CASE STUDY - Emergency Power Project Case Study Objectives Upon completion of this case study report, you should be able to: 1. apply engineering economic decision-making process, 2. prepare a detailed financial analysis report, and 3. provide a professional recommendation on the finding of the study. Current Business Report Emergency Power Sdn. Bhd. (EPSB) supplies back-up power to commercial sector, when the commercial companies, municipals and private functions require back up power for their activities. The company is equipped with 300 kW generator which is connected to a trailer which enable the diesel generator to be moved to the locations where it is required The company has been on the business for the last two years. The diesel is manned by two electricians and one driver. Monthly, the company received request for power back-up for about 20 days with each service range between 8 to 12 hours. On the average, the total of 6,000 kWh provides to clients monthly. The investment cost for the trailer and accessories is RM600,000. The investment cost is sourced from bank loan to be recovered within 3 years with interest rate of 10% per annum. The demand for the back-up power has been on an increase. It is estimated that the direct cost from diesel 50 % of the revenues. The annual revenues for the company are shown in TABLE 1, where FY2018/2019 are actual values while FY2020 is a projection. TABLE 1: Emergency Power Supply Original Business Revenues (annual statement of income) FY2018 FY2019 FY2020 (Present) 780,000 794,000 820,000 Revenue (RM) Power sales Direct Cost (RM) Diesel Gross Profit (RM) Gross Margin (%) 390,000 390,000 50 390,000 390,000 50 410,000 410,000 50 As expected, salary and rental would form a significant portion of the operating expenditure. Utilities, transportation, equipment repair and general maintenance also form part of the costs. Other forms of commitment including tax, legal fee etc. is lumped into miscellaneous expenses. All budgeted expenses are tabulated in TABLE 2. For simplicity in analyzing the business profitability, the expenses are calculated based on the budgeted value rather than the actual costs. CASE STUDY - Emergency Power Project Case Study Objectives Upon completion of this case study report, you should be able to: 1. apply engineering economic decision-making process, 2. prepare a detailed financial analysis report, and 3. provide a professional recommendation on the finding of the study. Current Business Report Emergency Power Sdn. Bhd. (EPSB) supplies back-up power to commercial sector, when the commercial companies, municipals and private functions require back up power for their activities. The company is equipped with 300 kW generator which is connected to a trailer which enable the diesel generator to be moved to the locations where it is required The company has been on the business for the last two years. The diesel is manned by two electricians and one driver. Monthly, the company received request for power back-up for about 20 days with each service range between 8 to 12 hours. On the average, the total of 6,000 kWh provides to clients monthly. The investment cost for the trailer and accessories is RM600,000. The investment cost is sourced from bank loan to be recovered within 3 years with interest rate of 10% per annum. The demand for the back-up power has been on an increase. It is estimated that the direct cost from diesel 50 % of the revenues. The annual revenues for the company are shown in TABLE 1, where FY2018/2019 are actual values while FY2020 is a projection. TABLE 1: Emergency Power Supply Original Business Revenues (annual statement of income) FY2018 FY2019 FY2020 (Present) 780,000 794,000 820,000 Revenue (RM) Power sales Direct Cost (RM) Diesel Gross Profit (RM) Gross Margin (%) 390,000 390,000 50 390,000 390,000 50 410,000 410,000 50 As expected, salary and rental would form a significant portion of the operating expenditure. Utilities, transportation, equipment repair and general maintenance also form part of the costs. Other forms of commitment including tax, legal fee etc. is lumped into miscellaneous expenses. All budgeted expenses are tabulated in TABLE 2. For simplicity in analyzing the business profitability, the expenses are calculated based on the budgeted value rather than the actual costs