CEL 464 CONSTRUCTION MINOR I

Time allowed 1 hour AND CONTRACT Maximum 25

MANAGEMENT Marks
Venue WS 209 & 213 Date 01.09.2008
ASSUME MISSING DATA SUITABLY IF REQUIRED.
Question 1 (6 marks)
The follovving table shows a contractor's project budget and profit distribution for a newly
awarded contract The conditions of contract allow Ig9nthly billing and payment of the amount
less 10% retention to be paid to the contractor one month later. While half the retention ~
released on completion of the project, the remaining half is released six months after completion.
'" - - - .

Determine the monthly net cash flows assuming an average delay of one month between the
contractor incurring a cost liability and the outward cash flow.

Month No. 1 2 3 4 5 6 7 8 9 10

Value of work 2 3 4 8 9 9 8 5 4 2
each month
(Lakhs)

Profit (% of 6 6 6 6 6 6 6 10 10 10
value)

Question 2 (7 +7 marks)
(A) The initial cost, annual running & maintenance cost and salvage values for the three
proposals are shown in the following table. !fthe life of each of the proposals is 20 years,
vvhich scheme should be recommended as the most economical? Assume MARR = 10%.
Values in Lakhs

Proposal Initial cost Annual running & Salvage value

maintenance cost ' 101',1-0} ::-lS'SH~ l~
I 9 3.6 0.9 (P;'p tlp'fo/J.J;J)-:;' D'I~ib
2 10 2.3 1.0
"
.J 12 2 1.2
(B) A contractor has a contract to construct a 3600 metre long tunnel in 30 months. He is trying
to decide whether to do the job with his own work force or subcontract the job. His i = 1.50 %
percent per month. Production under both alternatives will be 120 m per month. For the first
alternative the contractor has to buy a tunneling machine and work with own force. The cost of
tunneling machine = Rs 20 million and salvage value of machine at end of month 30 = Rs 4
million. The cost of labour and material = Rs 10,000/m for the first 10 months, and increasing by
0.5 % per month at EOM each month thereafter (i.e. Rs 10050/m at EOM, I, Rs 10 100.25 at EOM
!:!,etc.) ((> If ~~ ) ~t.I.\./)\
For the second alternative the total cost is Rs 27,000 per metre oftunnel. \'A '( 'p , >~'1
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Question 3 (1 x 5 = 5 marks) fL .
\ 2.\'1 0 \
Write shol1 notes (lor 2 sentences) on the following:
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(a) Mobilization Advance; (b) Retention Money; (c) Earnestmoney deposit (d) Defect Liability
Period (e) Double declining balance method
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