• • The city of Greendale wants to contract with your company to build a new baseball stadium. They have received a bond issue that will provide for $100M for the project. The proposal is that 5 equal payments of $20M will be paid over the course of the project. The initial investment that your company will require is $20M. The projected annual labor and materials budget is $10M. Additionally, you will need to make a capital outlay of $15M in year 3 for new equipment. The company required a rate of return of 12%.

    The stadium is an outdoor structure with a retractable roof. The project begins with clearing the site. Once the site is clear, work can start simultaneously on the structure itself and demolishing an adjacent building site. This demolition is necessary to create a construction stage for storing materials and equipment.

    The work on the stadium begins by driving 160 support pilings. Next comes the pouring of the lower concrete bowl. Once this is done the construction site has been set up, then the pouring of the main concourse, the installation of the playing field, and the construction of the upper steel bowl can occur.

    Once the concourse and upper bowl are completed, work can start simultaneously on building the luxury boxes, installing the sets, installing the jumbotron, and installing the stadium infrastructure which includes: bathrooms, lockers, restaurants, etc. once the seats are installed then the steel canopy can be constructed followed by the installation of the lights.

    The retractable roof represents the most significant technical challenge to the project. Building the roof track supports can begin after the lower concrete bowl is constructed. At this time the dimensions of the roof can be finalized and the construction of the roof at a separate site can begin. After the roof supports are completed then the roof tracks can be installed. Once the tracks and the roof are complete then the roof can be installed and made operational. Once all activities are completed a final inspection is required prior to occupancy.

    For purposes of this case assume the following:

    The following holidays are observed: January 1, Memorial Day (last Monday in May), July 4^th, Labor Day (first Monday in September), Thanksgiving Day (4^th Thursday in November), December 25 and 26.

    If a holiday falls on a Saturday then Friday will be given as an extra day off and if it falls on a Sunday then Monday will be given as a day off.

    The construction crew work Monday through Friday.

    
    

    questions:

    1. Perform an NPV assessment to first determine whether your company should accept the contract.

    2. If you decide to proceed what is the expected NPV value of the contract.

    3. Develop a scope statement for this project.

    4. What is the expected duration of the project and assuming you will begin construction on July1, 2016, what date do you expect to complete?

    5. What is the critical path for the project?

    7. Prepare a Gantt chart for the project schedule.

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Answer rating: 100% (QA)

Perform an NPV assessment to first determine whether your company should accept the contract To perform an NPV assessment we need to calculate the net present value of the cash flows associated with t... View the full answer