24 Jul ARE THERE ANY OTHER CONSIDERATION YOU WOULD HAVE IN YOUR FINAL DECISION?
Flatland Views has advertised for proposals to build a new community center but th Show more Great White Hall Flatland Views has advertised for proposals to build a new community center but the city council cannot agree on how to evaluate the submitted proposals. The request for proposal (RFP) specified that respondents had to meet certain basic needs although optional items could be included. The RFP also asked that each respondent calculate a benefit/cost (B/C) ratio using a discount rate of 12%. The RFP did specify the approximate size of each optional facility and the use that could be expected (and the value of such use in dollars per hour). The RFP stipulated that the council would select a package of facilities based on estimated construction costs and B/C ratios. Since this package might not match any proposal the council could issue a new RFP. However if a new RFP is issued only respondents to the first RFP may respond. The councils intent is to provide an incentive for participation in the first RFP. Instead of a second RFP the council could choose to simply negotiate with one of the original bidders. Three firms responded to the RFP but they used different assumptions on how to calculate the ratio as well as including different options within their proposals. Their construction materials and associated lives are similar but their designs differ substantially. The proposals can be summarized as follows. Tightfisted Proposal Averell Johnson the conservative patriarch of the citys construction community has proposed a bare-bones facility (see Table 1). Assuming 50 years of use and end-of-period cash flows his proposal has a B/C ratio of ____. His proposal also assumes that construction expenditures are all made at the start of the construction period. Table 1. Tightfisted Proposal Construction Costs and Time: 1 year; $2.5 million Annual Operation Costs: Gym: $120000 Annual Operation Costs: City offices: $190000 Annual Benefit Derived: Gym: 60 hours/week 52 weeks/year at $200/hour Major Projects Proposal The proposal that has been supported by the town and gown crowd includes a small auditorium/theater and a library as well as the gym (see Table 2). Major Projects Inc. has evaluated the proposal over 30 years of use for the benefits and for a 12-month term for the construction phase. Major Projects has assumed end-of-period cash flows but they have analyzed the construction phase as 12 month each with an equal share of the construction expenditures. Their calculated B/C ratio is _____. Table 2. Major Projects Proposal Construction Costs: 12 months; $4.8 million Annual Operation Costs: Gym: $110000 Annual Operation Costs: City offices: $165000 Annual Operation Costs: Library: $450000 (mostly salaries) Annual Operation Costs: Theater: $65000 Annual Benefit Derived: Gym: 60 hours/week 52 weeks /year at $200/hour Annual Benefit Derived: Library: $0.5 million in improved education Annual Benefit Derived: Theater: 16 hours/week 52 weeks/year at $450/hour Energy Breakthrough Proposal The third proposal (Table 3) is from a new firm that specializes in the design and construction of energy-efficient structures. They based their B/C ratio _____ on assumptions of 40 years of use and costs and benefits end-of-period cash flows except the construction cost which is to be paid in full upfront. Table 3. Energy Breakthrough Proposal Construction: 1 year; $3.9 million Annual operation: Gym: $ 65000 Annual operation: City offices: $100000 Annual operation: Theater: $15000 Annual benefit: Gym: 60 hours/week at $200/hour Annual benefit: 16 hours/week at $450/hour Councils Solution Overwhelmed by the responses the city council has decided to hire you as a consultant. Your contract requires you to: calculate comparable ratios to recommend a package of facilities and to recommend a contractor. Questions: A) Which alternative would you select based on B/C ratio analysis? B) Are there any other consideration you would have in your final decision? If yes which other factors would influence your final choice? C) Given that it takes one year to construct any of the facility 12 % discount rate useful life of 40 years construction costs of $1300000 for the gym; $1400000 for theatre and $900000 for the library which of the facilities may be justified based on B/C analysis? Note: the benefits derived from each of the facility are as given the case study above. Show less
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.