Report on Investment Appraisal Techniques and Economic Principles in Property Construction Sector

All assignments must be submitted online in the module area of the VLE. The assignment submission link opens 21 days before the due date. Please refer to the information provided in the ‘Coursework preparation’ week for submission guidance.

Demonstrate knowledge and critical understanding of the economic principles relating to property demand, supply and price; property and building cycles; urban and  regional location decisions; and land use.

LO2 Identify the impact of government intervention in the property and construction sector using cogent economic reasoning.

LO3 Interpret economic data and demonstrate the ability to apply appropriate models and techniques effectively.

LO4 Analyse and evaluate critically the appropriateness of different approaches to investment appraisal in development decisions.

LO5 Communicate information, arguments and analysis to specialists and non-specialists effectively, presenting cogently argued written work based upon economic principles.

Write a report to Newbuild plc which appraises the proposed house building project from both a financial and a non-financial point of view, bearing in mind the varying objectives of the  counterparties to the partnership. Your report should show how economists would approach the investment decision and the reasoning behind their approach.

• An explanation of and comparison between time-based and non time-based capital  investment appraisal techniques;

• A discussion of how a discount rate is chosen in the case of time-based techniques;

• An analysis of the rationale for taking a welfare approach to the project;

• An explanation of the meaning of externalities and an analysis of the process by which they are assessed;

• An analysis of how the proposed project might fit into an urban growth model (e.g. Hoyt);

• An evaluation of the forecasts made by urban growth models concerning the Newbuild project

This guidance is designed to help you to do as well as possible in your assessments by explaining how the person marking your work will be judging it.

Your work will be assessed in relation to the requirements set out in the assessment criteria marking guide at the end of this document and the grading guidance section below.

It is recommended that you read both of these sections before starting your assessment to learn what will help you to achieve the highest marks. Once you have finished you should review the assessment before submitting it, to check you have done what is required to achieve the highest marks.

When you receive your feedback from your tutor you should clearly be able to see which categories you gained marks in and, where relevant, recommendations about how to improve your performance going forward.

You are a member of a small specialised economics consultancy, ECO5 Ltd. Most of your clients  are in the construction and property sectors in the built environment sectors in your country. The client base is interested in the economic rationale behind the decisions being made by competitors  and public sector bodies. ECO5 Ltd has regular briefing sessions with clients to advise them accordingly.

ECO5 Ltd has been contacted by Newbuild plc, a large construction firm which is a major investor in urban areas. Newbuild plc is proposing to work in partnership with a local authority and a housing association to build a community of 400 modular houses, 100 of which will be affordable homes, on the site of an old hospital. The size of the new community means that there will be a need for public services e.g. a school and a medical centre.

Newbuild plc has asked ECO5 Ltd to write a report on the proposed project. The report will help Newbuild plc’s management to understand the processes involved in appraising a project of this type; it will analyse the financial and non-financial costs and benefits, and will arrive at a supported conclusion. Newbuild plc has requested that your report should include examples which will focus attention on this area of investment.