ENBU818 Construction Economics

Question 1

For greenfield and brownfield investments or developments involving large scale residential projects, lending can be less than $5m or more than $5m. The lender conducts a basic assessment of customer personality, facility, property, technical features, a guarantee of return on investment, customer investment assets and potential to satisfy the lender requirements. Highlight the primary considerations for lending to the customer, even when there is no guarantee and potential to repay the components of the loan.

Question 2

A construction development company is planning to execute $10 million construction project. The contract agreement specified a construct and reimbursed procurement strategy, which requires a need for borrowing to complete the contract. After the main contractor provided equity of $3 million, the lender approved a loan for the project. What is the value of LDCR (loan to development cost ratio)?

Question 3

You are the lead consultant for a business case consulting company in Auckland. Your company received an appointment by a Local Council Organisation to conduct a case analysis for the realisation of multiple railways project across Council areas. With a simple flowchart, develop a strategic fit logic using only the organisational contexts questions.

Question 4 (4 marks)

The primary determinants for selecting a contractual form are time, cost, risk and the extent of contract information. Develop, with the aid of a diagram, how the participants of Public-Private Partnership share the project risks.

Question 5

The local council plans to build a hospital that reduces 75%-85% in energy consumptions. The actualisation of the hospital project depends on innovation and long-term contract covering design, construct, maintenance and financing, which may or may not include operation. Suggest an innovative procurement strategy and, in a sentence, support the method selected with three reasons.

Question 6

For a new public-school construction in Auckland Central, create a business case schedule required to approve the school project by the local council.