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CSE 7008B Construction Management

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Coursework Brief for CSE 7008B Construction Management
Leeds Council Planning and Estates Department is considering the expansion of the runway system
at Leeds airport, which is now benefiting from a considerable increase in passenger transport
following its adoption by charter companies. The costs estimated for this development are listed
below:
£
Land acquisition 100000
Runway Construction 300000
Extension to perimeter fence 32500
Additional runway lighting 41500
Annual maintenance costs 31500
Increased revenue from landing fees 48000
However, a new runway will require a large snowplough, costing £101000. The existing one can be
sold for £18000. The new larger snowplough will add £13500 per annum to the running costs.
The Council estimates that the additional revenue from car-parking and business rate taxes will
amount to £70000 per annum. The Council views the profitability of projects on a ten year horizon
and has a hurdle rate for capital projects set at 10%.
In order to make a decision on the expansion of the runway the Council requires the following advice
from you on:
a) The calculation of the relevant cash flows for the project 10%
b) The calculation of the net present value (NPV) of the project 10%
c) The calculation of the internal rate of return of the project 20%
d) On the basis of your calculations, state whether or not the project should proceed and
justify your decision 20%
e) Comment critically on the level of certainty for the cash flow 20%
f) Summarise and elaborate on the non-quantitative factors affecting the decision 20%
TOTAL 100%
The cumulative present value factors are presented in Appendix B
Please note:
1. The coursework is an individual report of 1,500 words with all the calculation attached. The
submitted coursework has to specify the total number of words of the report. The content
table, references and titles of the appendices are not included in the 1,500 words. If the
submission exceeds the 1,500 words, only the first 1,500 words will be marked.
2. Appendices with no text for explanations can be attached.
3. The submission has the structure of a report and will have an introduction, content and
conclusions.
4. The assumptions considered in the estimating process have to be made clear.
5. What is included in the estimation and what is not included in the estimation will also need
to be made very clear.
6. Information about the risk included in the estimation has to be included.
7. Submission date 14 November 2019.

 
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