The document provides information about a proposed mixed development project in Rawang, Selangor. It will consist of 26' x 80' double-storey shop/office lots, 22' x 75' double-storey terrace houses, and 20' x 60' double-storey low cost houses. Thirty percent of the development must be low cost houses, and fifteen percent must be shop/office lots. The developer obtained a loan to purchase the land three years ago and has since received development approvals. As the cost consultant, you must analyze the development, provide a financial appraisal using the residue method, and cash flow analysis under sell-then-build and build-then-sell concepts.

1. SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN
BACHELOR IN QUANTITY SURVEYING (HONOURS)
AUGUST 2018
QSB 4223 DEVELOPMENT ECONOMICS ASSIGNMENT
ASSIGNMENT BRIEF
A property Developer intends to develop a piece of freehold land measuring 10 acres 1 rood
10 pole in Rawang, Selangor. The land was purchased three years ago at RM15.00 per sq. ft.
with a RM6,500,000.00 bank loan. During this period, the Developer had applied for land
conversion, subdivision, planning and building plans approval.
The proposed development shall be of mixed residential and commercial units comprising of
26’ x 80’ double storey shop/office lots, 22’ x 75’ double storey Terrace houses and 20’ x 60’
double storey Low Cost houses. Thirty percent (30%) of the development must be of low cost
houses. The Developer intends to have fifteen percent (15%) of the total units to be double
storey shop/office.
Development Order has now been granted and construction is ready to proceed. Construction
shall take two years to complete. As the cost consultant engaged for the proposed project,
prepare the following based on the project information available as attached.
Group Assignment
1) An analysis of the number of units for each type of houses that can be built for the
proposed development project.
2) A financial appraisal of the project using the Residue Method of Valuation.
3) A Cash Flow for the project based on ‘Sell-then-Build’ concept comprising of:
i) Monthly Cash Inflow taking into consideration the required sales projection:
* Note: Tabulation should indicate monthly total, net monthly cumulative total
and also quarterly inflow. Table should be in A4 size.
ii) Monthly Cash Outflow taking into consideration the contractual requirements;
* Note: Tabulation should indicate monthly total, net monthly cumulative total
and also quarterly inflow. Table should be in A4 size. This table will only reflect
construction costs. Administration expenses should be reflected in the quarter-
yearly cash flow as below.
iii) Quarter-Yearly Cash Flow based on the above Cash Inflow and Cash Outflow
and to include Project financing if required. For Project financing, to assume

2. that a one lump sum repayment for the land to be made upon completion of
construction. (For the purpose of this assignment, it is assumed no repayment is
made for construction cost).
4) With a twelve percent (12%) cost of capital, tabulate and calculate the NPV of the
project on a quarter-yearly basis. Give an overall analysis and comment on the
viability of the project.
5) Comment on the cash flow and viability of the project if it is based on a ‘Build-then-
Sell’ concept. (Assume 100% sales on completion of construction).
Instructions to students:
i) The assignment should be properly typed in A4/A3 sized paper with 12 point font size
and one-and-a-half spacing. Only one side of each sheet should be used. The margin at
the binding edge shall 40mm and other margins 25mm. The assignment must use
comb-binder and bound with the assessment form in front.
ii) All sources of information used should be acknowledged and referenced using an
appropriate referencing method.
iii) State the assignment topic, course and year, submission date and the names of all group
members and their respective ID on the front page of the assignment.
iv) You are to prepare minutes of meeting (in a format of your choice) to record what
transpired during your group discussion, attendees of the meeting, action to be taken by
respective individuals, progress of individual members & group as a whole and
deadlines set to achieve tasks in order to meet the assignment submission deadline. The
minutes of meetings are to be submitted as part of the assignment. ( 5 marks)
v) In order to also assess each student’s individual effort, please state your name for the
section/s of work/s that was prepared by you for the assignment.
vi) Please note that at the end of the assignment, a copy of peer evaluation form will be
given to all students for valuation of their team members’ contribution and efforts in the
project assignment.
vii) Submission date is on the 21st
November 2018.
-END-

3. PROJECT TITLE
PROPOSED DEVELOPMENT OF 26' X 80' D/S SHOP/OFFICE LOTS, 22’ X 75’ D/S TERRACE
HOUSES AND 20’ X 60’ D/S LOW COST HOUSES IN PUCHONG, SELANGOR.
PROJECT INFORMATION
Land Purchased @ RM15.00/fs : January 2010
Commencement of construction : January 2013
Scheduled Completion : End December 2014
Planning Constraints / Restrictions
 Effective development area : 60% of Land area
 Restrictions:
- Shop/Office Lots : maximum 10 units / block
- Terrace Houses : maximum 12 units / block
- Low Cost Houses : maximum 15 units / block
 Low Cost quota : 30%
 Bumiputra reservation : 30%
 Bumiputra discount : 7%
Development Composition:
Type Build-up Area Selling Price Construction Cost
Double Storey Shop/Office :
1. D/S Shop/Office 3,600 fs RM850,000.00 RM70.00 per fs
2. Corner unit 6,500 fs RM1,600,000.00 RM80.00 per fs
3. End unit 3,600 fs RM1,000,000.00 RM80.00 per fs
Double Storey Terrace :
4. D/S Terrace 1,500 fs RM400,000.00 RM75.00 per fs
5. Corner unit 1,500 fs RM650,000.00 RM85.00 per fs
6. End unit 1,500 fs RM500,000.00 RM85.00 per fs
Double-Storey Low Cost :
7. D/S Low Cost 900 fs RM45,000.00 RM35.00 per fs
8. Corner/End units 900 fs RM45,000.00 RM40.00 per fs
Development/Construction Costs
i. Land cost purchased at : RM15.00 per fs in January 2010
ii. Professional Fees : 9% of construction costs.
iii. Administrative Fees : 2% of GDV
iv. Plan Fees : RM2,000.00 per unit.
v. Contributions & Fees : 2% of construction costs
vi. Advertisement & Marketing : 1% of GDV
vii. Conversion premium -commercial : 20% of land value of commercial lots
-residential : 15% of land value of residential lots
viii. Subdivision : RM1,500.00 per unit
ix. Legal Fees : RM2,500.00 per unit
x. Contingencies : 5% of construction costs
xi. Earth Works : 5% of building costs
xii. Infrastructure costs : 10% of building costs
Assume:

4.  Item (ii) is payable 60% on commencement of construction and balance payable in two equal
yearly payments;
 Items (iv), (v), (vii) (viii) & (ix) are payable on commencement of construction;
 Items (iii), (vi) & (x) are payable equally throughout construction period.

5. Financing Costs
 Cost of Finance : 5.5% p.a.+ BLR
 Interest on Loan for Purchase of Land : 2.5% p.a. + BLR
(BLR assumed @ 6.5%)
Contractual Requirements
 Payment to contractor : 30 days Stage payment with 10% retention, limit 5%
On completion of : Foundation : 10%
RC Framework : 25%
Walls, Doors & Wdw Frame : 15%
Roofing, Elec Wiring & Plumbing : 15%
Internal & External Plastering : 15%
Sewerage Works : 5%
Drainage Works : 5%
Road Works : 10%
 Final Certificate : 18 months from completion of construction.
Sales Information
 Sales Launch : January 2013
 Sales Projection Shop/Office Terrace Low Cost
- on launching : 10% 30%
- end 2nd
Q. 2013 : 20% 50%
- end 3rd
Q. 2013 : 30% 70% 50%
- end 4th
Q. 2013 : 40% 80%
- end 1st
Q. 2014 : 50% 100% 100%
- end 2nd
Q. 2014 : 70%
- end 3rd
Q. 2014 : 100%
- end 4th
Q. 2014 :
 Collection from Purchasers : Stage Payment Third Schedule of SALE AND
PURCHASE AGREEMENT (LAND AND BUILDING)
Schedule G of HOUSING DEVELOPMENT (CONTROL
AND LICENSING) ACT 1966
Assume 100% collection 30 days after payment is due.
(ignore differences of billing period, notice period and
grace period)
Assume applicable for both commercial and residential
properties.
 Vacant Possession : Assume immediately upon completion of construction

6. PROPOSED DEVELOPMENT OF 26' X 80' D/S SHOP/OFFICE LOTS, 22’ X 75’ D/S TERRACE HOUSES AND 20’ X 60’ D/S LOW COST HOUSES IN PUCHONG,
SELANGOR.
Date of Commencement :
Date of Completion :
2013 2014
ITEM DESCRIPTION OF WORKS Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
1 EARTHWORKS
2 FOUNDATION
3 R.C. FRAMEWORK
4 WALLS, DOORS & WINDOW FRAME
5 ROOFING, ELEC WIRING & PLUMBING
6 INTERNAL & EXTERNAL PLASTERING
7 SEWERAGE WORKS
8 DRAINAGE WORKS
9 ROADWORKS
10 INFRASTRUCTURE WORKS
01 January 2013
31 December 2014CONSTRUCTION WORK PROGRAMME