Ravenhall Prison Essay: Background, Objectives, And Economic Analysis.

Question:

Discuss About The Venture Projects Economics Finance Accounting?

With the advent of science and technology there have been various venture projects that have been developing all over the globe in order to improve the economic and the operational structure of the world. It has been observed that there are various projects that have been constructed in order to build new buildings and artifacts that would enhance the lifestyle of the human beings living in this world(Schaper, 2016).

This paper therefore is being constructed in order to undertake a fundamental analysis of on ongoing project that is functioning in Melbourne so that a clear idea about the background of the project along with its objectives can be understood. The assessment of the economic analysis and tools and techniques would even be discussed and the cost benefit analysis of the project can even be understood so that a clear cut idea about the project can be taken into consideration. This paper therefore has considered Ravenhall Prison Project that has been operating from the year 2014 and still continuing so that precise knowledge about project and the cost associated with it can be gained.

The Ravenhall Prison Project is being constructed in order to provide a new medium-security prison facility in order to provide accommodations to around 1000 prisoners and this project has been predicted to be completed by the end of 2017.  In the year 2014 on 15^th September, the Victorian state made a contract with GEO consortium in order to build, finance, design, operate and maintain a new medium-security prison for men, which would be situated in Ravenhall, in the west of Melbourne(Treasury and Finance - Ravenhall Prison - Project Summary 2017). Ravenhall has been a key part of the prison expansion program of Victoria. The prison even has the ability to expand in future in order to accommodate around 1300 prisoners if deemed necessary.

The new prison that is under construction would deliver the infrastructure and prison beds in order to aid in explaining for the correctional services that have been demanded in Victoria. The prison has been constructed on the existing Crown land at Ravenhall that is contiguous to the Metropolitan Remand Centre and the dame Phyllis Frost Centre. The land is specifically flat in nature and comprises of open paddocks that consists of vestige native grassland patches and few trees that are scattered. The required planning along with the cultural heritage and environmental approvals for this area are in place. 

Risks Associated with the Project

This project has been a joint venture of the public private partnership in which the private sector is accountable for constructing, financing, operations, design and maintenance that are custodial in nature. This project would provide increased value for money with respect to the correctional services and even provide increased quality.

GEO Consortium was appointed to deliver the project after the completion of a tender process and a contract was signed in the year 2014 in September. GEO Consortiu, consists of John Holland Group, Capella Capital, Honeywell and GEO Group Australia. The essential alliance partners are inclusive of the Gathering Place and Melbourne City Mission, Kangan Institute and YMCA who would deliver services and programs in both post-release and the prisoners under custody(Treasury and Finance - Ravenhall Prison - Project Summary 2017). The health services within the prison would be given by Correct Care Australasia and the forensic services of mental health at the prison would be given by Forensicare.    

The construction of the project has been undertaken in order to improve the safety of the society by humanely and securely preserving the prisoners and giving them with services and programs that have been constructed in order to decrease the extent of reoffending.

This project reveals a key investment in the infrastructure and services of the prison with the help of which GEO Consortium would deliver an innovative facility that would perform a key role in the correctional system of management. This project would be influential for generating economic advantages as well as increasing employment with the establishment of 700 jobs during the period of peak construction and ongoing jobs that would be more than 600. The construction of the project would lead to development of new jobs in that area and thereby increasing the employment rate and in a way benefit the economy(Burchardt et al., 2016). The objectives of the project and the area of the focus has been explained as follows:

• Provide added capacity in the prison system of Victoria
• Provide added forensic metal health services to the prisoners
• Provide supplementary capability in order to lower the reoffending
• Encourage practices that are innovative in nature and effective operations that would assist the value for money

  The justification for the construction of the research project has been in order to secure and safeguard the communal harmony and to maintain the prisoners in the prison cell in an effective manner. The construction of a prison that would consist of various innovative amenities would boost the confidence of the prisoners and would help them in turning over a new leaf and start their life effectively(Gatti, 2013). The project construction is done in order to focus on various aspects like targeted approach for the prisoners who are having challenging behavior, indigenous prisoners and improved responsiveness towards the complexities of the young prisoners.   

Literature Review and Economic Analysis

The project has been constructed by depending on the financial capacity and the assumptions. The assumptions of the project include identifying the financial capability of the participants and the participating members in order to deliver the project within its completeness(Block et al., 2017).

There are various constraints that are related to the project like the risks that are associated with the planning of the project and gathering approvals for the planning, risks in the site like the native titles and contamination of the sites, construction risks and the design risks in order to construct the prison project and lastly the operational and the financial risks that are associated with the completion of the prison project. Therefore, the risks are allocated and transferred effectively in order to reduce the level of risks and thereby helping in improving and smooth flow for the construction of the prison project. 

The literature review would comprise of the various data and tools that have been used by the project on order to determine their operational activities and to undertake economic analysis and the cost benefit analysis of the Ravenhall Prison Project. This section of the paper would provide an extensive research and analysis of the cash flows, the present worth, internal rate of return along with the profitability index and business growth strategies and its best practices so that the project can be concluded precisely. The use of the MADM and MCDM financial analysis process would be influential for understanding the process that would be used in order to understand the current financial and economic position of the Ravenhall Prison Project. 

The project explains about the literature review and the explanation regarding the economic analysis and the cost benefit analysis of the Ravenhall Prison Project. A small overview of the risk evaluation model of Ravenhall Prison Project in Melbourne Victoria will be discussed in this section. The process of economic analysis are defined as the mathematical and statistics and graphics. The economic analysis is based on the various methods of the economic sensitivity and in order to make effective recognition of the similar input, it is essential to investigate two or more processes.  

Australia is regarded as a vivacious free democracy of the market and there has been vibrant economic progress that has been possible due to absence of any sort of recessions. The effective process of the government has been beneficial for the economy and a free well-functioning legal system, bureaucracy has led to effective entrepreneurial enhancement. Australia is considered as an attractive and dynamic position for investment(Stiglitz, &Rosengard 2015). In most of the scenarios, the government has decreased the investment and has influenced the private sector to undertake investments. This has been observed in the Ravenhall Prison Project where investments are undertaken mainly by the private sector. The country has been effectively competitive in the technological areas and services. The income tax rate is around 45% and the rate of corporate tax has been 30%.

Australian Economic and Investment Climate

One of the optimistic parameters of project start up in Australia has been rate of start up being higher as they have the probability of contributing to the expansion. The new business ventures in Australia like the variations in funding sources and projects like the Ravenhall Prison Project tries to make use of the equity finance during the primary stages of the constructions. The country has been experiencing shocks and problems in the during the past few years but during the first quarter of 2017, the economy has recovered from this situation and this has led to rise in the confidence for the business and the consumers and this in way would have a positive impact on the investment of the business and spending of the investors. The Australian economy is considered to be within a solid base in spite of the various weaknesses in the investments that are non-mining in nature. With respect to Ravenhall prison project in Australia it has been observed that the project has been experiencing growth and as this is an on-going process and this has led to rise in investments(Coates 2014). The Australian economy has remained very is strong in spite of the rise in the price of diesel and this has led to the fall in the disposable income for the consumers. The economy of the country has been developing with the rise in the rate of interest which is being used for reducing the rate of inflation. The growth of the economy has been possible as the government has been reducing the rate of taxation. This would encourage the investors of the project business to increase their investments in the Ravenhall Project Prison. This has led to the construction of the prison much more effectively.  The analysis of the Ravenhall Prison has been possible by undertaking economic analysis like the construction of the variables that are available in the project and the identities, functions and the equations that have been seen in the project report of Ravenhall Prison Project.

The economic assessment of the project has been possible by looking at the expenses and the total funding that has been undertaken for the completion of the project. The table below would provide an overview of the economic evaluation of the project.

The notice that has been allocated to each of the employees who are performing for the construction of the Ravenhall Prison Project has been given in the form of the table which provides a guideline of the process that would be utilized for the completion of the project within the scheduled time period.

The equivalent uniform cash flow of Ravenhall Prison Project has comprises of the outflow and the inflow of the cash flow(Dopp et al., 2014). The cash flow from the operating expenses refers to the payments made to the suppliers, direct labor cost. The annual cash flow for the organization has been given below:

The net present value for the project has been given below with respect to the variable inflation rate, growth rate and the WACC. The Net Present value at 25 inflation rate has been 3418865, ta 2.50% has been 358505005 and at 3.50% has been 36484023. It has been observed that with respect to the current position of the project, the Net Present Value has been 38505005 as the rate of inflation has been 2.505, the growth rate has been 7% and the WACC has been 8.71%.  

The Internal Rate of Return for Ravenhall Prison project has amounted to 10.04% suggesting that the project has a positive effect and the project can be viable for further investments(Welsh et al., 2015). The IRR would rise and fall with respect to the changes in the inflation rate, growth rate and WACC. The IRR has indicated that investments can be an effective in the prison project as government has interference on this project and therefore return on investment would be fruitful for the investors.  

The IRR can get modified with respect to the changes in the rate of inflation, growth rate and the WACC of the economy and the project. It is seen that the IRR has been 9.64% at 2% inflation rate and 10.22% at 3.50%. IRR would have a value of 9.10% at 5% growth and 10.58% at 9% growth. With respect to the WACC at 6.50% the percentage will be 12.11% and 8.05% at 10.50%.

The cost benefit analysis has been discovered to be the process with the help of which the business decisions are evaluated. The advantages of the stipulated condition or the actions related to the business are summed and then the expenditures related undertaking that action is evaluated(Hardin, 2015).  The cost benefit analysis of Ravenhall Prison Project has been analyzing the overall costs that are related to the project and the funds that are generated with the help of the various financial institutions and the capitals invested by GEO Consortium. The overall analysis of the cost is given in the table below:

There are are various other decision making models that are available to the management of the project in order to evaluate the activities of the project and undertake decisions accordingly. The use of the decision model is dependent on the management and the management makes proper utilization according to their needs in the prison project. There are various models include the Multi-Attribute Decision Making Model, Multi-Criteria Decision making Model, Analytical Hierarchy Process etc. These models can be used in an effective manner for the Ravenhall Prison Project and better decisions with respect to the operational activities can be constructed, which would lead to the completion of the project before the assigned deadline.  

The MCDM process makes use of equipment and tools that contributes in the quality of the financial process of economic decision making and to the quality of the resulting decisions. MCDM considers problems related to financial decisions as a multiple criteria as financial decision problem occurs due to the issues in different accounting figures which could have an effect on the financial report of the prison project(Medina et al., 2014). These problems mainly arise due to the effective assignment of the scarce capital and the alternate uses of the resources. Hence, it is essential for the management of the prison project looks to allocate the resources in an effective manner by taking help of this model as this would be influential for using the resources required for the project in the areas were these resources require more significance so that the project can be completed within the stipulated time limit and the each and every aspect of the project receives equal importance according to the priority.           

The multi attribute decision making model is a significant part of innovative decision of science. It anticipates that there are various set of substitutes for the various attributes, which the management undertaking the decision requires to assess and evaluate. The goal of this model has been to discover the demanded substitute for assisting the process of decision making. The problems that have been associated with the MADM has been rectified by taking help of the traditional processes like the simple additive weighing method, analytical hierarchy process and TOPSIS process. The MADM process looks into the different attributes related to the project rather than the price. In this scenario, it has been observed that Ravenhall Prison Project has looked in to the attributes of providing a safe restoration place for the prisoners in Australia and to accommodate a larger number of prisoners at one place(Wang et al., 2014). It is even seen that looking after the primary needs of the prisoners by providing proper beds and primary benefits are even considered overlooking the price involved. The project has even been constructed in order to provide safety and security to the citizens of Australia.    

The analytical hierarchy process is a technique that is structured for evaluating and organizing the decisions that are complex in nature and this has been done by depending on the mathematical process.

With respect to the Ravenhall Prison Project, the main objective has been to construct the prison at the lowest cost with the help of proper quality material and within the stipulated time. It is seen that various criteria are constructed by looking at the cost, safety and capacity(Gabay et al., 2014). These aspects would be taken into in choosing the best alternate strategy that would be used by the management in order to complete the prison project effectively. Hence, it can be said that making use of the strategy would be influential for the development of the prison project effectively.    

One of the biggest challenges in business growth is sustainable growth. The short term as well as the long term gains both need to be kept in mind while implementing the procedures for business growth. Different businesses have different reasons for the purpose of sustainability but the main fundamental concepts are the same.

The Authenticity of the business purposes need to be maintained. The authorities concerned must repeatedly examine their sense of purpose as well as ensure that the organisation serves the purpose of the project properly. There should also be a constant as well as consistent sense of growth. It also should involve continuous pragmatic innovation. The authentic purpose of a company contributes to its USP. It is better for an organisation to have a clear value and an aim for the purpose of the business growth. The prison project needs to utilise the practices of safety as well as security which is one of the features it aims to achieve (Cooke& Williams, 2013).

Partnership as well as collaboration is also an extremely important factor for the successful establishment of the business growth. Though the idea of achieving everything singularly in case of a business project is tempting and logical in case of not much availability of funds, the best thing to do is to find the best possible partners for the prison project. The collaboration with the suitable partners in case of the prison project will help in the expansion and proper growth and will also be sustainable. It is necessary to know exactly what to do at a particular time because the needs of different projects are different (Thompson, 2012, October).

The project should be done in such a way that the prison expansion concept is deemed successful and helps in the establishment of the successful steps in the business growth. The prison should have proper facilities along with the concept of improvement as well as rehabilitation options (Vaara& Whittington, 2012).

A business ecosystem is a financial community of organisations as well as individuals which operate in different ways. It is necessary to understand the needs of the prison project are different from other commercialisation projects like malls or shopping centres or other places. The business ecosystems encourage the companies undertaking the innovative as well as difficult projects by fulfilment of their competitive capabilities (Sherman, 2014).

In order to ensure that the business needs of any particular project is met, it should be maintained that the leaders or the authorities under whom the project is taking place, need to be aware at every particular stage of growth. Retrospection, self-awareness, as well as a keen sense of strategy is necessary which is both for the short as well as the long term (Healy&Palepu, 2012).

The authorities in charge of the prison project should adopt an adaptive as well as a flexible nature of leadership. By being mindful as well as understanding the business strategies give the best results for any given project. The continual investment in the capabilities of individual workers as well as organisations helps in the benefit of the organisations (Goodstein &MacKenzie, 2013).          

The business growth strategies should focus on the nature of the project at hand. It should be understood that the nature of the prison is different. The expansion of the prison needs to be the main focus of the organisation which is engaged in the construction project (La Vigne& Samuels, 2012). The expansion projects need to be properly undertaken and the details need to be stated in advance as well (Crawley, 2013). The prisons should not be built in a morose or a depressive way so that the residents or the inhabitants of the place should not be de-motivated. It should not happen that the people who are prisoners find it difficult to move back to normalcy.

There should not be any dark corners or dark places which might cause the prisoners to move to a dark part of their conscience. The prison architecture should in no way be linked with the levels of violence as well as drug use. There should be an openness as well as connectivity to the prisons as the closed, dark as well as the privacy of the prisons are bound to affect the mindsets of the prisoners and they might engage in fighting, assault, self-harm, consumption of drugs. It might also cause escapes from the prisons.

In other words it can be said that the prison projects should correspond or comply with the rehabilitation revolution in order to be a positive impact on the prisoners to facilitate their stay with good experiences and positivity.

The cost efficiency needs to be kept in mind while implementation of the project. The cost of prisons is considerable and they also cause the drainage of the vital resources from the segments of health-care, education, housing as well as the other social programs. The de-funding of the prison sector and ensuring the good environment does not lack the resources that need to be taken care of.

The exposure of the impact of the public-private finance initiatives show that the cost savings are never delivered. The reduction of the quality of services and the facilities should not be done in a way to actually harm the people. The prisons are never cost efficient. Since the prisons and their buildings waste money as well as the vital resources, the business strategies should revolve around the quality of the prison and the money as well.

The private prisons do not always form a clear advantage of the public sector counterparts. The nature of the prison market as well as their proper management need to be done to explain the findings carefully. The cost as well as the quality needs to be uncompromised as the prison projects are huge and influential to the company’s reputation. The quality of the prison, the provided facilities should constitute the business strategies of the prison project.

Profitability Index is even known as the profit investment and value investment ratio for any developing project and this has been a mechanism for ranking the projects as it permits to quantify the amount of the value developed due to the investment per unit.  With respect to the current profitability index of Ravenhall Prison Project, it can be observed that profitability index has been 0.42 or 42.20% and hence it can be said that the project is an effective one and undertaking investment in this project would lead to effective construction of the project within the stipulated timeline. 

The project has been established by undertaking numerous researches of the Australian market and evaluation of the financial statements and the project background and the scope of the project. The country has been regarded as the democratic market that is vibrant and has been functioning like this for over 25 years and this development has been possible due to the limited level of recessions. The effective process of the government has benefited the Ravenhall Prison Project due to an effective and well-functioned legal system. The presence of such an effective legal system and government regulations has revealed an effective economic system and this has motivated the private sector to undertake investments in such projects. Hence it is seen that GEO Consortium has undertaken investment in the prison project and this in way would improve the revenue for the organization and even complete the project in an effective manner. According to the financial estimations of the Ravenhall Prison Project, it has been observed that this project would be enormouslyachievable to make sure the growth and stability in the Australian region. It has been recommended that the project should undertake the activities that they have been performing currently as this has been an effective process and sustainable use of the project would lead to the proper return on investment for GEO Consortium and completion of the project in a timely manner with effective facilities available within the prison.   

Reference

Anderson, J. E. (2014). Public policymaking. Cengage Learning.

Bardach, E., &Patashnik, E. M. (2015). A practical guide for policy analysis: The eightfold path to more effective problem solving. CQ press.

Bernstein, S., Giroud, X., & Townsend, R. R. (2016). The impact of venture capital monitoring. The Journal of Finance, 71(4), 1591-1622. Omran, M. F. (2015). Islamic venture capital as a solution for economic coordination failures in the Arab world. International Journal of Islamic Marketing and Branding, 1(2), 142-148.

Besser, T. L., & Hanson, M. M. (2016). Development of last resort: The impact of new state prisons on small town economies in the United States. Community Economic Development, 73.

Bhagat, S. (2014). Why do venture capitalists use such high discount rates?. The Journal of Risk Finance, 15(1), 94-98.

Block, J. H., Colombo, M. G., Cumming, D. J., &Vismara, S. (2017). New players in entrepreneurial finance and why they are there. Small Business Economics, 1-12.

Burchardt, J., Hommel, U., Kamuriwo, D. S., &Billitteri, C. (2016). Venture capital contracting in theory and practice: implications for entrepreneurship research. Entrepreneurship Theory and Practice, 40(1), 25-48.

Coates IV, J. C. (2014). Cost-Benefit Analysis of Financial Regulation: Case Studies and Implications. Yale LJ, 124, 882.

Cochrane, J. H. (2014). Challenges for cost-benefit analysis of financial regulation. The Journal of Legal Studies, 43(S2), S63-S105.

Cooke, B., & Williams, P. (2013). Construction planning, programming and control. John Wiley & Sons.

Crawley, E. M. (2013). Doing prison work. Routledge.

Dopp, A. R., Borduin, C. M., Wagner, D. V., & Sawyer, A. M. (2014). The economic impact of multisystemic therapy through midlife: A cost–benefit analysis with serious juvenile offenders and their siblings. Journal of consulting and clinical psychology, 82(4), 694.

Elliott, I. A., & Beech, A. R. (2013). A UK cost-benefit analysis of Circles of Support and Accountability interventions. Sexual Abuse, 25(3), 211-229.

Farrington, D. P., &Koegl, C. J. (2015). Monetary benefits and costs of the stop now and plan program for boys aged 6–11, based on the prevention of later offending. Journal of Quantitative Criminology, 31(2), 263-287.

Gabay, H., Meir, I. A., Schwartz, M., &Werzberger, E. (2014). Cost-benefit analysis of green buildings: An Israeli office buildings case study. Energy and Buildings, 76, 558-564.

Gatti, S. (2013). in theory and practice: designing, structuring, and financing private and public projects. Academic Press.

Goodstein, L., &MacKenzie, D. L. (Eds.). (2013). The American prison: Issues in research and policy (Vol. 4). Springer Science & Business Media.

Gray, V., Hanson, R. L., &Kousser, T. (Eds.). (2017). Politics in the American states: A comparative analysis. Cq Press.

Hardin, R. (2015). Collective action. Routledge.

Healy, P. M., &Palepu, K. G. (2012). Business analysis valuation: Using financial statements. Cengage Learning.

Henrichson, C., &Rinaldi, J. (2014). Cost-benefit analysis and justice policy toolkit. Retrieved Aprilie, 20, 2015.

Hirsch, W. Z. (2015). Law and economics: an introductory analysis. Academic press.

Iossa, E., &Martimort, D. (2015). The simple microeconomics of public?private partnerships. Journal of Public Economic Theory, 17(1), 4-48.

La Vigne, N., & Samuels, J. (2012). The growth & increasing cost of the federal prison system: Drivers and potential solutions. Washington, DC: Urban Institute. https://www. urban. org/UploadedPDF/412693-The-Growth-and-Increasing-Cost-of-the-Federal-Prison-System. pdf.

Leigh, N. G., & Blakely, E. J. (2016). Planning local economic development: Theory and practice. Sage Publications.

Livermore, M. A. (2014). Cost-Benefit Analysis and Agency Independence. The University of Chicago Law Review, 609-688.

Medina, P., Bizuayehu, A. W., Catala?o, J. P., Rodrigues, E. M., & Contreras, J. (2014, January). Electrical energy storage systems: technologies' state-of-the-art, techno-economic benefits and applications analysis. In System Sciences (HICSS), 2014 47th Hawaii International Conference on (pp. 2295-2304). IEEE.

Moyer, E. J., Woolley, M. D., Matteson, N. J., Glotter, M. J., &Weisbach, D. A. (2014). Climate impacts on economic growth as drivers of uncertainty in the social cost of carbon. The Journal of Legal Studies, 43(2), 401-425.

Posner, R. A. (2014). Economic analysis of law. Wolters Kluwer Law & Business.

Rodrigues, E. M. G., Godina, R., Santos, S. F., Bizuayehu, A. W., Contreras, J., &Catalão, J. P. S. (2014). Energy storage systems supporting increased penetration of renewables in islanded systems. Energy, 75, 265-280.

Rose-Ackerman, S. (2013). Corruption: A study in political economy. Academic Press. South, J., Bagnall, A., Hulme, C., Woodall, J., Longo, R., Dixey, R., ...& Wright, J. (2014). A systematic review of the effectiveness and cost-effectiveness of peer-based interventions to maintain and improve offender health in prison settings. Health Services and Delivery Research, 2(35).

Schaper, M. (Ed.). (2016). Makingecopreneurs: developing sustainable entrepreneurship. CRC Press.

Sherman, H. J. (2014). The business cycle: growth and crisis under capitalism. Princeton University Press.

Sinden, A. (2015). Formality and Informality in Cost-Benefit Analysis. Utah L. Rev., 93.

Smith, M., & Ton, D. (2013). Key Connections: The US Department of Energy? sMicrogrid Initiative. IEEE Power and Energy magazine, 11(4), 22-27.

Stigka, E. K., Paravantis, J. A., &Mihalakakou, G. K. (2014). Social acceptance of renewable energy sources: A review of contingent valuation applications. Renewable and Sustainable Energy Reviews, 32, 100-106.

Stiglitz, J. E., &Rosengard, J. K. (2015). Economics of the Public Sector: Fourth International Student Edition. WW Norton & Company.

Thompson, H. A. (2012, October). The prison industrial complex: A growth industry in a shrinking economy. In New Labor Forum (Vol. 21, No. 3, pp. 39-47). Sage CA: Los Angeles, CA: SAGE Publications.

Treasury and Finance - Ravenhall Prison - Project Summary. (2017). Dtf.vic.gov.au. Retrieved 12 September 2017, from https://www.dtf.vic.gov.au/Publications/Infrastructure-Delivery-publications/Partnerships-Victoria/Ravenhall-Prison-Project-Summary

Vaara, E., & Whittington, R. (2012). Strategy-as-practice: taking social practices seriously. Academy of Management Annals, 6(1), 285-336.

Wang, X., Chen, Y., Sui, P., Gao, W., Qin, F., Wu, X., &Xiong, J. (2014). Efficiency and sustainability analysis of biogas and electricity production from a large-scale biogas project in China: an emergy evaluation based on LCA. Journal of cleaner production, 65, 234-245.

Welsh, B. C., Farrington, D. P., &Gowar, B. R. (2015). Benefit-cost analysis of crime prevention programs. Crime and justice, 44(1), 447-516.

Overview of Project Economical Analysis Techniques and Tools