School of Housing, Building and Planning

Construction Management

Year 2

Semester 1 2019/2020

RMS201 Management Studio1

Project 2: Feasibility Study and Financial Analysis

Conducted By:

Arman Abdul Razak

Dr. Muneera Esa

Dr. Ernawati Mustafa Kamal

Assoc. Prof. Dr. Mohd Wira Mohd Shafiei

Prepared by:

1. Chen Chen 140631

2. Zhang Qian 144873

3. Nur Aini Atiqah binti Zamri 143921

4. Qutrin Nazira binti Ahmad Ismail 144032

5. Muhammad Syakir bin Norazman 143509

6. Abdulrahman Esmail Abdulatef Abdullah 140582

 No. Content Page
1. Acknowledgement 3
2. Introduction 4
3. Main Development Components 5
4. Overall Cost Aspects 9
- Phase 1 (Hangar)
- Phase 2 (Renovation)
5. Anticipated Development Value 11
- Total revenue
6. Phasing & Timeline of Implementation 14
- Pre-Construction
- Phase 1
- Phase 2
- Post Construction
7. Comparative Analysis to measure Opportunity Cost 16
8. Value added/differentiation elements of the project 18
9. Project Cash Flow 21
10. Profit Margins 22
11. Conclusion 23
12. References 23
13. Appendix 24

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Acknowledgement

We would like to express our deepest appreciation to all those who provided us the possibility
to complete this project. A special gratitude we give to some respectable figures that had
provided help and guide us. We would like to show our gratitude to Encik Arman and Dr.
Muneera Esa for helping us to coordinate our project. The completion of this assignment has
given us much pleasure.

We highly thank to Encik Shahrulnizam Bin Mohamad Nor, Architect in Jabatan

Pembangunan Dan Pengurusan Aset USM for the site plan and the floor plan of the Minden
Sport Centre. Without his help, we cannot complete this project.

Our thanks and appreciation also goes to our coursemates and student in USM in developing
the project and willingly helped us out within their abilities. We would also like to expand
our deepest gratitude to all those who have directly and indirectly guided us.

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Introduction

Feasibility studies are preliminary studies undertaken in the very early stage of a project. It
tend to be carried out when a project is large or complex. The purpose of feasibility studies is
to establish whether the project is viable, to help identify feasible options and assist in the
development of other project documentation such as the business case, project execution plan
and strategic brief.

70%

60%

50%

40%

30%

20%

10%

0%
Upgrade the equipment Bigger and better facility Provide the equipment

In our previous project, we have analyse the local demand of Minden Sports Centre through
market survey. Above graph shows what is the most local demand. The supply issues related
about the market survey are poor booking system, unfriendly environment, broken equipment
and also the type of equipment is limited. The supply issues becomes a main problem for the
student and people near USM to use the sport facilities. As discuss, we agreed to use all the
most local demand to proposed a new face to achieve the local needs for the sports facilities.
Besides these also can achieved USM needs as USM wants to develop and cultivates sports
program for the entire campus.

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 Site plan with proposed site

Picture above shows the site plan with the proposed site of the new building (Hangar). Location
of the new building is beside the main building. The yellow box shows the proposed new
building. Area for the new building is 1000 sqm.

1. Main development components

Phase 1 Phase 2
New building (Hangar) Renovation of main building
• Futsal Court • Badminton Court
• Gymnasium • Squash Court
• Locker Room & Washroom

After look up on the local demand, the sports centre need to be bigger. To achieve that,
the sports centre need to add new building and renovation of the main building. The
development of this project will be divided into 2 phases. Phase 1 is construction for
the new building and phase 2 is the renovation of the main building.

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 Picture above shows the layout plan for the new building. For this building, Hangar is
use as the main structure of the building. In the Hangar, it will be focused on the Futsal
Court and gymnasium. The built up area for gymnasium is for 200sqm on the ground
floor and 200sqm on 1st floor make it total to 400sqm. Only 1 futsal court that can be
construct on the site at 800sqm which depending on the excess land. After sum up
everything, the total built up area for the new building is at 1200sqm.

All the built up area exceeds the minimum area provided by Uniform Building By Law
1984 (UBBL).

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 The picture shows the existing layout and the new layout plan. There are some space
that change into new spaces. The spaces that change are toilet and gymnasium. Toilet
changes into locker room and washroom. Toilet comes in 4 unit. 2 unit at ground floor
and the other 2 unit at 1st floor. All this toilet with 184sqm total area changes into locker
room and wash room. Each space of the toilet is divided into 2 parts, 1 part is for locker
room and the other is for washroom. New flooring will be insert in this space which
vinyl flooring for locker room and marble flooring for washroom. This changes will be
a luxurious mood for the users.

The existing gymnasium will be change into dance studio. Renovation for this space is
at 207sqm for flooring area, 60sqm for wall mirror area and 200sqm for wall painting
area. All the broke equipment will be thrown away and the equipment with good
condition will be put in the new gymnasium. The existing vinyl flooring will be hacked
and change into new vinyl flooring with better quality. Some parts of wall will be
change into wall mirror and the other wall will have a better look with new painting
colours.

Besides, the other spaces such as badminton hall and squash court is using the same
spaces. For badminton hall, only the material of the floor is change. The laminated
flooring will be maintain and the rubber mat flooring will be insert on the existing
laminated flooring.. In fact, rubber mat flooring is much more better quality. Plus it can
protect the users from injury. Another changes that take place in the badminton hall is
the paint of the wall with 844sqm wall area. New painting will take place in that space
to give more attraction to that place.

For squash court, renovation will take place on full area. The floor need a new system
which wood flooring system. The existing flooring will be hacked and insert a new
flooring system. The condition of the wall is so bad and needed a new paint. The total
area for renovation of squash court is at 207sqm at floor and 574 at wall.

In fact, the overall condition of the main building is moderate. Some space still have a
nice look and some space needed renovation. It will be a better facilities with a better
look. Main concern of this development is for the better quality rather than a cheap
sport facility with a bad look.

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 2. Overall cost aspects
Phase 1- New Building

Space Built up Area (sqm) Equipment Price

Futsal Court 800 RM 140
Gymnasium 400 RM 55,552.80
Total 1200 RM 55,692.80
Construction cost building and services per sqm = RM 1381

Total built up area = 1200sqm

Total Construction Cost = (RM 1381 x 1200sqm) + RM 55,692.80

= RM 1,712,892.80

*construction cost refer to construction cost handbook Malaysia (Arcadis)

Phase 2- Renovation of Main Building

Space New Space Area (sqm)

Badminton Hall - 936.2
Squash Court - 207
Toilet Locker Room & Wash Room 184
Gymnasium Studio 207

BADMINTON HALL
Cost Factor Floor Mat Aluminium Post Painting Equipment
Price RM 7800 RM 600 RM 15 RM 494.40
Quantity/Area 6 6 pair 844sqm -
Total RM 46,800 RM 3,600 RM 12,660 RM 494.40
Grand Total RM 63.554.40

SQUASH COURT
Cost Factor Hacking Painting Wood Flooring System
Price per sqm RM 215 RM 15 RM 57.50
Area 207sqm 574sqm 207sqm
Total RM 44,505 RM 8,610 RM 11,902.50 RM 65,017.50

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 LOCKER ROOM & WASHROOM
Vinyl Marble
Cost Factor Hacking Locker Painting
Flooring Flooring
Price per
RM 215 RM 960 RM 15 RM 29 RM 384.70
sqm/quantity
Area/Quantity 184sqm 8 quantity 537.6sqm 88.4sqm 95.6sqm
Total RM 39,560 RM 7,680 RM 8,064 RM 2,563.60 RM 36,777.30
Grand Total RM 94,644.90

STUDIO
Cost Factor Hacking Vinyl Flooring Wall Mirror Painting
Area 337sqm 207sqm 60sqm 200sqm
Price per sqm RM 215 RM 29 RM 190 RM 15
Total RM 72,455 RM 6,003 RM 11,400 RM 3,000
Grand Total RM 92,858

Total Renovation Cost = RM 63,554.40 + RM 65,017.50 + RM 94,644.90 +

RM 92,858

= RM 316,074.80

In order to get the overall cost aspects for the entire project development, professional
fees need to be add in. The professional that involved in this entire project is architect
and contractor. As for now the construction cost for phase 1 is at RM 1,712,892.80 and
for phase 2 is at RM 316,074.80. So the total construction cost for this 2 phase is at
RM 2,028,967.60. Professional fees is 16% from the total construction cost. So, the
calculation of professional fees is as follows:

a. Architect = 6% x RM 2,028,967.60
= RM 121,738
b. Contactor = 10% x RM 2,028,967.60
= RM 202,896.80

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 Professional fees = RM 121,738 + RM 202,896.80

= RM 324,634.80

So the total construction cost that will be use in this project is as follows:

Overall Cost Aspects = Total construction cost + Professional fees

= RM 2,028,967.60 + 324,634.80

= RM 2,353,602.40

3. Anticipated development value/potential

This part is where all the revenue is calculated. Total revenue is calculated for a year.
To get the total revenue the rate of sport activity is stated. The rate of all the sport
activity is based on the market research where the minimum price that the respondent
demanded. Plus, the rate is also based on the other sport facility as well. The comparison
rate is on Azman Hashim Sport Centre and the sport facility outside of USM.

Total revenue is calculated as follows:

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Total Revenue

= RM 202,575 + RM 324,850 + RM 179,850 + RM 105,120

= RM 812,125

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 4. Phasing and timeline of implementation
The project implementation schedule is an important time management document that
defines and schedules the major phases of project work being carried out to fulfil the
desired project objectives and achieve the expected deliverables. This document
describes project initiatives as a logical sequence of events over time to progress the
project from its original concept to the final implementation. Usually, the document is
used against progress of the project to monitor and assess ongoing activities and to
create status reports.
(schedule can refer to appendix)
a. Pre-Construction
In order to start a new construction, pre-construction stage is applied. In this
stage where design and planning works is done during the earlier stage. This
stage is target to be done by 8 weeks. The design and planning works to be done
in 4 weeks. Int this stage where architect design the new building and inspect
the main building on what to be refurbished. After that, contract, document
review and revision needed to be done in 2 weeks. In this 2 week, contract will
be made and all the documentation is to be done and revise. After that, the tender
will be open for the contractor to bid. Then, the review for the bids take part.
This stage where 2 months needed from design until reviewing the bids. Also,
RM 324,634.80 needed for professional fees.

b. Phase 1
After agreeing with the contract, the construction for the new main building
started. This phase will take 5 months to complete. The first activity that will
take part in this phase is the site preparation. The existing land will be cleared
and the new site is ready for the foundation work. Foundation work will take
part after the site preparation and is targeted for 1 month to be done. This take
a longer time due to the sloping land on the existing site. After the foundation
is done, the main structure of the new building take place. It involved of
structural steelwork, framework and columns. All this main structure targeted
to be done by 4 weeks. Walls and roofing will be insert after the main structure
is done. Construction of wall and roof need 4 weeks to be done.

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 Mechanical and electrical work will take place after the main structure works is
done. This M&E works targeted to be done by 4 weeks. The installation of the
M&E will be a bit difficult and takes longer time. Last work activity that will
take place is the exterior and interior finishes. This works targeted to be done
by 6 weeks. This works need a longer time as the space in the main building
needed a good handwork for a better quality. On this phase takes RM
1,712,892.80 for the cost.

c. Phase 2
In this stage, renovation work takes part after finish the phase 1. Hacking work
will be the first work to be done in the main building. The space which involved
in hacking is at gymnasium, squash court, locker room and washroom. All this
space will be insert new flooring. This hacking work targeted to be done by 4
weeks. After the hacking works is done, flooring part takes place. The material
of flooring will be insert on all the spaces that have been hacked. Not to forget
the floor mat of the badminton court also will be insert during the flooring
works. This flooring works takes 6 weeks. After that, painting works all over
the main building takes part. This painting works need two coats of emulsion
paint on the plastered surfaces and expected 1 month to finish. Last work on this
renovation phase is the furniture. Furniture will be insert on the selected space.
Phase 2 takes 4 months to be done and expected to use RM 316,074.80.

d. Post Construction
Post construction takes part after phase 2 is done. Post construction is about the
settling all the documents pending and all the cash claiming. The first step that
happen after the construction is done is the inspection of building takes part.
Checking the building on the usage of the materials and following the drawing
requirements or not. After that, cleaning of the building. Last step of this post
construction stage is the CCC approval and final walkthrough. To check the
building in terms of contracts. After that, the owner of the building move in to
the new building.

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 5. Comparative analysis to measure opportunity cost
The comparison takes part between the current total revenue and the expected total
revenue to get the opportunity cost. Comparison started from the rate charge on the
sport facility. This comparison is analysed on some aspect which is the customer, the
sports activity provided and operating hours provided.

Table shows the current rate of the sports facility.

Table shows the new rate of the sports facility.

From the table above, the new rate of the sports facility is a bit higher from the current
rate. If look back, this rate effect on the quality of the sport facilities. Also, the sport
activity provided on the new sports facility is added on futsal. This can make a huge
comparison on the revenue cost. The operating hours on the current sport facility is
lesser than the new sport facility. On the other hand, this new rate can give a huge
impact on the opportunity cost. Next is the table on the revenue of each sports activity
provided.

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 Table shows the current revenue of the sports facility.

As refer from the table above, only RM 24,768 that this sport facility get on a year. To compare
with the new total revenue of the sports facility, refer on point 3. The expected total revenue
is at RM 812,125 for a year. So, this is huge impact on the opportunity cost. The multiple rate
charge and multiple sports activity effect on this cost. Opportunity cost are calculated as
follows:

Expected Total Revenue – Current Revenue

= RM 812,125 – RM 24,768

= RM 787,357

It is a big impact if the construction is to be done. The cost increase at 30 times of the current
revenue. Instead of just let the sport facility getting lower revenue, this construction need to be
done to gain more income. As quotes say “if you spend more, you will get more”.

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 6. Value added/differentiating elements of the project
a. Futsal Court

Futsal is a famous sport among students and people. This sport can give more
income to the sport facility. This make variety of sports at the facility. USM
students who loved to play futsal needed to go far at Batu Maung or Bayan
Lepas to play futsal. If this indoor court is provided in USM, students will love
to use it. Why this facility is better that others? It is because of the price rate of
the court is cheap among others facility.

b. Gymnasium

Gymnasium is the same space that still provided at the facility. The thing that
change in this gymnasium is upon the equipment. From the current gymnasium,
the many equipment is broken due to maintenance factor. The current
equipment is looking so old yet still available in the current gymnasium. It
makes the user not comfortable on using it.

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 Plus in the new gymnasium, new technology will be apply. The technology is
access control channel on the main entrance of the gymnasium. This technology
makes the sport facilities forward on the systematic facilities. Students need to
use the matric card while the outsiders need to buy the access card. From this,
the sport facilities will have regular customer. Below are the examples of the
access control channel:

c. Dance Studio

Dance studio is the new space that will replace gymnasium in the main building.
This studio will make students and staff form USM bonding together. Plus,
Zumba and Aerodance is trending nowadays. This will helps the people to
recognize this sport facilities. Although there are no charges on the studio, this
dance studio will be an attraction for people to use others sports facility as well.

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 d. Locker Room

Locker Room is another things that can have in the value added. This locker
gives value in terms of the privacy. At the sport facility, locker is available for
the users to put their things but the place do not have the room to make it more
private. Existing locker is expose and the chances on people to rob is high. New
room provide for the locker besides the wash room. With locker and wash room
besides each other, it give the user more easier to change the clothes and to keep
their private things. This can attract more users to come as the place have more
privacy section.

e. Rate of the sports activity

From the previous section, the rate of sports activity is stated. The different rate
is big enough to compare on the other sport facilities inside USM and outside
USM. If the marketing is good enough, this new face of Minden Sports Centre
will be recognize of the students, USM staff and the people outside of USM.
The rate give a big opportunity to attract more people to come. As the new
technology is introduced and the rate is cheaper, definitely people will come
and being the regular customer on the facility. Plus, the operating hours will be
longer than the current operating hours.

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 7. Project Cash Flow

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 8. Profit Margins

Construction cost:
(Phase 1 = RM 1,712,892.80 , Phase 2 = RM 316,074.80, Professional Fee=RM 324,634.80)
Total Construction Cost = RM 2,353,602.40 Total Revenue = RM 812,125

EXPENSES FOR 1 YEAR

Worker Salary 10.6% : (6 worker x RM 1,200 x 12 months)= RM 86,400
Utilities 8% : (0.08 x RM 812,125) = RM 64,970
Maintenance 5% : (0.05 x RM 812,125) = RM 40,606.25
Total 19.6% = RM 191,976.25

USM 3% : (0.03 X RM 812,125) = RM 24,363.75

Loan Bank (12yrs) 26.43% : (0.2643 x RM 812,125) = RM 214,644.65

Total 29.43% = RM 239,008.40

NET PROFIT
= Total Revenue – All Expenses
= Total Revenue – (Worker Salary + Utilities + Maintenance + USM + Loan Bank)
= RM 812,125.00 – (RM 86,400 + RM 64,970 + RM 40,606.25 + RM 24,363.75 +
RM 214,644.65)
= RM 381,140.35

NET PROFIT MARGIN

Net Profit Margin = (Net Profit ÷ Total Revenue) x 100
= (RM 381,140.35 ÷ RM 812,125.00) x 100
= 46.93%

TOTAL REVENUE : RM 812,125

NET PROFIT MARGIN : 46.93%
NET PROFIT : RM 381,140.35

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Conclusion
Based on this project, Feasibility Study and Financial Analysis, we can conclude that this new
proposed development can give more profit to us. It is a huge profit that can generate from this
project regarding of the new rate that apply to this project. We can se that the rate charge effect
the income generate for the facilities. From the current sport facility the quality of the
equipment is so bad and too many of equipment is broke. From this we can see that the
maintenance for the facility is bad.

We are hoping that this development can give better returns for the developer and Universiti
Sains Malaysia. This sport facility is apart of USM image. If this development can make a
huge returns, USM will get the positive view from outside people. Though the new technology
introduced is one of the way to make USM try new things and a new face for USM students.
This sport facilities is important to USM as this facility is one of the old building that still
contribute to the university.

Thus, the new equipment that provided to the student will be the best sport equipment used.
People can come to the facility with no equipment needed and can rent from the facility as well.
This is another steps that can make USM a better university that other university. From this,
USM can get more athletes. Students nowadays love to play sports but they rather to stay in
the room because lack of equipment from themselves. This way can make them to play sports
anytime with no regret and at the same time the students can practicing the healthy lifestyle.

References

1. JUBM & Arcadis Construction Cost Handbook Malaysia 2019

2. Uniform Building By Law 1984 (UBBL)
3. (Renoeasi, 2018) Renovation Cost
4. (Ridzuan, 2017) Feasibility Study
5. Alibaba.com/product detail/vinyl flooring
6. (Investment Property, n.d.) GDV
7. HomeAdvisor.com/Marble Cost

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