MANU1054 Economic Engineering Strategy

MANU1054 Economic Engineering Strategy

MANU1054 Economic Engineering Strategy
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Question:
Scenario: The Proponents (Applicant)

The Shine Council area is located within the Riverland, three hours’ drive to the north east of Adelaide. The Shine Council is one of three Council areas within the Riverland which border the River Murray from Blanchetown in the west to Paringa in the east. The Shine Council is in the Riverland region of South Australia. The Riverland population is approximately 33,000 with the Council population 10,500. The area is 50,845ha which incorporates the townships of Barmera, Berri, Cobdogla, Glossop, Loveday, Monash, Overland Corner and Winkie. The economic base of the community is driven by horticulture and viticulture and associated industries. Berri has traditionally serviced the region for state and federal government services. Other major sources of economic development within the area include Accolade Wines Australia located at Glossop, tourism and retail shopping. The Council area has its origins in the pastoral holdings which occupied extensive tracts of land adjacent the River Murray as early as the 1850s. The first overland stock route between New South Wales and South Australia established by Joseph Hawdon and Charles Bonney in 1838 saw the development of Overland Corner as an important staging post for drovers. The River Murray also attracts visitors to the area for many recreational pursuits e.g. water skiing, fishing and house boating. Lake Bonney is also located within the Council area and is a key tourist and recreational attraction. The Council accounts for 34% of the Riverland population of 33 460. The Riverland unlike other country regions has a stable population with a small percentage increase.

The region has a well-earned reputation for an outdoor lifestyle and sporting excellence coupled with a naturally friendly and outgoing social acceptance. Council is very much a River Murray local government body with their future linked hand in hand with the health of the river for their economy, recreation and amenity.

Council is the applicant for the Renewable Energy Solar Power Generation Facility project submission to the State Local Government Infrastructure Partnership (SLGIP). To complete the Facility, Council is seeking the SA Government as an investment partner. Council will fund 80% of the project, $20.136M and is seeking $5.034.9M from the SLGIP. Council is committed to operating a financial sustainable manner and has conducted a financial analysis of the Facility which confirms the feasibility of the project. Council is in a strong financial position and has developed rigorous policies and processes to ensure that funds are spent and managed in accordance with Local Government Legislative requirements. Council has provisioned their contribution to this Facility in the long term financial plan:

Council financial commitment $20.136M
Partnership Funding from SLGIP $5.034M

Total Project Costs $25.17

BASE COST ESTIMATE

Effective date of BCE: dd/mm/yy

Estimated date of commencement of construction: dd/mm/yy

1

Direct Costs

 

 

 

1.1

Materials

 

 

1.2

Labour

 

 

1.3

Plant Hire

 

 

Sub total

 

$

2

Indirect Costs

 

 

 

2.1

Recurrent overheads

 

 

 

2.1.1

Site facilities

 

 

2.1.2

Plant & Equipment – site maintenance

 

 

2.1.3

Project management costs

 

 

2.1.4

Commercial

 

 

2.1.5

QA and Safety

 

2.2

Non-recurrent overheads

 

 

 

2.2.1

Establishment and mobilisation

 

 

2.2.2

Disestablishment and demobilisation

 

 

2.2.3

Project insurances

 

 

2.2.4

Professional fees – design, legal, financial, etc

 

Subtotal

 

$

 

Owner’s Cost

 

3.1

Contracted professional staff

3.2

Investigations

3.3

Land costs & resumptions

3.4

Authority fees

3.5

Owner supplied plant and equipment

Subtotal

$

 

Contractor’s Fee

 

4.1

Profit margin

4.2

Corporate Overheads

Subtotal

 

 

Provisional Sums 5.1

 

Subtotal

 

$

TOTAL OF BASE COST ESTIMATE

$

Table 2: Base cost estimate

 

BASE RISK ALLOCATION AND CONTINGENCY

 

Base Risk Allocation

 

6.1

Escalation

(period between BCE and construction)

6.2

Project Risk A

 

6.3

Project Risk B etc

 

Sub total

 

$

Contingency

 

 

7.1

 

 

Subtotal

 

$

TOTAL OF PROJECT RISKS

$

 

Tasks:
Please discuss what is potential economic benefit of this project (employment, gross value added labour, goods, materials, skills, long term economic growth strategy, supply chain development) specifically
Background o Overviewo Issues

o Constraints o Assumptions o Financial costs

o Non-Financial costs o Financial benefits

o Non-financial benefits o Duration

Recommendations
Discuss what is potential environmental impact of this project (positive and negative)
What is project risk?
What is cost of doing nothing?

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