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    CE 403 - Construction Management Assignment No.1: Major Activity Value (Rs. Million) Months

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    Mohamed
    The document provides information about a construction contract worth Rs. 240 million taking place over 9 months plus a 3 month defects liability period. It includes a schedule of major construction activities and their values totaling the contract sum. Payments will be made as lump sums for completed activities each month, with 1/6 retained as retention until months 9 and 12. A Rs. 60 million mobilization advance is provided upfront and deducted from payments. The contractor assumes a 20% profit margin. Students are asked to (1) prepare a cash flow statement for the contract making any assumptions, and (2) calculate the minimum finance charges if the contractor borrows at 3% monthly interest to maintain positive cash flow.

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    CE 403 - Construction Management Assignment No.1: Major Activity Value (Rs. Million) Months

    Uploaded by

    Mohamed
    5 views1 page
    The document provides information about a construction contract worth Rs. 240 million taking place over 9 months plus a 3 month defects liability period. It includes a schedule of major construction activities and their values totaling the contract sum. Payments will be made as lump sums for completed activities each month, with 1/6 retained as retention until months 9 and 12. A Rs. 60 million mobilization advance is provided upfront and deducted from payments. The contractor assumes a 20% profit margin. Students are asked to (1) prepare a cash flow statement for the contract making any assumptions, and (2) calculate the minimum finance charges if the contractor borrows at 3% monthly interest to maintain positive cash flow.

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    Construction Management

    Original Title

    Assignment 1

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    The document provides information about a construction contract worth Rs. 240 million taking place over 9 months plus a 3 month defects liability period. It includes a schedule of major construction activities and their values totaling the contract sum. Payments will be made as lump sums for completed activities each month, with 1/6 retained as retention until months 9 and 12. A Rs. 60 million mobilization advance is provided upfront and deducted from payments. The contractor assumes a 20% profit margin. Students are asked to (1) prepare a cash flow statement for the contract making any assumptions, and (2) calculate the minimum finance charges if the contractor borrows at 3% monthly interest to maintain positive cash flow.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    5 views1 page

    CE 403 - Construction Management Assignment No.1: Major Activity Value (Rs. Million) Months

    Uploaded by

    Mohamed
    The document provides information about a construction contract worth Rs. 240 million taking place over 9 months plus a 3 month defects liability period. It includes a schedule of major construction activities and their values totaling the contract sum. Payments will be made as lump sums for completed activities each month, with 1/6 retained as retention until months 9 and 12. A Rs. 60 million mobilization advance is provided upfront and deducted from payments. The contractor assumes a 20% profit margin. Students are asked to (1) prepare a cash flow statement for the contract making any assumptions, and (2) calculate the minimum finance charges if the contractor borrows at 3% monthly interest to maintain positive cash flow.

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    © All Rights Reserved
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    CE 403 - Construction Management

    Assignment No.1
    A civil engineering contractor has undertaken to carry out a project for a contract sum
    of Rs. 240 million. The contract duration is 9 months and the defects liability period is
    3 months. The construction schedule and the value of each of the major activities are as
    given in the following figure:

    Major
    Activity

    Months

    Value
    (Rs. million)
    1

    Activity - A
    Activity - B
    Activity - C
    Activity - D
    Activity - E
    Activity - F

    48
    60
    54
    36
    30
    12
    240

    According to the contract, payments will be made as lump sum amounts for each
    completed major activity after a period of 30 days. An amount equal to 1/6th of the
    above lump sum amounts for each major activity will be deducted as retention money
    from each lump sum payment upto a maximum of 10% of the contract sum. 50% of the
    retention money will be paid at the end of the contract period (9th month) and the
    balance 50% will be paid at the end of the defects liability period (12 th month). A
    mobilization advance of Rs. 60 million is paid to the contractor at the beginning of the
    contract. The mobilization advance will be deducted from the 1st and 3rd lump sum
    payments at the rate of 50%. Assume that the contractor has included a profit margin of
    20% on top of his total cost in the value of the contract sum.
    (i) Using the above data prepare a cash-flow statement for the above contract. State
    any assumptions made. (80% marks)

    (ii) If the contractor needs to borrow money from the bank at an interest rate of 3%
    per month, what would be the minimum total finance charge incurred by the
    contractor to maintain positive cash flow. (20% marks)

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