Mental Wealth – Engineering Management and Project Organization Sample

PART B

Section 4 – Economic and legal Planning

Introduction

This report contains the economic evaluation of the financing of an infrastructure. As the building layout plan is ready it enlists various options which can be used to finance the project. At the same time, it also highlights how the building lay out can help in generating finances at low costs. The report also other highlights other factors while raising finances for a infrastructure project. The report also includes various geo technical issues that the builder may face at the construction phase and what affects they may have on the cost. It also highlights dispute resolution factors, as in such huge projects there are various parties involved .it is common to have conflict of interest and disputes. There is a contractual agreement but dispute resolution techniques are in place to ensure the process of resolution in case of conflict. There are various experts involved and are present at a building site, so it becomes easier to resolve the disputes with their advice. This paper also highlights the role of such experts.

Economic Evaluation of the financing of the infrastructure

Financing project means raising funds to ensure that planning, designing, operations, construction and other activities in the construction goes smoothly. In such projects the outcome of the project i.e. building is considered as mortgage. The forecasted cash inflows that might be generated by the project decided the viability of the project. The cost of capital is also dependent on project assets, copyright and patents, goodwill etc. These financing schemes are the best way to finance the project off balance sheet. The funds raised are in a suitable ratio in the form of equity and debt. The cost of financing can be in the form of interest and profit sharing/dividend. The project is about development of millennium mill. It is a capital intensive project and involves construction of residential, and commercial complexities. The building will be eco-friendly and sustainable. The construction and redevelopment are being handled by Silverton partnership. This project has build, construct operate and transfer and is long term in nature. In such cases the project gestation period is long and the lender is only relying on the cash revenue that the project itself will generate once completed.

Methods of project financing:

Private Investment:

Private finds are the funds that are not included in public funds by the definition of Companies act. Hedge funds or private equity are the examples of this type of funding.   Private investment has limits on requirements and the number of investors that could be involved. Private investments have comparatively less criteria and regulation right from reporting the financials to redemptions. In private investment the risk taking capabilities can also be redefined by the investor depending on the return and viability of the infrastructure project. This also helps when a family with wealth wants to invest their sums by creating a private investment pool. It will only have family members as shareholders and the power won’t go to any outsider. Same applies if a group of friends want to invest in a venture together while enjoying the rights to vote among themselves.

Joint venture

The creation of joint ventures has been considered by some companies which need to enter the market with similar products and services with some of the core activities of a business. In order to gain an edge on the market, organizations must combine resources. At the outset, joint ventures are necessary for various shared investment strategies, which can be considered for a project based on the partnership agreement. This means that some company-wide criteria must be removed from the burden of financial commitments. A party is proposing the share be included in a pool of shared resources to reduce the costs of the process. The business process management team wants to take into account specific experiences and knowledge that would be useful in this aggressive move in a specific way.

Government funding:

This includes any kind of funding given by central, state government or local government authorities. This includes grants, aid and support the projects can get from any government authorized organization. This includes non-monetary benefits also like technical support, international permits, or any benefits that aids the project. Government money have tight rules and as these any such grant is extended by tax payer money, the reporting standards are very high to ensure that the funds are allocated to the activities for which they are given. In addition to direct support, some major reports must be maintained with regard to waiving payment methods fees and costs. To qualify for loans, the company must account for project maintenance and financing costs for the public sector and similar entities. In order to ensure the government can provide financial assistance, consumers demand shadow tariffs, as well as top-up tariffs for financial assistance, which necessitates monitoring of effective PPPs. In order to manage private investors who supplement financially viable projects, risk bearers are provided the assurance so that they can deal with it in a better and more efficient manner.

Co-operative

The financial information of the cooperatives are taken into consideration for a better impact and offers the chance to purchase the efficient technology that was examined for improvements for the business. To this end, for direct members who must deal with themselves and retained surpluses for cooperative business and from outside sources, it is necessary to operate or to acquire money for improvements for business, and for direct members who must deal with themselves, skills are needed. As part of the creation of funds to allow cooperative businesses to remain in business, there has been the defeating of direct allocations for members as well as the supply of capital for long-term investments and deposits, which are necessary for retaining funds through some cooperative techniques. In order for this to be accomplished, the beneficial goals must also be clearly defined (Van Truong and Ninh, 2017). It is necessary to raise funds in order to preserve institutional capital as well as a representation of collective wealth and the inclusion of cooperative wealth within institutional capital.

Layout of Millennium Mills and relation to financing

Ground floor for retail shops

A restaurant, a utility store, and a commercial hub for big and small businesses will occupy the ground floor. On the south side of the land, the restaurant will offer a waterfront view. Commercial and residential parking is available throughout the site’s perimeter. These can bring in more money for the building owner. Digital transformation must take place for those who need analytics and for those who are required to travel to some places that require shopping. Increasing footfalls at the Millennium Mills will result in the building’s proximity rate boosting for traffic and footfalls rather than the footprints of consumers (Ansah and Sorooshian, 2017). Stores can provide more revenue and can be more financially viable if they are rented out to people and acquired money from them.

First Floor and Above

The first category is for recreational and residential areas. Multipurpose halls, gyms, creches, a library, and indoor courts will be available. There will be a gym, spa, and a small community hall at Leisure. The building’s owner will be the owner of the floor. These will produce annual membership fees as well as collections for bookings and events. Leisure will also have a favourable impact on the rent/purchase price of residential apartments in the immediate vicinity of the building. According to the project’s liquidity and working capital requirements, a hybrid approach will be used. The builder will keep a few amenities for himself and can lease others to meet short-term cash needs. This building’s layout and plan suggest that it has a high return potential, which will pique the attention of investors in the project’s funding.

Residential

Renting a location for an acceptable value to be put for upgrades of local and developmental phases of commercial and residential stages for valuation of those areas is a frequent means of making money. The residential blocks in the structure should bring in consistent revenue, which will aid in improved cost financing (Loose more and Lim, 2017). Inflation is also taken into account when determining the price of a property or the general growth in its value over time.

Critical Path

The critical path method has been studied for a typical construction scheduling strategy, as well as for a scheduling procedure that has been described appropriately. The minimum time required for this procedure is for the project to be completed, as well as the probable starting and ending times for various activities based on the allocation. The Millennium Mills development process has a vital route that has been established and considered for this development.

Conclusion

This report is well-written and includes various figures as well as tabular representation for economic evaluation issues. It is necessary to address the cost for the scheme of costs that includes geotechnical costs. In this paper, the techniques of dispute settlement are discussed, as well as the physical environment and the people who work in it. The resolution of disputes should be done in a variety of ways, taking into account the expertise of the professionals, and it should include diverse roles for the plan of constructing the needs.

Geotechnical Issues

Introduction

This section addresses several geotechnical difficulties that necessitate a design plan and expense. This section explains the geotechnical study method as well as the problems that Millennium Mills faced during its development. It also covers financial considerations for geotechnical consequences.

Process of conducting investigation

During some proposed construction projects, engineering geologists or geotechnical engineers conduct geotechnical investigations to determine or repair subsurface conditions, as well as to determine and repair soil foundations and earthworks. The geotechnical investigation of thermal conductivity is required, which includes investigation of subsurface soils and of storage facilities as well. The geophysical methods for gathering data connected to locations, as well as the test for soil samples that need to be obtained, are necessary for gas pipelines and transmission lines. Surface exploration necessitates geology mapping in order to examine some geophysical methods for professional walking that is required for gas and oil pipelines. An environmental geotechnical inquiry includes the analysis of the surface for subsurface exploration, the study of soils for determining incorrect findings on side panes, and the consideration of development skills for the development of negative environmental implications. Several types of infrastructure projects are undertaken by geotechnical engineers, including excavation pits and beach nourishment reclamation. Millennium Mills needs to be analyzed for the respective services for some projected ground conditions, and the structure for development needs to be considered, including the problems. The geotechnical engineering process entails a number of services that must be included for the examination of certain projects in accordance with the tailoring procedure. Some phases of the procedure are as follows:

Data collection

Data collection is required for numerous clients, and it includes topographical maps as well as geology map evaluations for consideration of area geological conditions such as faults, earthquakes, soil formation, and so on. It also contains information on the weather and climate.

Program for geotechnical investigation

The inquiry programme necessitates some procedures for specific requirements, as well as some structure, predicted ground conditions for data gathering, and technical standards that should be applied to a variety of features. In order to assess the mapping and the number of boreholes to be evaluated, some sample and boreholes are required. The soil investigation method necessitates rock drilling and soil sample. For field shear vane tests on undisturbed and disturbed soil samples, the standard penetration test is required. It is also necessary to test the rock samples and send them to laboratories.

Sampling and Field Investigation

Mobilizing and demobilizing geotechnical fields requires the same amount of manpower or work planning to increase drilling capacity. For boreholes, some components of warehousing and transportation have been examined, as well as some paper handling and warehousing for geotechnical laboratories. Drilling, site research, and soil sampling for rotary core drilling, as well as rock sampling for SPT, are all part of the sampling process. CPT considers VST for the ground disturbance analysis, and it necessitates evaluation of strata variations for the collection of conditions related to the foundation bearing capacity, settlement, and liquefaction characteristics. It is necessary to analyze and upgrade CPT results, as well as collect soil samples from the CPT testing area, in order to achieve this.

Laboratory testing

In addition to moisture content and soil percentage, several steps are included for calculating weights of oven-dried soil. As well as examining the index properties, some engineering qualities are being examined in the laboratory in the context of assessing deformation and strength. The point load and uniaxial compression of this test must be analyzed with an engineering property test and a rock strength test. A chemical analysis of groundwater was also conducted to determine pH levels, chloride levels, and sulfate levels.

Reporting Practices

An analysis of various operations is documented in the report of a geotechnical investigation. Despite the need to complete the project description for consideration for a programme of geotechnical investigation and rock sampling, a penetration test must still be performed within the confines of the project description.

Conclusion

Loan default could be caused by geotechnical concerns. It could result in late payments, additional costs, limited financial inflows, or unforeseen building delays. When applying for loans and money, a geotechnical study is required, as are property condition assessment documentation. It’s critical to keep a lender’s risk from becoming a significant problem by thoroughly analysing the situation before making any investment decisions. The lender must evaluate it as part of the due diligence procedure. This analysis will provide a clear picture of the land beneath and around the site, as demonstrated by Cheung et al 2002, and will alert the lender about dangers such as sinkholes, landslides, and liquefaction. If not detected differently, a site may appear to be in excellent condition, yet it may have issues such as settling corrosion or moisture penetration beneath the ground. It also analyses and tests soil samples in the laboratory, which aids geological research in earthquake and natural disaster prediction.

These Geotechnical issues must be considered in this case:

• Because the mill’s site hasn’t been used in a long time and its geotechnical data is out of date, it’s critical to conduct this investigation.
• A new location is being developed, hence there may be no geotechnical report available for that area. It should be completed.
• The report is over 5 years old, and there is a history of similar problems.

Dispute resolution

Disputes must be resolved since they can lead to claims, project inefficiency, and parties’ discontent. Various legal concerns have arisen in the financing of construction projects. Anticipation and resolution of disagreements should be planned in this field. These concerns are more likely to occur due to big capital participation and non or limited recourse loans, according to Coyle and Drahozal (2019). Political factors, exchange rates, geotechnical elements, economic conditions, federal legislation, tax rates, and other variables all influence the Net present value, internal rate of returns, and payback timeframes. The following are the most prevalent techniques for resolving disputes in project financing:

Arbitration

This is the most formal method of out-of-court conflict resolution. An neutral third party is appointed in this case. It’s more akin to a legal system. The party hears both sides’ verdicts, presents witnesses, and renders a decision without involving either party in the final conclusion. The choice is final and cannot be reversed. It is regarded as final.

Mediation

It’s a procedure in which a mediator or a neutral third party is appointed. By listening to both sides, the mediator lends a sympathetic ear to them and even assists them in negotiating a consensual solution to the issue. According to Erie (2019), it assists the parties involved in identifying the problem, developing a set of solutions, and agreeing on the best potential solution through mutual agreement. In this situation, the mediator does not intervene in the content of the conflict, instead offering advice to improve the resolution process. It is non-binding and reversible.

Conciliation

It’s similar to mediation, only the third party is more of an advisor in this scenario. It takes an active role in providing both parties with legal and other data, as well as their strengths and limitations. According to Chong and Zin (2012), it also aids in the creation of a list of probable outcomes for the many options being evaluated. It’s less formal and doesn’t have any legal ramifications. Here conciliator defines the time and the structure of the complete operation.

Case appraisal

Similar to the previous two, this also involves a third party advising both parties involved in the dispute on the next course of action. However, this is typically used when the dispute is not very complex and both parties are looking for quick solutions without resenting any witnesses or lengthy and formal procedures.

Litigation

It is the most popular method of resolving conflicts. Civil litigation entails appearing in front of a court or jury of judges, as well as the lawyer. The process of presenting the witnesses is usually dominated by them. The jury or judges render their decision based on the testimony and arguments presented by both parties. The decision is enforceable and final.

Role of professional in the built environment as an expert witness

An expert witness in the built environment is someone who has a deeper understanding of the built environment. In construction dispute settlement, the role of an expert witness has always been vital. These specialists offer their perspectives and assist decision-makers in comprehending facts. The ay or role of the expert on the construction site is referred to as an expert witness. The selection of an expert becomes a challenging task because this person must be objective and work solely on the basis of facts. Architects, engineers, and project managers may be called in as experts to provide information on finance or economic issues. Because these experts are on the scene and have direct knowledge of the situation, it is simple for them to present the facts and explain the line of conduct that led to the conflict in the first place.

Engineers, architects, and project managers can all play a part since they have a good understanding of the reports generated from the beginning of the construction and renovation project. This specialist also keeps track of the sponsors’ reactions to various situations as the project progresses. They’ve created or reviewed planning construction assessments, geotechnical reports, and meeting minutes where fund allocation decisions were made. As a result, they come up with an opinion that clarifies third-party judgments or whoever is attempting to resolve the situation. Professional engineers and architects also have a legal checklist that includes the checks and analyses that should be performed on the site and surrounding property in order to determine if there is a problem that could affect cash flow creation.

Conclusions

The responsibility of redeveloping the mill into a sustainable, ecologically friendly residential and business park with park green area and water retention has been assigned to the Silver Town Partnership. There are several ways for financing such capital-intensive projects. The majority of these choices regard the project as a source of security and wait for the gestation period to end. The loan and interest are paid once the project or building is completed and begins to generate money.

For the silver town proposal, the financial department must first decide on a debt-to-equity ratio, according to the newspaper. Long-term loans, government subsidies, and bridge financing are all feasible options for debt financing. Paid-up capital from sponsors, as well as money raised from family and friends, and any other party interested in the project, can be used to generate share money. Tax advantages must also be addressed, as they might be shown as a cost and eliminated before calculating profit before tax, while dividends paid are taxable. To minimise future problems, geotechnical difficulties must be examined prior to investing in any project. If the other party agrees, arbitration can be a good way to resolve finance concerns in project management because it is formal and not too expensive.

References

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Cheung, S.O., Tam, C.M. and Harris, F.C., 2000. Project dispute resolution satisfaction classification through neural network. Journal of Management in Engineering, 16(1), pp.70-79.

Chong, H.Y. and Zin, R.M., 2012. Selection of dispute resolution methods: factor analysis approach. Engineering, Construction and Architectural Management.

Coyle, J.F. and Drahozal, C.R., 2019. An Empirical Study of Dispute Resolution Clauses in International Supply Contracts. Vand. J. Transnat’l L., 52, p.323.

Cui, C., Liu, Y., Hope, A. and Wang, J., 2018. Review of studies on the public-private partnerships (PPP) for infrastructure projects. International journal of project management, 36(5), pp.773-794.

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Yoshino, N., Helble, M. and Abidhadjaev, U., 2018. Financing infrastructure in Asia and the Pacific: Capturing impacts and new sources. Asian Development Bank Institute.