The Environment and Cost Benefit Analysis in Feasibility Studies Dr.

The Environment and Cost Benefit Analysis in Feasibility Studies Dr. John M. Hutcheson, Senior Lecturer, School of Building, the University of New South Wales, Kensington, NSW. , Australia Summarized by: Kamal Al Dihan ARE 512

Outline Introduction Reason for the Research A Framework The Model Sensitivity Analysis Summary & Conclusion

Introduction Standard format was used to highlight the :impact of the following Taxation, Interest, Profit, and Risk Environmental changes were also analyzed such :as Social, Economic, Political, and Physical aspects

Reason for the Research 1. Reducing The Uncertainty Energy Supply Government Fiscal Policy International Economic, and Political Changes 2. make Predict future trends and to effective decisions

A Framework Market, Financial, and Physical

The Model A. B. C. D. E. F. Feasibility stage Design stage Pre-construction stage Construction stage Handover & maintenance stage Sale or management stage

Time Sequence Model OH Overhead L Land Cost C Final Contract Price S Sales T3 Contract Duration I Interest S1 I S2 COSTS C S3 L S4 OH T1 T2 T3 T4 T5 PROFIT )P( S5 S6 TAX TIME Interest Calculation (Approximate) P I {OH (T1 T2 T3 T4) L-T2/10 LT3 LT4 C (T4)/2 (C L OH I) T5/2}

Sensitivity Analysis Overhead (OH) Timing Pre-Construction, and Construction Cost (C)

Revenue (s) Current Prices / Income Future Prices / Income Patterns of Sales / Income

Tax and Profit Profit Cash Flows Interest

Environmental Impacts Political Action Social Change

Political Action New Taxes, Development Regulations, New Philosophies, Narrow or Overwhelming Parliamentary , Fiscal Measures, Majorities, Grants, Public Expenditure, and Rental Freezes., and Safety rules and labor laws, Subsidies, Decentralization, Discriminatory Taxation, Health Regulations,

Social Change Demography, Work force, Household formation, Migration, Natural population growth, and Other social elements

Risk Assessment Time and Place , Location location, and location Continuing Evaluation

Impact on the Environment Accountability Cost Benefit Analysis Presentation Project Selection

Computers Format / Programs Holding periods, Financing terms, Taxation and Rate of return.

Construction Software Project Accounting, Analytics and Reporting, Customization, Distribution, E-commerce, Field Service Management, and Financial Management, Accounting, Estimating, Procurement, Project Management, Reporting & Other Tools, Service Management, Estimating, and Project Management Estimating Software, Bidding Software, Scheduling Software, Document Management Software, and Accounting Construction Accounting, Job Management, Revenue & Billing, Payroll, Reporting, Inventory, Document Management, Estimating

Summary Sensitivity Format

Sensitivity Revenue Assessment (Pattern of Income) Interest Calculation Risk Timing of Cash Flows Project Selection Taxation, and Environmental Impacts

Format Used discounted cash flow (DCF) methods NPV to assist the feasibility of project Rate of Return for quick assessment (real estate).

Conclusions Risk Format The Environment

Risk Most professionals underestimate the sensitivity of critical elements of project profitability studies especially .for neglected sensitive areas

Format Simple Format Cost Benefits Computers

The Environment Environment and Benefit Analysis Probability Analysis

The Future Educate and re-educate developers and their advisors to understand the rationale behind feasibility studies. Use the best available technology to develop the used model in order to depict all the neglected internal and external elements impacting projects.

Thank you