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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 following table shows a contractor's project budget and profit distribution l~)r a newly
awarded contract. The conditions of contract allow monthly billing and payment of the amount
less 10% retention to bc paid to thc contractor onc month later. While half the retention is
released on completion of the project, the remaining half is released six months aller completion.
Determinethe monthly net cash flows assuming an averagedelay of one month betweenthe
contractor incurring a cost liability and the outward cash flow.
-
Month No. ] 2 3 4 5 6 7 8 9 ]0

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 ]0 10 10
value)

Question 2 (7 +7 marks)
(A) The initial cost, annual r~g1l1ing& maintenance cost and salvage values for the three
proposals are shown in the following table. If the life of each of the proposals is 20 years,
which scheme should be recommended as the most economical? Assume MARR = 10<%.
Values in Lakhs
Proposal Initial cost Annual running &
maintenance cost
Salvage value
l~ 110ft 'l.o) ;;. ~ .5"13S'
I 9 3.6 0.9 ('?p ,Io'/,! 'l-D)::"'Iltib
2 10 2.3 1.0
" 12
J 2 1.2
(n) 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 pcr month. Production under both alternatives will be 120 m per month. For the first
alternative the contractor has to buy a tunneling machineand workwith 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 10Q50/mat EOM11.Rs 10100.25 at EOM
12,etc.)
For the second alternative the total cost is Rs 27,000 per metre of tunnel.
Question 3 (l x 5 = 5 marks)
Write sholi notes (J or 2 sentences) on the following:
(a) Mobilization Advance; (b) Retention Money; (c) Earnest money deposit (d) Defect Liability
Period (e) Double declining balance method

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