OBJECTIVES

This assessment item relates to the unit learning outcomes 1 and 2.

Note: Assessment item should be submitted online via “Assessment” in the course Moodle site. Only ONE file (doc, docx, pdf) can be submitted.

QUESTION 1

Various factors influence the demand for residential buildings. Some of these factors are controllable, while some are outside a company's control. Assume you are a manager from a property development company and investigate the demand for residential buildings in your location. You are required to identify five factors, which are outside your company’s control and have a significant impact on the demand for residential buildings in your location.

Here, please (1) identify these five factors, (2) discuss how these factors impact the demand, and (3) provide recommendations for your company to respond to these five factors. (Around 300-350 words per factor)

QUESTION 2

Your company would like to develop a shopping mall in the CBD of a large city. You are invited to prepare a feasibility study report.

(1) What specific tasks will you carry out? Brief description to each task is needed. (350-400 words)

(2) How do tax considerations influence the development process? Sufficient explanations should be provided. (350-400 words)

QUESTION 3

Visit the Australian Bureau of Statistics (ABS) website and search the figures of Australian annual total dwelling units approved (seasonally adjusted), during the period 2015-2017.

(1) What does “seasonally adjusted” mean?

(2) Discuss the change trend of the total dwelling units approved in 2015-2017. (around 200 words)

(3) Provide three possible reasons for the change. (around 300-350 words)

OBJECTIVES

This assessment item relates to the learning outcomes 3 and 6.

Note: Assessment item should be submitted online via “Assessment” in the course Moodle site. Only ONE file (doc, docx, pdf) can be submitted.

QUESTION 1

A company will invest to construct an office building in the urban area. The following assumptions are applied:

· A discount rate is accepted at 7.3%.

· The initial investment includes 150 million dollars at the beginning of the 1st year and 50 million dollars at the beginning of 2nd year.

· The company will rent out offices to earn income. At the beginning of the 3rd year, the company will receive a net annual rent of 10 million dollars, by renting out 70% of all the offices.

· At the beginning of the 4th year, the company will receive a net annual rent of 14 million dollars, by renting out all the offices. The net annual rent will increase by 5% per year, from the beginning of the 5th year.

Now the company has two options:

Option A: at the end of 10th year, the company will sell out the building at the price of 266 million dollars;

Option B: at the beginning of the 11th year, the company will spend 34 million dollars in refurbishing the office building, and will not receive rent income in the whole 11th year; from the beginning of 12th years, the company will receive a net annual rent of 21 million dollars, and the net annual rent will increase by 5% per year in the 13th, 14th, and 15th years; at the end of 15th year, the company will sell out the whole building at the price of 325 million dollars.

(1) Draw the net cash flow diagrams of the two investment options.

(2) Calculate the net present value (NPV) of the two options. You must show the calculation process.

(3) Are the two options viable? Which option is better?

(4) What are the possible problems of using the NPV method to assess the project viability?

(5) Can the internal rate of return (IRR) method be used to evaluate the financial viability of the two options? Provide the reasons?

(6) List all the possible cost factors that should be considered in the project financial viability. Briefly explain why these cost factors should be considered.

QUESTION 2

The value management (VM) approach intends to analyze the functions and costs of a system, supply, equipment, service or facility and improve the value by means of achieving the required functions specified by the clients at the lowest possible overall cost, consistent with requirements for performance. As the construction industry has been consistently working towards satisfaction of clients’ needs, VM has been widely adopted in the construction industry and recognized as an effective method for achieving “best value-for-money” for clients.

Please prepare a report to describe the use of VM in your company/organization. You are required to show:

(1) How is VM adopted in your company? (around 400 words)

(2) In your opinion, how do you enhance the VM practices in your company? (around 500 words)

OBJECTIVES

This assessment item relates to the course learning outcomes 1 to 6.

Note: Assessment item should be submitted online via “Assessment” in the course Moodle site. Only ONE file (doc, docx) can be submitted.

GUIDELINES

You must submit a satisfactory workbook in order to receive a passing grade for this unit. The Workbook is a compulsory component of the course as it supplements the other assessments. You will need to show appropriate use of procedures, discussion, evaluation and calculations in your Workbook answers. Set out your work clearly. Work is to be typed. Handwritten work will only be accepted when associated with sketching, drawing or numerical calculations. Treat each activity as a ‘new chapter’ by starting a new page in the Workbook.

ACTIVITIES

Some workbook activities may take a few weeks to complete so you may need to proceed with your study of the next topic before you finish these activities.

Activity 1

Recently, the exchange rate of the Australian Dollar has fluctuated greatly. Discuss the impact of the exchange rate fluctuation on the demand and supply of the residential property market. (around 400 words)

Activity 2

Discuss the possible reasons why some commercial projects fail, even if they are deemed as feasible in feasibility study reports. (around 400 words)

Activity 3

What is a sensitivity analysis and how is it used in investment decision making? Provide an example to further explain your answer. The example in the course study guide should not be used here (around 400 words).

Activity 4

Explain the term “inflation”. Why is it relevant to infrastructure procurements? (around 400 words)

Activity 5

Indices are used to forecast future movements in building costs. However, they can be criticized as not providing an accurate assessment of these price movements. What are these criticisms? (around 400 words)

Activity 6

Discuss the relationship between value management and risk management. (around 400 words)