Q1. To enable Saudi 2030 vision, the government sought to utilize Public-Private-Partnerships (PPPs) to finance, design, build, and operate many projects. (a) Define types of Contracts used in PPPs, and compare them to traditional contracting. Discuss in terms of advantages and disadvantages. Provide at least two references for your answer. ( 10 points) (b) Give examples of at least three PPP projects in Saudi Arabia. (These projects could have been done in the past, present, or planned). Provide details for each project in terms of size of the investment, duration of the contract, type of contract, and a brief description of project objectives. (10 points) Q2. Rabigh Municipality is considering two locations for a new city park. Mastoora location would require an investment of SAR 3 million and SAR 50,000 per year for maintenance. Another South of Rabigh location would cost SAR 7 million to construct but the Rabigh Municipality will receive SAR 25,000 per year in park entrance fees. The operating cost of the South of Rabigh location will be SAR 65,000 per year. The revenue to shops in Mastoora due to the park will be SAR 500,000 per year, while at South of Rabigh will be SAR 700,000 per year. The disbenefits associated with each location are SAR 30,000 per year for Mastoora and SAR 40,000 for South of Rabigh. Assume that the park will be maintained indefinitely. Use an interest rate of 12% per year to determine which location, if either, should be selected on the basis of: (a) the B/C method (7.5 points) (b) the modeified B/C method (7.5 points) Q3 A junior mechanical engineering student is cooping this semester at Regency Aircraft, which customizes the interiors of private and corporate jets. Her first assignment is to develop the specifications for a new machine to cut, shape, and sew leather or vinyl covers and trims. The first cost is not easy to estimate due to many options, but the annual revenue and M&O costs should net out at $+15,000 per year over a 10-year life. Salvage is expected to be 20% of the first cost. Determine the breakeven first cost of the machine to just recover its first cost and a return of 10% per year under two scenarios: I: No outside revenue will be developed by the machine. II: Outside contracting will occur with estimated revenue of $10,000 the first year, increasing by $6000 per year thereafter. Solve using (a) hand and (b) spreadsheet solutions. (15 points) Q1. To enable Saudi 2030 vision, the government sought to utilize Public-Private-Partnerships (PPPs) to finance, design, build, and operate many projects. (a) Define types of Contracts used in PPPs, and compare them to traditional contracting. Discuss in terms of advantages and disadvantages. Provide at least two references for your answer. ( 10 points) (b) Give examples of at least three PPP projects in Saudi Arabia. (These projects could have been done in the past, present, or planned). Provide details for each project in terms of size of the investment, duration of the contract, type of contract, and a brief description of project objectives. (10 points) Q2. Rabigh Municipality is considering two locations for a new city park. Mastoora location would require an investment of SAR 3 million and SAR 50,000 per year for maintenance. Another South of Rabigh location would cost SAR 7 million to construct but the Rabigh Municipality will receive SAR 25,000 per year in park entrance fees. The operating cost of the South of Rabigh location will be SAR 65,000 per year. The revenue to shops in Mastoora due to the park will be SAR 500,000 per year, while at South of Rabigh will be SAR 700,000 per year. The disbenefits associated with each location are SAR 30,000 per year for Mastoora and SAR 40,000 for South of Rabigh. Assume that the park will be maintained indefinitely. Use an interest rate of 12% per year to determine which location, if either, should be selected on the basis of: (a) the B/C method (7.5 points) (b) the modeified B/C method (7.5 points) Q3 A junior mechanical engineering student is cooping this semester at Regency Aircraft, which customizes the interiors of private and corporate jets. Her first assignment is to develop the specifications for a new machine to cut, shape, and sew leather or vinyl covers and trims. The first cost is not easy to estimate due to many options, but the annual revenue and M&O costs should net out at $+15,000 per year over a 10-year life. Salvage is expected to be 20% of the first cost. Determine the breakeven first cost of the machine to just recover its first cost and a return of 10% per year under two scenarios: I: No outside revenue will be developed by the machine. II: Outside contracting will occur with estimated revenue of $10,000 the first year, increasing by $6000 per year thereafter. Solve using (a) hand and (b) spreadsheet solutions. (15 points)
