SCHOOL OF ARCITECTURE, BUILDING AND DESIGN

BACHELOR OF QUANTITY SURVEYING (HONOURS)

DEVELOPMENT ECONOMIC (QSB 4223)

Submission Date : 21st November 2016

Lecturer : Sr Dianne Kok Hui Wei

Group Members:
Danielle Yoong Li Ping

0317206

Ng Wei Lin

0316302

Chung Hui Ping

0310592

Chang Chow Tong

0314411

Lim Yun Xuan

0316919

Wong Kim Wan

0310908

Khew Sze Hao

0311907

Koay Wei Jia

0310629

PROPOSED DEVELOPMENT OF 26' X 80' D/S SHOP OFFICE LOTS, 22' X 75' D/S TERRACE HOUSES
AND 20' X 60' D/S LOW COST HOUSES IN RAWANG SELANGOR
Q1 Land Size : 10 acres 1 rood 10 pole
Development area @ 60%
Type
Double story shop/office lots
Double storey terrace houses
Double storey Low Cost Houses

0.60
Lot Size
26' x 80'
22' x 75'
20' x 60'

Lot Size (ft)

% of development area
2,080.00
0.15
1,650.00
0.55
1,200.00
0.30

A Calculation
Ai) Land size (sq ft)
1 acres
1 rood
1 pole

43,560.00 sq ft
10,890.00 sq ft
272.25 sq ft

Aii) Total Land Size

10 acres
1 rood
10 pole

Aiii) Total Land Value

Land @ RM15/sq ft

435,600.00
10,890.00
2,722.50
449,212.50

= RM15 x 449,212.50 sq ft

Aiv) Effective Development Area

60% of Land

sq ft
sq ft
sq ft
sq ft

RM 6,738,187.50

269,527.50 sq ft

B Analysis of number of units :

Bi) Double storey shop/office
Intermediate
1 row of shop office with 10 units, thus:
Intermediate
End

26' x 80'

Lot Size
8.00 Unit
1.00 Unit

2,080.00 fs

Corner
add ratio
Total ratio for a block
Average unit ratio
Thus required area for one lot

1.00 Unit
20'/26'

0.77
10.77
1.08
2,240.00

=10.77/10
= 2,080 x 1.08

Development Area @ 15%

No of units

= 15% x 269,527.50 sq ft
= 40,429.13 / 2,240 fs

Thus number of blocks

= 18 units/ 10 units per block

40,429.13
18.05
18.00
1.80
2.00

multiplier
multiplier
multiplier
fs
sq ft
units
units
blocks
blocks

Bii) Double storey terrace houses

Intermediate
1 row of terrace houses with 12 units, thus:
Intermediate
End
Corner
add ratio
Total ratio for a block
Average unit ratio
Thus required area for one lot

22' x 75'

Lot Size

Development Area @ 55%

No of units

= 55% x 269,527.50 sq ft
= 148,240.13 / 1,775 fs

Thus number of blocks

= 83 units/ 12 units per block

1,650.00 fs

10.00 Unit
1.00 Unit
1.00 Unit
= 20'/22'

0.91
12.91
1.08
1,775.00

=10.91/12
= 1,650sq ft x 0.91

148,240.13
83.52
83.00
6.92
7.00

multiplier
multiplier
multiplier
fs
sq ft
units
units
blocks
blocks

Biii) Low Cost houses

Intermediate
1 row of low cost houses with 15 units, thus:
Intermediate
End
Corner
add ratio
Total ratio for a block

20' x 60'

Lot Size

1,200.00 fs

13.00 Unit
1.00 Unit
1.00 Unit
= 15'/20'

0.75 multiplier
15.75 multiplier

Average unit ratio

Thus required area for one lot

=15.75/15
= 1,200sq ft x 1.05

Development Area @ 30%

No of units

= 30% x 269,527.50 sq ft
= 80,858.25 / 1,260 fs

Thus number of blocks

= 64 units/ 15 units per block

1.05 multiplier
1,260.00 fs
80,858.25
64.17
64.00
4.27
5.00

sq ft
units
units
blocks
blocks

PROPOSED DEVELOPMENT OF 26' X 80' D/S SHOP OFFICE LOTS, 22' X 75' D/S
TERRACE HOUSES AND 20' X 60' D/S LOW COST HOUSES IN RAWANG SELANGOR
Summary
Units to be Built
Double Storey Shop Office
Type of Development
Total Units
Total Blocks
Intermediate
End
Corner

Units
18.00
2.00
14.00
2.00
2.00

Double Storey Terrace Houses

Type of Development
Total Units
Total Blocks
Intermediate
End
Corner

Units
83.00
7.00
69.00
7.00
7.00

Low Cost Houses

Type of Development
Total Units
Total Blocks
Intermediate
End
Corner

Units
64.00
5.00
54.00
5.00
5.00

TOTAL UNITS

165.00

PROPOSED DEVELOPMENT OF 26' X 80' D/S SHOP OFFICE LOTS, 22' X 75' D/S TERRACE HOUSES
AND 20' X 60' D/S LOW COST HOUSES IN RAWANG SELANGOR
Gross Development Value
Selling Price

Q2
1

Type
Double Storey Shop Office
Intermediate
End
Corner
Double Storey Terrace Houses
Intermediate
End
Corner
Low Cost Houses
Intermediate
End
Corner
Total GDV before discount
Bumiputra reservation (30%)
less Bumiputra discount (7%)
* Assume the reservation is for all types of development
Total Gross Development Value

Units

GDV

RM 850,000.00
RM 1,000,000.00
RM 1,600,000.00

14
2
2

RM 11,900,000.00
RM 2,000,000.00
RM 3,200,000.00

RM
RM
RM

400,000.00
500,000.00
650,000.00

69
7
7

RM 27,600,000.00
RM 3,500,000.00
RM 4,550,000.00

RM
RM
RM

45,000.00
45,000.00
45,000.00

54
5
5

RM 2,430,000.00
RM
225,000.00
RM
225,000.00
RM 55,630,000.00

RM 16,689,000.00
RM (1,168,230.00)
RM 54,461,770.00

PROPOSED DEVELOPMENT OF 26' X 80' D/S SHOP OFFICE LOTS, 22' X 75' D/S TERRACE HOUSES
AND 20' X 60' D/S LOW COST HOUSES IN RAWANG SELANGOR
Gross Development Cost
Q2
RM
1 Land Cost

10 arces
1 rood
10 pole

435,600.00
10,890.00
2,722.50
449,212.50 RM 15 sq/ft
Total Land Cost

2 Building Cost
2a Double Storey Shop Office
Intermediate
End
Corner
2b Double Storey Terrace Houses
Intermediate
End
Corner
2c Low Cost Houses
Intermediate
End
Corner
Total Building Cost
Earth Works
Infrasturcture costs
3 Administrative Fees
Professional Fees
Administrative Fees
Plan Fees
Contributions & Fees
Advertisement & Marketing
Conversion
Effective development area : 60%
15% commercial
85% residential
Conversion premium - commercial
Conversion premium - residential
Subdivision
Legal Fees
4 Finance Cost
Cost of finance for Construction
5.5% p.a + BLR 6.5%
Interest on loan for purchase of land
2.5% p.a + BLR 6.5%
5 Contingencies

6,738,187.50

14
2
2

Built-up Area
Construction Cost
3,600.00 RM
70.00
3,600.00 RM
80.00
6,500.00 RM
80.00

69
7
7

1,500.00 RM
1,500.00 RM
1,500.00 RM

75.00
85.00
85.00

7,762,500.00
892,500.00
892,500.00

54
5
5

900.00 RM
900.00 RM
900.00 RM

35.00
40.00
40.00

1,701,000.00
180,000.00
180,000.00
16,752,500.00
837,625.00
1,675,250.00
19,265,375.00

5% of building cost
10% of building cost
Total Construction Cost
9% of construction costs.
2% of GDV
RM2,000.00 per unit
2% of construction costs
1% of GDV

165 units

RM
4,042,912.50
RM
606,436.88
RM
3,436,475.63
20% of land value of commercial lots
15% of land value of residential lots
RM1,500.00 per unit
165 units
RM2,500.00 per unit
165 units
Total Administrative Fees

RM

3,528,000.00
576,000.00
1,040,000.00

1,733,883.75
1,089,235.40
330,000.00
385,307.50
544,617.70

121,287.38
515,471.34
247,500.00
412,500.00
5,379,803.07

9,632,687.50

2,311,845.00

6,500,000.00
Total Financing Cost
5% of construction costs

3,501,055.71
5,812,900.71
963,268.75

RM

Total Gross Development Cost

38,159,535.03

3i)Projected Cash Inflow

Item

Description
Sales Projection
1 Double Storey Shop/ Office
2 Double Storey Terrace
3 Double Storey Low Cost
Monthly Total
% of cumulative sales

Week

Amount

30.7%
64.1%
5.2%
100.0%

Q1
M1

16,740,900
34,901,350
2,819,520
54,461,770

M2
10%
30%
22.3%
22.3%

Item

Description

1
2
3
4
5
6
7
8
9
10
11
12
13

ITEM

Signing of Sales and Purchase

Foundation
RC Framework
Wall, Doors & Window Frame
Roofing, Elec Wring & Plumbing
Internal & External Plastering
Sewage Work
Drainage Work
Road Work
Vacant Possession with Electricity &Water
Memorandum of Transfer
Vacant Possession (After 6 months)
Vacant Possession (After 18 months)

Week

Amount
3
9
7
7
8
5
6
2

M4

22.3%

M5

22.3%

M1

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

M2
22.3%
7.4%

M6

7.4%

M4
7.4%
2.5%

M5

2.5%

M8

38.2%

M6

2.5%

M9

M10
10%
20%
50%
18.5%
56.7%

M11

56.7%

M8

5.1%
5.5%

Q1
M12

M13
10%
10%
9.5%
66.2%

56.7%

Q3

M7
15.9%
15.9%
5.1%

Q4

38.2%

2013

Q2
M3

Q3

M7
10%
20%
15.9%
38.2%

22.3%

Q1

M14

66.2%

M10
18.5%
18.5%
11.3%
9.2%
8.1%

5.1%
5.5%

M11

11.3%
9.2%
8.1%

M16
10%
20%
50%
18.5%
84.6%

66.2%

Q4
M9

M15

Q2
M17

84.6%

Q1
M12

M13
9.5%
9.5%
9.5%
13.9%
10.5%
8.4%

11.3%
9.2%
8.1%
7.1%

M14

13.9%
10.5%
8.4%

M15

10.5%
8.4%

13.1%

M18

2 FOUNDATION

10.0%

5,446,177

3 RC. FRAMEWORK

15.0%

8,169,266

4 WALLS, DOORS & WINDOW FRAME

10.0%

5,446,177

5 ROOFING, ELEC WIRING & PLUMBING

10.0%

5,446,177

6 INTERNAL & EXTERNAL PLASTERING

10.0%

5,446,177

7 SEWERAGE WORKS

5.0%

2,723,089

8 DRAINAGE WORKS

5.0%

2,723,089

9 ROADWORKS

5.0%

2,723,089

12.5%

6,807,721

11 MEMORANDUM OF TRANSFER

2.5%

1,361,544

12 VACANT POSSESSION (AFTER 6 MTH)

2.5%

1,361,544

13 VACANT POSSESSION (AFTER 18 MTH)

Total

2.5%

1,361,544
54,461,770

90.8%

2014
M18

13.1%
14.1%

15.3%

M22

30%
9.2%
100.0%

M23

100.0%

M20

18.2%
15.3%

M24

100.0%

Q3

M19
6.1%
6.1%
6.1%
6.1%
6.1%
19.2%

100.0%

Q4
M21

M22
9.2%
9.2%
9.2%
9.2%
9.2%
9.2%
21.2%
19.9%

18.2%
15.3%

M23

21.2%
19.9%

M24

M25

Q1
M26

2015

Q3
M31

2016
Q3
M43

21.2%
50.0%

100.0%
100.0%

2013

5,446,177

90.8%

Q4
M21

100.0%

Q1

10.0%

M20

100.0%

M1
1 SIGNING S&P

Q3

M19
20%
6.1%
90.8%

84.6%

Q2
M17

M16
18.5%
18.5%
18.5%
18.5%
28.9%
13.1%

2014

50.0%

DESCRIPTION OF WORKS

10 VACANT POSSESSION WITH ELECTRICITY

M3

22.3%

3ii ) Monthly Cash Inflow

2013

Q2

22.3%
1,214,497
7.4%
404,832

M2

7.4%
404,832

2014

Q2
M3

7.4%
404,832
2.5%
204,232

M4

M5

2.5%
204,232

2.5%
204,232

Q3
M6
15.9%
865,942
15.9%
865,942
5.1%
416,633

M7

5.1%
416,633
5.5%
297,127

M8

Q4
M9

18.5%
1,007,543
18.5%
1,007,543
5.1%
11.3%
416,633
923,127
5.5%
9.2%
297,127
498,409
8.1%
441,140

M10

11.3%
923,127
9.2%
498,409
8.1%
441,140

M11

11.3%
923,127
9.2%
498,409
8.1%
441,140
7.1%
386,679

Q1
M12
9.5%
517,387
9.5%
517,387
9.5%
776,080
13.9%
756,620
10.5%
571,849
8.4%
457,479

M13

13.9%
756,620
10.5%
571,849
8.4%
457,479

M14

M15

18.5%
1,007,543
18.5%
1,007,543
18.5%
1,511,314
18.5%
1,009,062
10.5%
28.9%
571,849 1,573,945
8.4%
13.1%
457,479
713,449

M16

13.1%
713,449

Q2
M17

2015
Q3

M18

M19

M20

6.1%
332,217
6.1%
332,217
6.1%
498,325
6.1%
333,347
6.1%
332,217
13.1%
19.2%
713,449 1,045,666

14.1%
384,094

15.3%
417,576

18.2%
494,395
15.3%
417,576

18.2%
494,395
15.3%
417,576

Q4
M21
9.2%
501,048
9.2%
501,048
9.2%
751,572
9.2%
501,048
9.2%
501,048
9.2%
501,048
21.2%
578,100
19.9%
543,133

M22

21.2%
578,100
19.9%
543,133

M23

M24

M25

Q1
M26

Q3
M31

2016
Q3
M43

21.2%
578,100

50.0%
1,361,544

50.0%
1,361,544
100.0%
6,807,721
100.0%
1,361,544
100.0%
1,361,544

1,619,330

404,832

609,064

204,232

204,232

2,148,517

713,759

713,759

3,877,762

1,862,676

2,249,355

3,596,801

1,785,948

1,029,327

6,822,856

713,449

1,097,544

3,291,565

911,971

911,971

4,378,046

1,121,232

1,939,644

1,361,544

6,807,721

1,361,544

1,361,544

100.0%
1,361,544
1,361,544

CASH OUTFLOW
2013
ITEM

DESCRIPTION OF WORKS

WEEK

AMOUNT

Q1
1

1 EARTHWORKS

5%

837,625.00

2 FOUNDATION

3 10%

1,675,250.00

3 RC. FRAMEWORK

9 25%

4,188,125.00

4 WALLS, DOORS & WINDOW FRAME

7 15%

2,512,875.00

5 ROOFING, ELEC WIRING & PLUMBING

7 15%

2,512,875.00

2014

Q2
2

558,416.67

558,416.67

Q3

Q4

Q1

10

11

12

465,347.22

465,347.22

465,347.22

465,347.22

465,347.22

465,347.22

465,347.22

465,347.22

358,982.14

358,982.14

358,982.14

358,982.14

358,982.14

358,982.14

Q2

13

14

15

16

358,982.14

358,982.14

358,982.14

358,982.14

358,982.14

358,982.14

358,982.14

358,982.14

314,109.38

314,109.38

314,109.38

314,109.38

314,109.38

Q3
17

18

19

314,109.38

314,109.38

314,109.38

2015
Q1

Q4
20

21

22

23

24

167,525.00

167,525.00

167,525.00

167,525.00

167,525.00

139,604.17

139,604.17

139,604.17

139,604.17

25

26

27

837,625.00
558,416.67

465,347.22

6 INTERNAL & EXTERNAL PLASTERING

8 15%

2,512,875.00

7 SEWERAGE WORKS

5%

837,625.00

8 DRAINAGE WORKS

5%

837,625.00

9 ROADWORKS

2 10%

1,675,250.00

6 10%

1,675,250.00

139,604.17

10 INFRASTRUCTURE WORKS
TOTAL
RETENSION SUM 10%, LIMIT 5%
CUMULATIVE RETENTION SUM
TOTAL PAYMENT

* Work Programme
* Payment

19,265,375.00
963,268.75

1,396,041.67
139,604.17
139,604.17
1,256,437.50

558,416.67
55,841.67
195,445.83
502,575.00

1,023,763.89
102,376.39
297,822.22
921,387.50

465,347.22
46,534.72
344,356.94
418,812.50

465,347.22
46,534.72
390,891.67
418,812.50

465,347.22
46,534.72
437,426.39
418,812.50

824,329.37
82,432.94
519,859.33
741,896.43

824,329.37
82,432.94
602,292.26
741,896.43

1,183,311.51
118,331.15
720,623.41
1,064,980.36

1,183,311.51
118,331.15
838,954.56
1,064,980.36

1,497,420.88
124,314.19
963,268.75
1,373,106.69

139,604.17

837,625.00

837,625.00

1,032,073.66

1,032,073.66

673,091.52

673,091.52

279,208.33
593,317.71

279,208.33
732,921.88

279,208.33
732,921.88

279,208.33
586,337.50

279,208.33
586,337.50

279,208.33
586,337.50

307,129.17

1,005,150.00

837,625.00

1,032,073.66

1,032,073.66

673,091.52

673,091.52

593,317.71

732,921.88

732,921.88

586,337.50

586,337.50

586,337.50

307,129.17

1,005,150.00

837,625.00

Quarter-Yearly Cash Flow

2010
Item

Description

Amount
M1

CASH INFLOW
1 Bank Loan for Land
Repayment
2 Sales Projection

1
2
3
4
5
6
7
8

9
10
11
12

Total Monthly Inflow

CUMULATIVE INFLOW
CASH OUTFLOW
Land Cost
Construction Cost
Professional Fees
Administrative Fees
Plan Fees
Contributions & Fees
Advertisement & Marketing
Conversion Premium
-Commercial
-Residential
Subdivision
Legal Fees
Finance Cost:
Cost of Finance
Interest on Loan for Land

13 Contigencies
Total Monthly Outflow
CUMULATIVE OUTFLOW
SURPLUS / DEFICIT

6,500,000.00
(6,500,000.00)
54,461,770.00

6,500,000.00

54,461,770.00

6,500,000.00
6,500,000.00

6,738,187.50
19,265,375.00
1,733,883.75
1,089,235.40
330,000.00
385,307.50
544,617.70

6,738,187.50

Q1
M2

M3

M4

Q2
M5

M6

M7

Q3
M8

M9

M10

Q4
M11

M12

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

121,287.38
515,471.34
247,500.00
412,500.00
2,311,845.00
3,501,055.71

58,350.93

963,268.75
38,159,535.03
16,302,234.97
42.72%

6,796,538.43
6,796,538.43
(296,538.43)

58,350.93
6,854,889.36
(58,350.93)

58,350.93
6,913,240.29
(58,350.93)

58,350.93
6,971,591.21
(58,350.93)

58,350.93
7,029,942.14
(58,350.93)

58,350.93
7,088,293.07
(58,350.93)

58,350.93
7,146,644.00
(58,350.93)

58,350.93
7,204,994.93
(58,350.93)

58,350.93
7,263,345.86
(58,350.93)

58,350.93
7,321,696.78
(58,350.93)

58,350.93
7,380,047.71
(58,350.93)

58,350.93
7,438,398.64
(58,350.93)

2011
M1

Q1
M2

M3

M4

Q2
M5

M6

M7

Q3
M8

M9

M10

Q4
M11

M12

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93
7,496,749.57
(58,350.93)

58,350.93
7,555,100.50
(58,350.93)

58,350.93
7,613,451.43
(58,350.93)

58,350.93
7,671,802.36
(58,350.93)

58,350.93
7,730,153.28
(58,350.93)

58,350.93
7,788,504.21
(58,350.93)

58,350.93
7,846,855.14
(58,350.93)

58,350.93
7,905,206.07
(58,350.93)

58,350.93
7,963,557.00
(58,350.93)

58,350.93
8,021,907.93
(58,350.93)

58,350.93
8,080,258.85
(58,350.93)

58,350.93
8,138,609.78
(58,350.93)

2012
M1

Q1
M2

M3

M4

Q2
M5

M6

M7

Q3
M8

M9

M10

Q4
M11

M12

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93

58,350.93
8,196,960.71
(58,350.93)

58,350.93
8,255,311.64
(58,350.93)

58,350.93
8,313,662.57
(58,350.93)

58,350.93
8,372,013.50
(58,350.93)

58,350.93
8,430,364.42
(58,350.93)

58,350.93
8,488,715.35
(58,350.93)

58,350.93
8,547,066.28
(58,350.93)

58,350.93
8,605,417.21
(58,350.93)

58,350.93
8,663,768.14
(58,350.93)

58,350.93
8,722,119.07
(58,350.93)

58,350.93
8,780,470.00
(58,350.93)

58,350.93
8,838,820.92
(58,350.93)

2013
M1

Q1
M2

M3

M4

Q2
M5

M6

M7

Q3
M8

M9

M10

Q4
M11

M12

1,619,329.96

404,832.49

609,064.10

204,231.60

204,231.60

2,148,516.80

713,759.00

713,759.00

3,877,761.70

1,862,676.20

2,249,354.80

3,596,801.46

1,619,329.96
8,119,329.96

404,832.49
8,524,162.45

609,064.10
9,133,226.55

204,231.60
9,337,458.15

204,231.60
9,541,689.75

2,148,516.80
11,690,206.55

713,759.00
12,403,965.55

713,759.00
13,117,724.55

3,877,761.70
16,995,486.25

1,862,676.20
18,858,162.45

2,249,354.80
21,107,517.25

3,596,801.46
24,704,318.71

1,256,437.50

502,575.00

921,387.50

418,812.50

418,812.50

418,812.50

741,896.43

741,896.43

1,064,980.36

1,064,980.36

45,384.81

45,384.81

45,384.81

45,384.81

45,384.81

45,384.81

45,384.81

45,384.81

45,384.81

45,384.81

1,373,106.69
346,776.75
45,384.81

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

3,315,287.68
12,154,108.61
(1,695,957.72)

1,519,328.71
13,673,437.32
(1,114,496.22)

681,703.71
16,986,589.68
1,466,813.09

681,703.71
17,668,293.39
32,055.29

1,004,787.64
19,677,868.67
2,872,974.06

1,327,871.57
21,005,740.25
534,804.63

1,327,871.57
22,333,611.82
921,483.23

1,982,774.66
24,316,386.48
1,614,026.80

1,040,330.25
45,384.81
330,000.00
385,307.50
22,692.40
121,287.38
515,471.34
247,500.00
412,500.00

765,466.21
14,438,903.53
(156,402.11)

1,184,278.71
15,623,182.25
(980,047.11)

681,703.71
16,304,885.96
(477,472.11)

1,004,787.64
18,673,081.03
(291,028.64)

2014
M13

Q1
M14

M15

M16

Q2
M17

M18

M19

Q3
M20

M21

M22

Q4
M23

M24

1,785,947.60

1,029,327.45

6,822,856.18

713,449.20

1,097,543.50

3,291,564.58

911,971.10

911,971.10

4,378,046.20

1,121,232.38

1,939,643.75

1,361,544.25

1,785,947.60
26,490,266.31

1,029,327.45
27,519,593.76

6,822,856.18
34,342,449.94

713,449.20
35,055,899.14

1,097,543.50
36,153,442.64

3,291,564.58
39,445,007.22

911,971.10
40,356,978.32

911,971.10
41,268,949.42

4,378,046.20
45,646,995.62

1,121,232.38
46,768,228.00

1,939,643.75
48,707,871.75

1,361,544.25
50,069,416.00

1,032,073.66

1,032,073.66

673,091.52

673,091.52

593,317.71

732,921.88

732,921.88

586,337.50

586,337.50

586,337.50

307,129.17

45,384.81

45,384.81

45,384.81

45,384.81

45,384.81

45,384.81

45,384.81

45,384.81

45,384.81

45,384.81

45,384.81

1,005,150.00
346,776.75
45,384.81

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

22,692.40

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

96,326.88
58,350.93

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

40,136.20

856,208.92
29,634,490.61
241,334.58

995,813.09
30,630,303.70
2,295,751.49

849,228.71
32,475,345.50
62,742.39

849,228.71
33,324,574.22
3,528,817.49

849,228.71
34,173,802.93
272,003.67

570,020.38
34,743,823.31
1,369,623.37

1,294,964.87
25,611,351.35
490,982.73

1,294,964.87
26,906,316.22
(265,637.42)

935,982.73
27,842,298.96
5,886,873.45

935,982.73
28,778,281.69
(222,533.53)

995,813.09
31,626,116.79
(83,841.99)

1,614,817.96
36,358,641.27
(253,273.71)

2015
M25

Q1
M26

M27

Q2
M29

M28

M30

M31

Q3
M32

M33

Q4
M35

M34

M36

(6,500,000.00)
6,807,721.25

1,361,544.25

1,361,544.25

307,721.25
50,377,137.25

1,361,544.25
51,738,681.50

51,738,681.50

1,361,544.25

837,625.00

481,634.38

37,677,900.65
-

37,677,900.65
-

37,677,900.65
-

37,677,900.65
-

37,677,900.65
1,361,544.25

37,677,900.65
-

37,677,900.65
-

37,677,900.65
-

37,677,900.65
-

37,677,900.65
-

837,625.00
37,196,266.27
(529,903.75)

481,634.38
37,677,900.65
879,909.88

2016
Q1
M38

M37

M39

Q2
M41

M40

M42

M43

Q3
M44

M45

Q4
M47

M46

M48

1,361,544.25

1,361,544.25

481,634.38

37,677,900.65
-

37,677,900.65
-

37,677,900.65
-

37,677,900.65
-

37,677,900.65
-

37,677,900.65
-

37,677,900.65
1,361,544.25

37,677,900.65
-

37,677,900.65
-

37,677,900.65
-

37,677,900.65
-

481,634.38
38,159,535.02
(481,634.38)

Q4. With a twelve percent (12%) cost of capital, tabulate and calculate the NPV of the
project on a quarter-yearly basis. Give an overall analysis and comment on the viability
of the project.
Year

Period, n Quarter Quarterly Inflow Quarterly Outflow Net Cash Flow

-3.00
-2.75
-2.50
-2.25
-2.00
-1.75
-1.50
-1.25
-1.00
-0.75
-0.50
-0.25
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
2.75
3.00
3.25
3.50
3.75
4.00
TOTAL

2010

2011

2012

2013

2014

2015

2016

Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4

6,500,000.00
2,633,226.58
2,556,980.00
5,305,279.70
7,708,832.46
9,638,131.23
5,102,557.28
6,201,988.40
4,422,420.38
1,669,265.50
1,361,544.25
1,361,544.25
54,461,770.00

6,913,240.29
175,052.79
175,052.79
175,052.79
175,052.79
175,052.79
175,052.79
175,052.79
175,052.79
175,052.79
175,052.79
175,052.79
5,600,082.61
2,547,686.14
2,691,279.00
4,638,517.80
3,525,912.48
2,788,004.74
2,694,270.52
3,034,067.06
1,319,259.38
481,634.38
38,159,535.03

(413,240.29)
(175,052.79)
(175,052.79)
(175,052.79)
(175,052.79)
(175,052.79)
(175,052.79)
(175,052.79)
(175,052.79)
(175,052.79)
(175,052.79)
(175,052.79)
(2,966,856.07)
9,293.86
2,614,000.70
3,070,314.66
6,112,218.75
2,314,552.54
3,507,717.88
1,388,353.32
350,006.12
1,361,544.25
1,361,544.25
(481,634.38)
16,302,234.97

PV Factor @ Discounted Cash Flow

12%
(NPV)
1.405
(580,602.61)
1.366
(239,122.11)
1.328
(232,470.11)
1.290
(225,818.10)
1.254
(219,516.20)
1.219
(213,389.35)
1.185
(207,437.56)
1.152
(201,660.81)
1.120
(196,059.12)
1.089
(190,632.49)
1.058
(185,205.85)
1.029
(180,129.32)
0.972
(2,883,784.10)
0.945
8,782.70
0.919
2,402,266.64
0.893
2,741,790.99
0.868
5,305,405.88
0.844
1,953,482.34
0.820
2,876,328.66
0.797
1,106,517.60
0.775
271,254.74
0.753
0.732
996,650.39
0.712
0.692
0.673
0.654
890,449.94
0.636
(306,319.47)
12,490,782.69

Table 4.0 Net Present Value (NPV) of the Project on a Quarter-Yearly Basis
The project is viable due to its positive net present value of RM 12,490,782.69. It
means that the investor is paying less than what the development is worth, indicating a better
return in the future. By paying RM 12,490,782.69 today, the project is able to generate a
future cash flow of

RM 16,302,234.97 upon the completion of the project. The higher the

positive NPV, the more attractive the investment will be.

On the other hand, return on Investment (ROI) exceeds development costs by 23.77%,
indicating a net gain on the investment. Hence, this development is forecasted to generate a
profitability of 23.77%. However, ROI does not take into account of time period during
which the investment takes place as well as the differences in value of money due to
inflation.

When rate of return is taken into consideration, this investment is able to generate
42.72% of profit gained on the investment. With 42.72% rate of return, this means that the
investor is able to recover his initial cost of investment of RM 38,159,535.03 in 2 years and 4
months time.
Form Table 4.0, there is cash deficits from year 2010 to 2012 due to the purchase and
financing of the land purchase while there arent any developments on the land itself. Also,
there is a huge amount of capital outflow on the first quarter of 2013 when development order
has been granted and construction is commenced. Hence, external funding is required by the
client to finance the development cost during these periods. The cash flows then become
positive when there is cash inflows by selling off the units while the construction proceeds.
By that time, the client is able to finance the development cost by using the cash inflows from
sales and paying back the bank interest rate for borrowings at the same time.

Q5. Comment on the cash flow and viability of the project if it is based on a Build-then
Sell concept. (Assume 100% sales on completion of construction).

Introduction

In April 2007, Malaysia government implemented and introduced Build Then Sell
system which was proposed by previous Prime Minister of Malaysia, Tun Abdullah Bin Ahmad
Badawi. The BTS system can prevent the problem of abandoned projects where this system
can promote better quality of house and provide greater protection for home buyers. Developers
are required to build and complete their project before selling the completed house to home
buyers upon Certificate of Compliance and Completion (CCC).

There have two types of build then sell system applied such as, completed build then
sell 0:100 and partial build then sell 10:90. Partial build then sell is implemented in Malaysia
since 1st December 2007. The home buyers will pay 10% deposit upon signing the Sale and
Purchase Agreement with the developer and the balance of 90% is made upon completion of
the house with CCC. Housing Development (Control and Licensing) Act 1996 and Regulation
was also amended to accommodate with this new system delivered.

Comparison of BTS and STB

1. Sell Then Build Concept

The sell then build system required the home buyer to pay 10% of the purchase price
upon the signing of the Sale and Purchase Agreement (SPA) and the 90% is progressively paid
to the developer in accordance to the construction stage. In this system, the developers are
financed by the home buyer where developer do not need to get more loan to finance his
projects. The home buyers have to get loan from bank to pay to developer for the property that
is incomplete. This may have disadvantages for the home buyer because it will cause loss to
home buyer when the project is abandoned.

2. Build Then Sell Concept

The build then sell concept implemented whereby the developer will not finance by the
sales from home buyers. Developer have to obtain financing aid from the bank to finance the
projects up to completion of projects. Bank sector will play a major role in providing finance
up to the completion stage of projects and increasing the banks risk exposure. From
conventional point of view, the bank prefers to lend money to individual buyer rather than
lending to developer in one parcel.

Compare of BTS and STB

Items

Build Then Sell

Sell Then Build

Percentage of project

Low

High

Required more finance from

Low finance required as

bank or capital of company

most of the finance come

abandoned
Developer Finance Factor

from home buyer

Satisfactory of home buyer

Satisfied with final products

Not satisfied with final

with final products

as products will be rectified

products due to poor

before sell

workmanship

Requirement of Build Then Sell

There have few criteria that require developer to fulfill with the implementing of Build Then
Sell concept. As in this concept the developer has to base on their financial capital and capacity
to carry out project on their own without financing from home buyers. The developer has to
apply more financing from financial institution or their own capital or both to cover all the cost
in projects. On the other hand, there is no progressive payment from home buyer resulting the
developers required higher bridging loans to finance projects and causing the financial
institution or bank increase risk which mean increase the loan pricing.

When apply financing loan and approve of loan the developer and banker have to understand
the housing market before embarking into any development and would cautions into

committing speculative projects. In this system, the developers and bankers have to bear the
overall development risks. Besides, developer have difficulties in applying financing loan
under bridging finance because the banks will only approve to the experienced developers who
have good track record and adequate financial strength. The smaller developer has
disadvantages on this system where they are weak in financial and track record to carry on the
projects.

Based on Assignment Question No. 5

For a developer to successfully implement the build-then-sell method, it is crucial for

them to have a strong cash flow and financial position so that they can fund their operations. If
they fail to generate positive cash flow, they may need to rely on external financing such as
short term debts, which may not sustain the firm in the long term. Borrowing money from
banks or financial institutions come with an interest that is to be paid every month. Based on
the quarterly cash flow produced, without any inflow from the sales, the cash flow throughout
the entire development of 5 years will have a deficit net cash flow of approximately RM 38
million. This amount does not include the interest that will be incurred if the developer has to
borrow more money form external funds.

Thus the developer needs to have or borrow this amount of money in order to proceed
with the development. In the event the developer is not able to pay the contractor for the interim
payment, the progress of the work may be affect or if the developer decides to cut cost due to
the low level of cash, the quality of the building will be affected. A building with of low quality
will eventually not attract the attention of the potential buyers.

Since all units are sold out completely upon completion of the construction, there will
be a large amount of cash inflow. The developer can then pay off their debt from the bank or
other external funds and can earn their profit for the development. However, as compared to
STB, the gross profit from the development may not be as much for BTS as more financing
cost for the borrowing will be incurred which reduces the net cash flow. Thus the development
is still viable to continue provided that the developer fulfills the requirement; however not as
viable as compared to STB.