JASPEN Development Sdn Bhd expert in construction of shoplots and shopping malls. The marketing manager identified a RM5,000 million project on development of a new shopping mall in Batu Kawan, Penang. The data related to the new shopping mall project is as follows: Direct materials required: (i) 1,000,000 pieces of alluminium bar type G is required to be used in the project. The original cost of alluminium bar type G was RM80 per piece but as the bar has not been required for the last two years, it has been written down to RM25 per piece scrap value. The only foreseeable alternative use is as a substitute for alluminium bar type H (in current use) but this would involve further processing costs of RM15 per piece. The current cost of alluminium bar type H is RM55 per piece. (ii) Other materials cost is RM1,210 millions. Site workers required: Total estimated site worker hours involve in this project is 54million hours. One third of the total labour hours is skilled worker and the rest is semi-skilled worker hours. A worker possessing the necessary skills is currently paid RM30 per hour. A replacement would, however, have to be obtained at a rate of RM24 per hour for the work which would otherwise be done by the skilled workers. The current rate for semi- skilled work is RM11 per hour and additional workers could be appointed for this work. The other project costs are listed as below: RM'million Contractors 2,200 Legal Costs 250 Costs payable to local authorities 100Required: {a} Determine the project net prot. Show all workings clearly. (11 marks} (b) Based on the project contract; use timing expected receipt and payments proportion are listed as below: REM ' of gear 202.2 2024 2112.5 202.5 Contract T.ralue 1% 2G% 65% 5 % Direct Materials 3U% 3D% 4D% Site Workers 25 % 25% 25% 25% Contractors\" Progress 3U% 30% 2G% 15% 5 % Legal Cost l% Cost payable to Local authorities 5U% 5U% Prepare the Yearly Cash Budget of the project Show all workings clearly- (19 marks} {e} Determine the net present value of the project Note: The management expects 10% annual return rate. Show all workings. {5 marks} {d} The Project Director proposed to negotiate with the client in order to improve the progress claim collection. He suggested to o'er 5% discount on the project value as an incentive tn the client to pay intactly based on the progress completion stages. (Note: the progress completion stages follow the Contractors Progress claims}- The Project Logistic Manager suggested to manage other material supplies based on zero stock and just in time acquisition. The company needs to pay additional 2% on the acquisition cost of the other material supplies when the company practices just in time stock management; (Note: no change on the thther processing cost to convert alluminium type G to alluminium type H}. Project Human Resource Manager informed the management that a special one week training course should be provided to all workers before the commencement of the project Based onthe previous statistic reports, workers' productivity were be improved by 211134\": aer they attended the course. The estimated training cost is REE millions. (i) Determine the revised Yearly Project l[Clash Budget Show all workings. (15 marks} (ii) Determine the revised Net Present Value based on {dKi} ahuve. Show all workings. {5 marks} (iii) Discuss ten [10) matters to be considered on this revised proposal. [It] marks} (e) Discuss the term 'budgetary control' and what are the five (5) benefits and five (5) limitations of budgetary control. (25 marks)
