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MBA641 Project Feasibility Study and Timeline Assessment 2 Answer

Assessment Information 2

Subject Code: MBA641

Subject Name:Strategic Project Management

Assessment Title: Length:

Assessment 2 – Project Feasibility Study and Timeline 2000 words (+/- 10% allowable range)

Weighting:40%

Your task

You are required to read the following case study and prepare a Project Feasibility Study and Timeline based on the information contained in the case study.

Assessment Description

This assessment is a case study regarding a Residential Duplex Development Project. In this case study you own a real estate development business with cash reserves for funding development projects of $800,000. Your current business project is to successfully complete, within a nine-month timeframe, a small residential development in a regional centre (a place that is not a suburb in a capital city) in the state in which you reside.

This will require you to locate:

  1. A regional centre in your state with a growing population that currently has more than 10,000 residents;
  2. A block of land for sale that is large enough to construct a duplex (two attached residences) based on the minimum land allotment size prescribed by the local council and that is selling for a price you can afford;
  3. A builder that will construct a duplex on your chosen block of land for a price you can afford.

Your primary objective is to create as much equity as possible (value of your constructed duplex less all project costs) and as much income as possible (rent collected from tenanted duplex less all holding costs).

Your assessment task is to prepare and submit a Project Feasibility Study and Project

Timeline. Templates for both of these will be made available to you but you are welcome to modify them or use your own templates if you wish. You are expected to source real statistics and information rather than providing estimates. This can be achieved by conducting internet research of relevant websites and emailing or telephoning relevant people and organisations.

You will also be required to prepare an explanation supported by evidence of where you sourced each item of information in your assessment submission from. How you do this is entirely up to you.

You may prepare a separate report based on each of the headings in the project feasibility study

or

You may include the information in your project feasibility study and project timeline as an appendix.

Your explanation report cannot exceed 2,000 words and it must also include:

  • Constraints and goals
  • Macro-environment business drivers (such as economic, competitive, resourcing and
  • demographic factors taken into account when determining feasibility)
  • Micro-environment business drivers (such as technical /internal expertise, time pressures, and other people-related considerations)

Answer

The Report is presented in two sections the Project feasibility report and Project time line for the Residential Duplex Development Project. The project involves buying a block of land for sale in the regional centre of state and getting constructed a duplex on the chosen land in the affordable price.

PROJECT FEASIBILITY STUDY

Project Feasibility Study is an activity which is carried out to ascertain the viability of the project. The study is carried out to get the assurance that the project is legally and technically feasible and is economically profitable to the stakeholders.  This helps in making a decision on if the project is worth the investment (Simplilearn, 2019). The project under consideration is    the development of the residential duplex. The objective of this feasibility study report is to assess if the project is able to create the equity value of $150,000 (value of your constructed duplex less all project costs) or more if owned and  net monthly rental income of $1,000(rent collected from tenanted duplex less all holding costs) if rented out.

Constraints and Goals

The constraints to the project are the limitations that are to be kept in mind while implementing the project. The constraints arte :

  • The budget available for development of thee project is $800,000. The Project is to be completed with the available fund and it should not increase the given fund.
  • The time line of the project is fixed at 9 months and cannot increase this time. The time line includes procurement of the land, construction of duplex and making it available to use.

Thus the Goals of the project are to complete the development of the duplex house with the following requirements:

  • The regional centre where the residential house is to be made should be the regional centre where the population is more than 10,000
  • The black f land should sufficient and large enough to make the Duplex
  • The budget of the project should not increase $800,000 including the cost of land, construction and other related expenses
  • The project should create as much equity as possible for the stakeholder/owner. Equity value of more than $100,000 and the income of more $1000 is acceptable.
  • The project should be completed within 9 months

About the Location

The place identified for the project is Mandalay Circuit, Lot 2345, ABC Homes, Beveridge (Madalayliving.com).  The area of the land is 354.00 M.sq. It can be made into 3 Bedrooms, 2 bathrooms and two parking.

Stage 23B - Release, Lot 2345 Mandalay Circuit, Beveridge

Lot Area :354m²

Frontage :12.5m

Depth :28.29m

The seller of the land is Newfield Real Estate Pty Ltd and the builder is Australian Building Company.

Price of the Estate

The cost/Price of the estate includes the cost of the land, cost of construction and the cost of development fees paid to the state. The Residential land and house at the above address and with the above specifications is available at the package deal of $ 442,800 excluding the taxes and taxes and development charges (Appendix 1).

The Beveridge  rural north area comprising the residential areas is governed by Whittlesea council. According to the Beveridge Central Precinct Structure Plan 2018, the dual occupancies Duplexes supported size is from less than 300MSq. to the size of more than 600 Msq.  The land chosen above is 354Msq and is hence the supported lot size by the council (Beveridge Central, 2018, pg. 15).

Project Feasibility Study





1. Land Information


2. Purchase Information






Land Address:
Stage 23B - Release, Lot 2345 Mandalay Circuit

Land Price:
$230,000





Suburb/Town:
Beveridge

Builder Name:
Australian Building Company





Land Size:
354Msq.

Duplex Construction Costs:
$2,12,800





4. Duplex Information


3. Local Council Information






Duplex Estimated Value:
$5,52,500.00

Local Council Name:
Whittlesea Coucil





Monthly Rental Income:
$1,400

Minimum Land Allotment Size:
300Msq.





Monthly Agent Fees:
$120








Monthly Landlord Insurance:
$100








5. Project Results









Equity Value =
Duplex Value of $552500
less
$ 4,42,800.00
$1,09,700.00





Net Monthly Rental Income =
Gross Monthly Rent of $1400
less
$220
$1,180


*Insurance cost has been retrieved from the above website: finder.com.au, 2019

*Rental Income of the house is estimated with the help of online information available at  realestate.com.au , 2019.

Macro Economic Factors

Australia is facing slow economic growth currently. The property demands are less in market because of less number of takers. However there are always two sides of any incident. Since the market is slow the people who want to buy the estate for personal use and long term use can get it at cheap prices and hence at a lesser value. The economists view that the property prices might bottom out by the end of the year and will be steady in coming few years, thus a good time for buyers (Hobday & McDonald, 2019). CBRE in its Real Estate Market Outlook Report 2019 mentions that this time to make the dream of a great house in Australia true (CBRE, 2019) as the property rates had gone very high and the correction was inexorable. Net change in real estate prices in Melbourne is less than other parts of the country and the buying And selling of properties her is still taking place.

In order to boost the real estate market, the grant of $20,000 is made available to first home buyers in Mandalay. Also the stamp duty saving is available for all the houses/properties that cost upto $600,000 given conditions (mandalayliving.com.au, 2019). Thus the above concerned property is free from stamp duty, thus increasing the net worth of the property as compared to other similar properties.

Micro Economic Factors

The location of the property is such that it is surrounded by nature and large landscapes making it the best place to peaceful living.  The area has Community Park and related recreational facilities.

The construction company, Australian Builder is a new company that has the objective of providing Australians with affordable houses of their own choice. The organisation aims at providing unique experience to the people in terms of beautiful homes that gives value for money. The homes are equipped with all modern requirements that suit the lifestyles of the new age generations at affordable prices. The company provides services for variety of house like single story or double story and according to the family specific needs (ABC homes, 2019). It is expected that the construction will complete the work on time and will provide good quality at reasonable rates.

Since the deal is the package of land and construction of house, it is expected that the time required in closing the deals and implementing the work will be less. Since there will be dealings with less no of people/contractors the deadline can be met easily.

Project feasibility conclusion

The project considered to be feasible and acceptable if it can achieve the given goals within the available constraints (Marker, 2019). It is observed from the above data collection and analysis that the project is feasible and economically viable. The total cost of the project given the grant and subsidies by the council and the reduced property prices in the country is $442,800 which is less than the available fund of $800,000. Thus the project can be easily completed with the available resources.

The net worth created by the Project as an equity investment is about $109,700 which is more than the acceptable value of $100,000. Also the net monthly rental of the house is $1180 which is more than the acceptable limit of $1000 per month.

Thus the project is economically viable and profitable and hence should be accepted.

PROJECT TIMELINE

Project Timeline is the list of events required to complete the project arranged chronologically. Thus the activities to be performed for the project are put in line with dates and duration of the activity. The timelines helps in checking and managing the progress of the project. Thus the timeline is very important as it helps in keeping the project on track and allots resources accordingly so the project is completed on time (Stepanov, 2017).

The main components of the project timeline chart are:

  • List of tasks required to complete the project
  • The time and date of the start of the task
  • Duration of the task
  • Dependency of the tasks on each other

The tasks with the start time, duration and precedence for the project to be completed are as follows:

S.no.
Task
*Start time
Duration
1
Settlement period of Land Purchase
19-08-19
6 weeks
 2.ee 
Approval from the Council
e30-09-19
1 week
3.
Duplex construction civil design (Approval)
7-10-19
1 week
4.
Duplex construction begins: Procurement of the material
1e4-10-19
2 weeks
5.
Laying of the foundation
28-10-19
e2 weeks
6.
Constructing the walls
11-11-19
6 weeks
7.e
Laying/setting of the roof
23-12-19
4 weeks
8.
Flooring
20-01-2020
4weeks
9.
Electrical fittings
20-01-2020
2 weeks
10.e
Plumbing work
20-01-2020
2weeks
11.
Painting and finishing work
17-02-2020
5 weeks
12.
Furniture and fixtures
e23-03-2020
4 weeks
13.
Inspection/Checking of the work done
20-04-2020
e1 week
14.
Final touching and completion
27-04-2020
1 week
15.
Contingency
04-04-2020
1 weeks
15 .e
Handing over the project
11-05-2020
Final Date of Project completion 25-May-2020


*Notee: It is assumed that the project starts from Monday, 19 August 2019

The graphical representation of the project timeline in the form of bar graph is presented as under. The Gantt Chart are the tools that are used to monitor the progress of the project (Projectmanager.com, 2019) The timeline shows that the project will be completed on time. The contingency period of 1 week is kept in order to meet the unforeseen circumstances that might result in delay of the project.

eeee graphical representation of the project timeline

Assumptions:

Lack eof availability of data has led to following assumptions in the completion of the project:

  • The price of land and construction is divided on the basis of assumption considering the land rates available on websites in Biveridge area.
  • It is assumed that the material will be available as and when required and there will be  no lead time required in procurement of the material.
  • The timelines for completion of each task are assumed on the basis of the efforts required and general timelines as available online for construction projects.


Attachements:

Attached to the project report are the Excel sheets of the project Feasibility Report and project timeline.eee 

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