006.30 1,761,006.30 1,761,006.30 1,761,006.30 2,515,723.28 2,515,723.28 2,515,723.28 2,515,723.28 2,515,723.28 2,515,723.28 2,515,723.28 4,265,514.70 5,265,514.70 5,265,514.70 5,265,514.70 7,026,521.00 7,026,521.00 7,026,521.00 7,026,521.00 7,026,521.00 7,026,521.00 7,026,522.00

Figure 1: NPV of Pessimistic Option

6.2.2.5. Benefit-Cost Ratio The following results have been obtained from our analysis: • • •

Tangible Net Present Value: $11,602,007.45 Intangible Net Present Value: $8,750,000 Total Cost of the Project: $23,130,000

It is therefore concluded that the development should not be undertaken by ACCC, as the BCR is below the target BCR set by the Corporation.

7. IMPLEMENTATION STRATEGY 7.1. Purpose of the Implementation Plan The Implementation Plan establishes ACCC’s requirements and standards regarding the procedures undertaken by all personnel during the development. It also sets out the hierarchy of project governance for this project. All ACCC personnel are expected to follow the standard set in this Implementation Plan to achieve the desired organisational objectives in term of Time-Cost-Quality throughout the life of the project. 7.2. Implementation Plan A number of local staff has been employed on a full time basis during the construction of the project aside from ACCC personnel, most of whom come from New Zealand. It is an essential part of the project, as ACCC has realised that local knowledge of these individuals in operation, resources and local legal requirements is a valuable asset. 7.2.1.

Project personnel

The list below outlines the project personnel in the development and their respective position in the Management team: • • • • • •

Mr. Van Tran-Project Manager Mr. Ivan Neeyo-Quantity Surveyor Mr. Aman Kumar-Project Risk Manager Mr. Jim Stewards-Construction Manager Mr. Steven John-Operations Manager Mr. John Doe-Facility Manager

7.2.2.

Training

Regular training sessions and meetings will be carried out during the construction phase of the development. This will also continue during the operation phase with appropriate modifications to meet the requirements of the circumstances. 7.3. Implementation Timeline The Implementation Plan will be undertaken in a timely manner according to the project timeline as outlined below:

ID

Task Name

1 2 3 4 5 6 7 8 9 10

Carpark Development Procurement Site set-up Piling Foundation Superstructure Phase 1 Phase 2 Phase 3 Commisioning

Project: Project1 Date: Mon 12/10/09

Duration

Start

280 days Mon 12/10/09 2 mons Mon 12/10/09 4 wks Mon 12/10/09 3 mons Mon 9/11/09 2 mons Mon 1/02/10 140 days Mon 29/03/10 2 mons Mon 29/03/10 2.5 mons Mon 24/05/10 2.5 mons Mon 2/08/10 20 days Mon 11/10/10

Finish

Aug '09 5 Oct '09 S W S T

16 Nov '09 28 Dec '09 8 Feb '10 M F T S W S T

22 Mar '10 3 May '10 14 Jun '10 26 Jul '10 6 Sep '10 18 Oct '10 M F T S W S T M F T S W S T

Fri 5/11/10 Fri 4/12/09 Fri 6/11/09 Fri 29/01/10 Fri 26/03/10 Fri 8/10/10 Fri 21/05/10 Fri 30/07/10 Fri 8/10/10 Fri 5/11/10

Task

Milestone

External Tasks

Split

Summary

External Milestone

Progress

Project Summary

Deadline

Page 1

7.4. Project Structure and Reporting The Project Manager, Mr. Van Tran, will overlook the project during the life of the development. He will be assisted with other authorised members in the Management Team as outlined above. This structure is to ensure a robust organisational information governance assurance framework, including: • • • •

Ensuring the organisation has a robust management and accountability framework in place for all aspects of information governance. Ensuring that organisation has a Guardian and an appropriately resourced function to provide confidentiality and expertise. Ensuring that the organisation has appointed (or has access to) an appropriated trained and supported Managers. Ensuring the organisation undertakes an annual information governance self-assessment.

Regular reporting will be carried out on a monthly basis on the Senior Management level and on a fortnight basis on a lower Management level. This is to ensure problems to be identified early and improvement of communication among personnel at different levels in the organisation.

8. CONCLUSION AND RECOMMENDATION

This report has shown careful analysis of the developments of the carpark project undertaken by ACCC at Griffith University, Southbank Campus in Brisbane. It has also explored different options which can be taken by the Corporation in order to maximise the income for the organisation as well as to establishing its presence in Australia, particularly in one of the fastest growing regions in the country such as the Southeast Queensland region. A structured approach in management of the project throughout its whole economic life has also been set up to ensure the financial and operational objectives of the Corporation are met during the specified concession period. Based on careful financial analysis of the project, the Corporation can make a profitable investment in this development. There are also many intangible benefits which the Corporation can achieve in this project such as a well-established reputation and a valuable experience in Australia. The author therefore recommends ACCC to undertake the project. However, careful planning needs to be carried out to ensure a security system is developed during the construction to minimise the number of defaulters, as they can have a severe impact on the income of the Corporation.

9. BASIS OF ESTIMATE The following formulations have been used in this report to derive appropriate calculations which form the basis for subsequence analysis. 9.1. CAPEX =$19,800,000

9.2. OPEX

9.3. DISCOUNT RATE

9.4. INCOME CALCULATION (NH) Note: Number of hours depends on the time during the day: • Day time: Number of hours=8 hours • Evening: Number of hours=4 hours • Night: Number of hours=12 hours

* Note: * shows: • Number of week: 40 during term time and 12 during holiday • Number of days are 5 and 2 respectively which represent weekdays and weekend time and • is different times in a day as before.

9.5. INCOME AND CASH FLOW CALCULATION These calculations are as per other assignments and worksheets with only a minor change in GST and PBIT calculations.

and

For Cash Flow Calculation, there is a minor change at year 10 when there is a cost of refurbishment. Therefore the Present value in Year 10 is: