Bài giảng quản lý kinh doanh xây dựng (7 chương)

Bài giảng quản lý kinh doanh xây dựng (7 chương) CHƯƠNG 1 TỔ CHỨC DOANH NGHIỆP XÂY DỰNG VÀ CÁC VẤN ĐỀ PHÁP LÝ CHAPTER 2 CONSTRUCTION BUSINESS STRATEGY STRATEGIC PLANNING Chapter 3 MARKETING IN CONSTRUCTION BUSINESS Chapter 5 RISK MANAGEMENT IN CONSTRUCTION Chapter 6 BIDDING CONTRACTING IN CONSTRUCTION BUSINESS CHAPTER 7 CONSTRUCTION BUSINESS MANAGEMENT

Chapter 7 CONSTRUCTION ECONOMICS

CONSTRUCTION BUSINESS

MANAGEMENT

DR NGUYEN ANH THU

CHAPTER 7CONSTRUCTION BUSINESS

MANAGEMENT

REFERENCE

1 Chapter 17, Construction Methods and Management, S.W

Nunnally, 7 th edition, 2007, Pearson Education

2 Lecture Note from Richard O’Carroll, CEEC

3 Susan Coomer Galbreath, Ph.D., CPA Charles W Caldwell,

D.B.A., CMA Jon A Booker, Ph.D., CPA, CIA Cynthia J

Rooney, Ph.D., CPA.

CHAPTER 10CONTRACTING IN CONSTRUCTION

BUSINESS

1 INTRODUCTION

What do the following Buildings have

in common ?

Source: Richard O’Carroll

‘Hydropolis Underwater’ Resort Hotel - Dubai UAE

Estimated price -$440M

A

‘Burj Dubai’ UAE –

World’s tallest building

Estimated price -$1.5B

828M high

160Nr Levels

B

Source: Richard O’Carroll

‘Ski Dubai’ UAE – World’s

largest indoor snow park

Estimated price -$275M

C

What’s in your mind …

Yes… you spotted it … ‘DUBAI’

“Well not quite what we wanted you to notice”

LOOK AGAIN !!!

$440 Million

$1.5 Billion

Source: Richard O’Carroll

They all needed ‘Budget

Estimates’ to be established

(to ‘Confirm feasibility or otherwise

the Client’s Objective’) “you’re fired !!”

Source: Richard O’Carroll

They all needed to be Measured and Evaluated

(to confirm the

Client’s Budget).

Comparative Cost Planning based on Analysis on previous completed Contracts

CONTRACTING IN CONSTRUCTION

BUSINESS

2 TIME VALUE OF MONEY

• Checking following statements

Correct or Incorrect? (Interest Rate

is 5%/year )

– 98.000 VND = 105.600 VND next year InC (102.900)

Examples

• A contractor wishes to borrow $12,000 to

finance a project The interest rate is 5% per

year If the borrowed amount and the interest

are paid back after 3 yr, what will be the total

amount of the repayment?

F=12,000x(1+0.05)3

=$13,891.50The amount of interest is $1,891.50

Examples

• A contractor want to set aside enough money

today in an interest-bearing account to have

$100,000 in 5 yr from now for the purchase of

a replacement piece of equipment If the

company can receive 8% per year on its

investment, how much should be set aside

now to accrue the money?

F=P(1+i) n

$5.000

Cal Given Formula Equation

) 1 (

1

)

%, ,

F

P F

i A P

) 1 ( 1 ) 1 (

)

%, ,

A

P A

P 

P

F P

n

1 ) 1 (

)

%, ,

A

F A

n n

i i i P

A ( ,i%,n)

P

A P

i

i F

A ( ,i%,n)

F

A F

– Forecasting project income and expenditure

– Determining the amount of work undertake at

one time.

DIRECT COST PAYMENT

7 Cost

Control

CHAPTER 10 CONTRACTING IN CONSTRUCTION

• Depreciation is a major component of fixed costs and

has a significant affect on project cash flow

• Decline in market value of an equipment due to age,

wear, deterioration, and obsolescence.

Ownership

Cost 1 Depreciation

1 Evaluating tax liability

2 Determining hourly equipment cost

Factors in Computing Depreciation

Expense

The fixed asset’s initial cost

Its expected useful life

Straight line Method

depreciation expense for each year of

the asset’s useful life

Example 1

• A machine had a cost of $24,000, salvage value of $2,000 and

useful life of 5 years

• Annual depreciation expense =

Annual depreciation expense = Cost – Salvage value

Example 2

Source: Susan et al.

Example 2

Example 3

• A machine had a cost of $30,000, salvage of

$5,000 and useful life of 6 years Compute

depreciation under the straight line method?

• What is depreciation expense in year 3?

Sum of the years’ digits method

• Find the annual depreciation and book value

at the end of each year for a track loader

having initial cost of $50,000, a salvage value

Sum of the years’ digits method

Units of Production

• This method provides for the same amount of

depreciation expense for each unit produced

or each unit of capacity used by the asset

Example 4

• A machine had a cost of $24,000, salvage

value of $2,000, estimated total hours of

production of 10,000 and annual hours used

of 2,100 hours Compute depreciation for the

period under the units of production method

Example 4

• Depreciation rate per unit =

Cost – Salvage value Estimated hour

= $24,000 - $2,000 = $2.20

10,000 hours

• Annual depreciation expense =

Source: Susan et al.

Example 5

Example 5

Example 5

• A machine had a cost of $30,000, salvage

value of $5,000, estimated total hours in

production of 5,000 and annual hours used of

900 hours Compute the depreciation

expense for the period using the units of

production method

Declining Balance Method

• Provides for a declining periodic expense over

the estimated useful life of the asset

Example 6

Source: Susan et al.

Example 6

Example 6

Source: Susan et al.

Example 7

A machine had a cost of $24,000, salvage value of $2,000 ,

estimated life of five year Compute depreciation

Year Cost Accumula

ted Depreciati on

Book value at beginning

of year

Rate Depreciati

on

Book value at end of year

1 $24,000 $24,000 40% $9,600 $14,400

2 24,000 9,600 14,400 40% 5,760 8,640

Example 8

A machine had a cost of $30,000, salvage value

of $5,000, estimated life of 6 years Compute

depreciation using the double declining

Ownership

Costs 2.Investment (interest) cost

• Investment cost (or interest) represents the

annual cost (converted to an hourly cost) of

the capital invested in a machine

= Value of the equipment x Rate

Costs 3.Insurance cost

• Cost of fire, theft, accident, and liability

insurance

• Set up on annual basis

• Insurance cost per hour

= Annual cost/hour in year

Ownership

Costs 4 Taxes

• Tax cost: cost of property tax and licenses for

the equipment

• Set up on annual basis

• Tax cost per hour

= Annual cost/hour in year

Ownership

Cost 5 Storage Cost

• Storage cost: cost of rent and maintenance for

equipment storage yards and facilities, the

wages of guards and employees involved in

handing equipment, and associated direct

Operating

Costs 1 Fuel Cost

• Hourly Cost of fuel = Fuel/hour x Cost/fuel

Job conditions Estimated from manufacturer’s data/

Contractor cost data

Operating

Costs 1 Fuel Cost

Costs 3 Repair Cost

Lifetime repair cost = Factor x Initial cost less tires

Operating

Costs 3 Repair Cost

Example 9

– Estimated life: 5 years

• Estimate the hourly repair cost for the second

Operating

Costs 4 Tire Cost

Example 11

Example 11

Example 11

4 Equipment Rental

Source: http://www.cat.com/en_US/products/rental.html

4 Equipment Rental

4 Equipment Rental

Source: http://www.cat.com/en_US/products/rental.html

4 Equipment Rental

4 Equipment Rental

Source: http://www.cat.com/en_US/products/rental.html

4 Equipment Rental

– New equipment: 20 to 25 billion US$

– Used equipment: 15 billion US$

– Equipment rental: a like amount

no advance payment, provide skilled worker,

dealer provides all maintenance…

4 Equipment Rental Cost Savings

maintenance, and other ownership costs are

taken into account

Source:

http://www.gradingandexcavation.com/GX/articles/5271.aspx

4 Equipment Rental Operating Advantages

technicians fix it immediately

productivity

4 Equipment Rental Financial advantages

• Renting frees up capital to invest in your

primary business,

• It requires no down payment,

• It increases borrowing capacity since

equipment does not appear on your balance

sheet,

• It increases your cost control since it can be

difficult to know the true cost of ownership

Source:

http://www.gradingandexcavation.com/GX/articles/5271.aspx

4 Equipment Rental

• SAFETY: rental equipment receives routine

preventative maintenance and is compliant

with all OSHA/ANSI regulations

• Maintenance costs as the primary reason why

there is a trend toward long-term rentals

4 Equipment Rental

Source:

http://www.gradingandexcavation.com/GX/articles/5271.aspx

5 The rent-buy-lease decision

• Leasing involves a commitment for a fixed

period and may include a purchase option in

5 The rent-buy-lease decision

5 The rent-buy-lease decision

5 The rent-buy-lease decision

• BUY advantages:

– Tax incentives (investment credit and depreciation)

– Full control

– Always available

– LOWEST hourly equipment cost if the equipment is

properly maintained and full utilized However,

because of idle, it may be increased.

• RENTING is least expensive with low utilization

• LEASING is intermediate, best when capital is

limited and equipment utilization is high

5 The rent-buy-lease decision

5 The rent-buy-lease decision

• Complex and usually involves juggling

– Resale value of the equipment

• Nothing can replace a detailed assessment of

each business's situation

5 The rent-buy-lease decision

• To identify your best option among renting,

leasing, or buying, answer the questions in the

three decision trees in the following order

– Step 1: Renting Decision Tree

– Step 2: Leasing Decision Tree

– Step 3: Buying Decision Tree

5 The rent-buy-lease decision

Source:http://www.gradingandexcavation.com/GX/Articles/

Simplifying_the_Rent_Lease_Buy_Decisions_5472.aspx

5 The rent-buy-lease decision

5 The rent-buy-lease decision

Assignment 1 (Cont)

• Project has following information:

– Contract: Cost plus 50% of cost

– Payment: at the following month

– Retention: 15% of the payment, and total

retention will be paid after project finished 2

months.

– Because contractor has to borrow money from

bank, each month he has to pay 10% of interest.

Draw the cumulative project cash flow

Assignment 2

equipment’s useful life for each of the following

depreciation methods for the following wheeled

front-end bucket loader:

Assignment 3

second year of operation of a 465hp twin-engine

scraper This equipment will be operated 8 h/day

and 250 days/year in average conditions Use the

sum-of-years’-digits method of depreciation as

the following information:

Assignment 4

A crawler tractor costs $250,000, has an estimated salvage value

of $50,000, and has a 5 year life

1 Find the annual depreciation using the double declining balance

method of depreciation.

2 Sum of the years’ digits method of depreciation

3 Using case 1, calculate the average hourly ownership cost for the

first year of the life if the tractor is operated 2,000 hours during

the year The rate for interest, taxes, and insurance is 12%, and

the rate for storage and miscellaneous costs is 2%.

Assignment 4 (cont)

A crawler tractor costs $250,000, has an estimated salvage value

of $50,000, and has a 5 year life

4 Find the operating cost with following data:

Operating conditions = average Load conditions = average

Rated power= 300hp (224kW)

Assignment 5Determine the probable average cost per hour over the life of the

equipment for ownership and operating a wheel loader under the

following conditions, use the straight line method of depreciation.

Cost of a set of tires = $4,000 Operating conditions = average

Loader horsepower = 120hp (89.5kW)

Rate for interest, tax, insurance, and storage = 15%

Contractor A has awarded the construction contract with

the following information:

• Activities’ details as shown in Table 1 below.

• INDIRECT COST = $2,000/mon

• Contract: Cost plus 30% of cost

• Payment: at the following month

QUIZ 2

DUR (Month) PRE

DIRECT COST ($)

5 Finish paint work 2 3 6,000

PROJECT 1