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COURSE TITLE : CONSTRUCTION ECONOMICS II

COURSE CODE : BQES 3202

SEMESTER/SESSION : SEMESTER II/SESSION 2012/2013

TITLE : PROPOSED DESIGN AND FEASIBILITY

STUDIES FOR PR1MA LAKSAMANA

JAYA WITH 2 TYPES OF RESIDENTIAL

DESIGN

SUBMISSION DATE : 17.05.2013

PREPARED BY: SUKMAJAYA GROUP OF COMPANIES

NO. NAME MATRIC NO.

1 SITI KHADIJAH ABDUL RANI BEQ100031

2 NURUL NAJIHA MOHD GHAZALI BEQ100038

TABLE OF CONTENTS

ITEMS PAGE NO.

1.0 About PR1MA LAKSAMANA JAYA

2.0 RIBA Work Stages for PR1MA LAKSAMANA

JAYA

3.0 Proposed Cost of Development of PR1MA

Laksamana Jaya

4.0 Proposed Shops lot/Office Lot within the Site of

Proposed PR1MA Laksamana Jaya

Question 1

Upon inspecting the site, you were asked by the top management to propose 2 alternative

designs that suit to the requirements by the government. Based on your analysis on the

building designs and the site conditions, propose the most economical alternative and provide

justifications for your proposal. In your proposal, you must include the number of units and

the proposed gross floor area (GFA) for each unit.

Feasibility Studies

Feasibility study defined as a study on the current and expected availability of human,

physical and financial resources so as to ensure their optimum deployment that can be

measured according to specified criteria in the context of prevailing and predicted commercial

and socio-economic requirements.1

Feasibility objectives are:

Generate adequate cash flow and profits

Withstand risks

Remain viable in the long-term

Meet the goals of client2

The feasibility study prepared as a proposal to develop PR1MA housing at Kota Laksamana,

Malacca. Consist of the information below:

1) Site Analysis

2) Soil Analysis

3) Design Analysis

4) Market Analysis

1) Site Analysis

1 Khairani Haji Ahmad

2 Justis, R. T. & Kreigsmann, B. (1979). The feasibility study as a tool for venture analysis. Business Journal of

Small Business Management 2

The proposed site for the development of PR1MA Laksamana Jaya housing located at

the Kota Laksamana, Malacca. The proposed site area is estimated 12.80 acres (51 800M2)

Figure 1: Proposed area for PR1MA Laksamana Jaya housing development by Google Maps

Area Calculator Tools

2) Soil Analysis

To reclaim this piece of land, it is necessary to fill up the tidal land into a platform higher

than seawater levels at all time. For area that had been raised up by landfill, it should be trimmed

down and covered with soil to form a platform. Site investigation consisted of boreholes,

piezocones and trial pits was carried out prior to the reclamation work. The subsoil profiles and

the engineering properties are presented. Potential problems associated with the reclamation

work are discussed. Ground treatment to overcome the anticipated settlement of soft ground is

presented. Dynamic compaction was carried out to densify the landfill thus minimized the

potential settlement in future. Geotechnical instrument were installed to monitor the

performance of subsoil.3

Due to the inherent uncertainty of subsoil, it is very difficult to estimate precisely the

magnitude of settlement and the rate of settlement of the reclaimed platform especially when

only limited numbers of boreholes were made and these boreholes were distributed over large

area. Monitoring of the subsoil performance during construction is essential. Geotechnical

3 Menard, L. and Broise, Y. 1975. Theoretical and practical aspects of dynamic consolidation.

Geotechnique 25, No. 1, pp. 3-18.

instruments inclusive of inclinometers, piezometers and settlement markers were installed

during the process of reclamation to monitor the subsoil performance. Four numbers of

inclinometers were installed at the edge of the platform slope. Six numbers of pneumatic type

Piezometers were installed at different levels mainly in the clayey soil layer. Total 31

numbers of settlement markers were installed immediately after the platform had been formed

before placing of additional fill.4

i. Landfill

The landfill was only found at localized area with thickness varied from 3m to 6m in general.

It was assume that this landfill had been at site for more than 15 years. From the site

investigation, the landfill consists of variety of materials inclusive of domestic refuse,

construction waste, organic substance etc.

ii. Soft clay layer

Soft silt clay was found at the tidal land as well as below the landfill area. The average

thickness is about 5m. Liquid limit and plastic index of the soft clay were in the ranges of

50% to 80% and 35% to 45% respectively.

iii. Medium stiff layer

Underlying the soft silt clay is a thick layer of medium to stiff silt clay and medium dense silt

sand layers.

iv. Hard layer and bedrock

Hard or very dense soil layer could only be encountered at about 45m to 55m below the

existing ground level. Granite bedrock was encountered in some boreholes at depth of 50m to

65m.

3) Design Analysis

Proposed on PR1MA Laksamana Jaya design concept of the housing is green and

sustainable environments. There are two types of proposed alternative designs which are high-

rise apartment and landed houses. The design concept for both proposed design is summarized

as below:

4 Asaoka, A. 1978. Observational procedure of settlement prediction. Soils and Foundation, No.4

Hansbo, S 1979. Consolidation of clay by band-shaped prefrabricated drains. Ground

Engineering, July 1979.

Total proposed site area for this project estimated is 12.86 acres (52 035M2)

Total proposed site area for residential housing and infrastructure 11.80 acres (47 753M2)

Total proposed site area for shop house and/ or office building is estimated 1.06 acres (4

281M2)

A) Alternative A- High-rise Apartment

Characteristics High-rise development

Storey heights No. of blocks: 4

- 2 blocks of 110 units

- 2 locks of 140 units

No. of floors: 5

500 unit houses

GFA residential housing 917.84 sq.ft (85. 27 m2)/ per unit

458 920 sq.ft (42 635.00 m2)

GFA infrastructure 55 089.69 (5 118 m2)

Layout design 3 bedrooms

2 bathrooms

Kitchen

Dining area

Living room

Balcony

Dry yard

B) Alternative B- Landed House

Characteristics High-rise development

Storey heights No. units: 300 houses

No. Storey : single storey

GFA residential housing 1076.39 sq.ft (100.00 m2)/ per unit

322 917sq.ft (30 000.00 m2)

GFA infrastructure 19 1091.70 (17 753 m2)

Layout design 3 bedrooms

2 bathrooms

Kitchen

Bedroom 2

Kitchen Bathroom1

Bathroom2 Master

bedroom

Bedroom1

Dining

area

Living

room

Car

Park

Dining area

Utility room

Living room

Balcony

Parking

4) Market Analysis

The Proposed area for developing PR1MA Harmoni house as showed on Figure 1.1 and

located 2.8KM to the south-west of Malacca city centre and approximately takes 5 minutes

driving. It is also located at the western side of the Jalan Tengkera main road linking Kota

Laksamana and the Malacca centre. The proposed site is actually located around Jalan

Mahajaya and Jalan Syed Abdul Aziz and also accessible from Jalan Tengkera and Jalan Syed

Abdul Aziz. The nearest developed residential areas are Taman Kota Laksamana, Taman

Mahajaya dan Taman Angkasapuri. The site located near by the beach and is a reclamation

land. Malacca is the smallest state in Malaysia, the availability of the land residential and

commercial land is very low due to preservation of the world heritage buildings and

monuments. As a result, reclamation process is done to widen the land that later be used to

develop the state and to fulfil demand for the citizens in Malacca and their growing visitors

each year.

Accessibility to Kota Laksamana is via the Melaka/Muar highway, Malacca Coastal

Highway and North/South Expressway. The proposed area are surrounded by a lots of facilities

and others development. Developing the site is very convenient as the site is in a strategic

location where excellent and services are within walking distance from their homes. The site is

very suitable for residents with family and within sustainable communities.

Facilities and Amenities Nearby

Lists of Schools

SJK(C) Pay Fong 1(Primary School)

SJK(C) Pay Teck (Primary School)

SMK Gajah Berang (Secondary School)

Pay Fong High School(Secondary School)

Lists of Hospitals

Mahkota Medical Centre

Asia Clinic & Maternity Home

Southern Hospital

Putra Specialist Hospital

Transportation Facilities

Melaka Sentral Bus Terminal (Express)

Melaka Sentral Bus Terminal (Local)

Tourism Places

Jonker Walk Melaka

Muzium Warisan Baba Dan Nyonya

Menara Taming Sari

A’Farmosa

Dataran pahlawan

The Stadthuys

Lists of Shopping Complexes

Mahkota Parade Shopping Centre

Dataran Pahlawan Malacca Megamall

Conclusion

As conclusion, the most economical alternative in developing PR1MA housing is by

adopting alternative A - high rise apartment. The apartment is provides 3 bedrooms and 2

bathrooms. The total units to be built are 500 units with 42 635.00 m2 total gross floor areas

and the layout design for the house is equal to the middle-income household’s family sizes and

it is priced accordingly. We choose to develop high rise apartment because it is easy to construct

by adopting Integrated Building System (IBS) that is compulsory to use in every government

project for high rise. The construction process is time saving and it promote a green

environment due to no wastes are. On the other hand, 5 118 m2 from the total gross floor area

are for the resident infrastructure including swimming pool, open car parks, playground, squash

court, guard house and TNB substation. While another 4 281m2 gross floor area are for the

development of shop lots or/and office lots. The most important factor to be consider in

purposing the building design is the current market demand and future market demand of Kota

Laksamana, that located in Malacca that constantly facing high demand in housing development

regardless from local residents or tourist and it is predicted that Malacca will be facing land

shortage since it is a small developing state with various tourism projects and also state

development project. Therefore there will be numerous numbers of developments in Melaka in

order to sustain the population density. High rise apartment is very convenient in solving those

problems of land shortage and high demands in Malacca. Moreover, constructing a high rise

PR1MA houses can sustain a larger population than landed housing.

QUESTION 2

Advice PRIMA Berhad and the government on the following:

2 (a) The suitability of the RIBA Work Stages for this project and why it is advisable to adopt

such work stages.

Figure of RIBA Plan Work 2013

RIBA Work

Stages

Suitability for project Reason for adoption

Stage A

(Appraisal)

Set up project steering group

and identify the version and

key (KPI) performance

indicators for the project.

Considering funding and

procurement.

Identification of client’s requirement and

any possible constrain on development.

Preparation of studies to enable the client

to decide whether to proceed and to select

the probable procurement method. This is

particularly important decision as it will

determine the way in managing project

resource, responsibilities and risk

between client and its consultant and

contractors.

Stage B

(Design Brief)

Studies of requirement, site

conditions, planning, design

and cost as necessary to

reach decisions

Monitor performance against

the vision and KPI’s for the

project

Preparation of general outline of

requirement and planning, of future

action on behalf of the client with client

conforming key requirement and

constraints.

Identification of procedure, organisation

structure and range of consultant and

others to be engaged for the project.

The strategic brief is a key output from

this stage and becomes the clear

responsibility of the client.

Stage C

(Concept)

Develop the brief further,

studies on user requirements,

technical aspects, planning,

design and cost as necessary

to reach decision.


the vision and KPIs for the

project.

Provide the client with an appraisal and

recommendation in order that they may

determine the form in which the project is

to proceed.

Ensure that it is feasible functionally,

technically and financially

At the point the development of the

strategic brief into the full project brief

begins and outline design proposal and

cost estimates are prepared.

Stage D

(Design

Development)

Complete final development

brief and full design of the

project by the architect

Engineers prepare

preliminary design

Preparation of cost plan and

full explanatory report

Submit proposals for all

approvals


the vision and KPI’s for the

project.

Determines the general approach to the

layout, design and construction in order

to obtain authoritative approval of the

client on the ouline proposals.

The project brief will be fully developed

and detailed proposal will be made and

compiled generally in Stage D

The application for full development

control approval will be made at this

point.

Stage E

(Technical

Design)

Full design of every part and

compartment of the building

by collaboration of all

concerned. Complete cost

checking of design.



project.

Completion of the brief with decision

made on the planning arrangement

appearance, construction method, outline

specification and cost of the project.

All approvals will be obtained at this

stage, including Building Regulations.

In effect, during the stage final proposal

are developed for the project sufficient

for coordination of all its components and

elements to realise the construction.

Stage F

(Production

Information)

Prepare final production

information such as drawing,

schedules and specifications.



project.

Final decision taken on every matter

related to design, specification,

construction and cost.

Any further production information

required under the building contractor to

complete the information for construction

is then prepared.

All statutory approvals should be

obtained by the end of this phase.

Stage G

(Tender

Documentation)

Prepare bills of Quantities

and tender documents



project

Prepare and collate tender documentation

in sufficient detail to enable a tender or

tenders to be obtained for the

construction of the project.

It should be noted that this stage is much

more relevant to traditional forms of

procurement

Stage H

(Tender Action)

Hold pre-tender briefing for

potential contractors to

ensure they have a good

project understanding.

Obtain and appraise tenders.

Appoint contractor.



project.

Prepare and complete all information and

arrangements to obtain tender.

Identify potential contractors for the

construction of the project.

Tenders obtained and appraised with

recommendation made to the client body

to allow an appointment to be made.

This can be achieved by the inclusion of

this as a key selection criterion early in

the procurement process.

Stage J

(Mobilisation)

Take action in accordance

with the RIBA Plan of Work.

Hand over site to contractor

to prepare prior to

construction.



project.

Building contract let and contractor

appointed.

Production information issued to the

contractor.

Site is handed over to the contractor.

Stage K

(Construction to

Practical

Completion)


with RIBA Plan of Work.

Regular site inspections of

work to ensure it meet

specification.

Contractor programmes the work in

accordance with the contract and

commences work on site.

Further information supplied to the

contractor as and when reasonably

required.



project.

Stage L

(Post Practical

Completion)


with the RIBA Plan of Work.



project.

Analyze job records and

inspect completed building

as appropriate.

Conduct studies of the

building in use. These are

particularly important to

focus on energy in use

against the design

specification.



project.

Final inspections are made to ensure

specification have been met. In addition,

the final account is settled.

At this stage, the building has been

handed over to the client for occupation.

Any defects will have been remedied and

the final account settled. This allows the

management, construction and

performance of the project to be assessed.

Initial Project Brief:

i. Preparation of feasibility studies

ii. Preliminary estimate

iii. Determine budget

iv. Procurement route

Suitability for project

Reason for adoption

i. Preliminary estimate – cost planning

ii. Detail cost planning

iii. Firm budgeting

iv. Finalise procurement strategy


Reason for adoption

i. Firm estimating & cost planning

ii. Preparation of tender document

iii. Preparation of Bills of Quantities


Reason for adoption

i. Tender document procedure

ii. Calling for tender


Reason for adoption

i. Tender document procedure

ii. Calling for tender

iii. Tender evaluation


Reason for adoption

1. Contract documentation

2. Contract administration:

i. Preparation of cash flow

ii. Cost report

iii. Interim valuation and payments

iv. Variation controls

v. Final account


Reason for adoption

1. Process can be similar

2. From estimating to final account, specifically to maintain the

building


Reason for adoption

2 (b) The cost management methods available and how these methods can be applied into this

project.

The choice of method employed will be influenced by the information and time available, the

experience of the surveyor and the amount and form of the cost data available. The cost

management methods available are:

Unit Method

Comparative Estimate Cube Method

Elemental Cost Gross Floor Area

Analysis Method

Approximate Quantities Storey Enclosure Method

The first method that can be applied in this project is the Gross Floor Area Method (GFA) :

In this method the total floor area of the building on all floors is measured between the internal

faces of the enclosing external walls and it includes internal walls, partitions, columns, stairs,

lift shafts, corridors. While the sloping surfaces such as staircases, galleries, tiered terrace are

measured flat on plan.

A unit rate is then calculated per square meters of floor area and the probable total cost of the

building is obtained by multiplying the total floor area by the calculated unit rate. This is the

most popular method of approximate estimating, as it is comparatively easy to calculate the

floor area of a building and the costing are expressed.

Total cost of proposed building can be obtained by using the formula:

Next method that can be applied in this project is the Elemental Cost Analysis (ECA):

This method uses elemental cost analyses for previous project as a basis for the estimate. The

cost is computed on a superficial or floor area basis but the overall superficial unit is broken

GFA = Cost/m2 GFA x Total cost of proposed building

down into elements and sub elements. This method involves a close examination of the design

and cost aspects of major parts or elements of the building and the information available, thus

this analysis can form a preliminary estimating.

The cost will then distributed to several elements of the building. Allocation should be made to

allow visible changes to differences on design market condition, time location, contract

condition and also to establish cost target or a realistic cost limit. It is possible to make cost

adjustments for variations in the design in a new project as compared to other method.

Figure 2: depicts the cost distribution to the total building cost, from the percentage of each

element in the project.

Cost Limit

Substructure

(20%)

(20%)

Furniture and

fittings (13%)

Superstructure

(40%)

Services

(12%)

Finishes

(15%)

QUESTION 3

From your experience and from other previous and similar projects, provide the top

management on how do you derive with you proposed cost of the development.

a) The total cost/m2 of this project. Sources from Bank Negara Malaysia indicated that the

interest rate is expected to increase by 2% from 10% in 2012.

Formula New Price;

= Current Index x Cost/M2 Interest Rate: 12%

Base Index

=93.0 x RM 821.21=RM 763.73

100

DESCRIPTIONS

PROPOSED FOR MEDIUM COST APARTMENTS (4 BLOCKS OF 5 STOREY CONSIST OF 500 UNITS) BASED ON PREVIOUS PROJECT IN LEMBAH KLANG IN 2002

1.BUILDING COST

GROSS FLOOR AREA 42635 M2 COST= RM763.73 RM763.73

COST= GFA X COST/M2 RM32,561,628.55

2.INFRASTRUCTURE COST

40 % OF TOTAL BUILDING COST RM13,024,651.42

TOTAL BUILDING AND INFRASTRUCTURE (CONSTRUCTION COST)

RM45,586,279.97

3.PRELIMINARIES @ 10%

(10 % OF TOTAL BUILDING AND INFRASTRUCTURE)

RM4,558,628.00

TOTAL CONSTRUCTION COST RM50,144,907.97

4.FINANCE ON CONSTRUCTION

FORMULA: CONTRACT SUM x CONTRACT PERIOD x 12% / 2

RM 50,144,907.97x2YEARSx12%/2

RM6,017,388.96 5.SITE COST

COST= RM376.60/M2

GFA=42635/M2

COST=GFAxCOST/M2 RM16,056,341.00

6.FINANCE ON SITE

SITE COSTx12%xCONSTRUCTION PERIOD RM3,853,521.84

TOTAL LAND COST RM19,909,862.84

7.PRE-DEVELOPMENT COST @15% RM7,521,736.20

8.CONTINGENCIES @ 5% OF TOTAL CONSTRUCTION COST RM2,507,245.40

COST OF DEVELOPMENT RM86,101,141.36

TOTAL COST PER M2 RM2,019.49

b) The total cost/m2 of this project using the cost indices published by the Department of

Statistics Malaysia. Additionally, at the same time, PRIMA BERHAD would like to

improve the quality for several elements and will be applicable for this project. Propose

your improvement for this project and provide the details for verification by PRIMA.

Formula:

% of Improvement= Current Index – Base Index x 100 Cost Indices 2002=100

Base Index Price Material m2 in year of 2002

New price= Current Index x Cost/m2

Base Index

Below are the elements that has been chose to improve its quality for the proposed project:

Element Cost/m2 (RM)

New Price (RM) % of Improvement Cost after Improvement

Paint for internal wall finishes

48.70 102.4 x 48.70 100 =49.87

102.4-100 x100 100 =2.4%

(49.87 x 2.4%) +49.87 =51.07

Tiles for Floor finishes

47.45 100.4 x 47.45 100 =47.64

100.4-100 x 100 100 =0.4

(47.64 x 0.4%) +47.64 =47.83

Ceiling Materials

8.62 99.6 x 8.62 100 =8.59

99.6-100 x 100 100 =-0.4

(8.59x -0.4%)+8.59 =8.55

TOTAL 104.77 107.45

Current cost/m2 GFA – referred to current cost /m2 of elements = RM 763.73-RM 104.77= RM

658.96

Cost/m2 after improvement as for Selangor price in 2002. Since Selangor and Melaka is in the same

Zone which is Zone C so, there is no need to multiply with its locality factor.

Conversion of cost/m2 in Melaka 1999 to 2013

Formula: Current Index X Base Price.

Base Index

=RM 658.96 x 99.6

100

=RM 656.32/M2

QUESTION 4

As an added value to the proposed project, your company is proposing to have a separate

local business area but within the proposed site. It is proposed that this local business area

to be built as a separate building to minimize the traffic issues. Provide 2 alternatives for this

proposed building;

a) Units for sale after completion

b) Units to let after completion

Both alternatives are having;

Similar site cost

Construction cost

Professional fees and other fees

And have to be completed in 2 years. Advice PRIMA accordingly with justifications.

Provide your own assumptions on other items such as;

Selling price after completion,

Annual rental

Return on investment

Interest rate

Annual outgoings,

By using previous Elemental Cost Analysis on shops lot projects of 1 block of 3 storey

shoplot/office building which located in Kuala Langat Selangor on 2001.Based on price per

m2/GFA on 2001. New price formula will be use:

Current Index X Cost/m2= NEW PRICE FORMULA

Basic Index

Information from statistic department ANNUAL OUTGOING 20% OF

ANNUAL RENTAL OUTGOING EXPENSES=20%

BMI on April 2013=91.7 YP IN PERPUITY @9.5 (ASSUMPTION

BASED ON PREVIOUS ECA PROJECTS.

BMI on Jun 2001=126.5 RENTAL=20/M2

PRICE GFA/m2 in 2001=RM 414.16 INTEREST FINANCE AT 10%

New Price Formula = 91.7 X RM 414.16

126.5

Chart shown as the above, shows that shop lot/office units for rental are very viable to be build.

Which mean that the development cost of this project is very small but it does consist many

elements of work. The return of investment for shop lot/ office for rental is almost 120% rate

of return after 2 years which is relatively much higher compared to shop lot/ office for sales.

From this, we can also conclude that for shop lot for sales after 2 years the percentage rate of

return for the investment is around 53.16 % profit return in two year.

Finalize

Documents

site analysis

proposed site area

proposed area

pr1ma housing

proposed design

design analysis

kota laksamana

soil analysis