FACULTY OF CIVIL ENGINEERING AND BUILT ENVIRONMENT

ENGINEERING ECONOMIC
BFC 44602
SEM 1 SESSION 2022/2023

PROJECT REPORT
NEW DEVELOPMENT OF RESIDENTAL AT GLENMARIE JOHOR, BANDAR DATO
ONN, JOHOR

LECTURER’S NAME : Ts. Dr. Ruzaimah Binti Razman

GROUP : 1

SECTION : 4

NO. GROUP MEMBERS MATRIC NUMBER

3. MOHAMAD AMIRUL HAKIMI BIN ABU BAKAR SOBRI AF190089
5. MOHAMAD RASYID BIN ROSLY AF190073
4. MUHAMMAD ALIFF HAIQAL BIN RIDZUAN AF190020
2. NUR ADLINA BINTI BADRUL HISHSAN AF190120
1. NURRUL RIFFQAH BINTI MUHAMMAD SUFFIAN AF190079
 TABLE OF CONTENT

CHAPTER 1 3

1.1 Introduction 3

CHAPTER 2 5

2.1 Financial Management 5

2.2 Company Background 5

2.3 Company Vision and Mission 7

2.3.1 Vision 7

2.3.2 Mission 7

2.4 Company Organization Chart 8

2.5 Company Performance 10

2.5.1 Balance Sheet 10

2.5.2 Cash Flow 11

2.5.3 Income Statement 13

CHAPTER 3 14

3.1 Project Management 14

3.2 Benefit-Cost Ratio 14

3.2.1 SITE A 18

3.2.2 Site B 22

3.3 Summary 23

CHAPTER 4 24

4.1 Conclusion 24
 CHAPTER 1

1.1 Introduction

Engineering economy involves the systematic evaluation of the economic merits of proposed
solutions to engineering problems. Economics theories are used to make business decisions in an
unpredictable and changing environment. The fundamentals of demand, pricing, cost, production,
competition, trade cycles, and national income are all included in economic theories. Engineers
are making more financial decisions than ever before as the design and manufacturing processes
become more complex.

Engineering economics analyses the benefits and costs of engineering projects to see
whether they save enough money to justify their investment. Engineering economics is the
application of engineering design and analytical approaches to the production of goods and
services that satisfy customers at a reasonable cost. The design engineer who evaluates material
selection should be knowledgeable with engineering economics.

A successful project involves the participation of a large number of competent persons. In

order to achieve the project's goal, each project participant has a certain role to perform and
responsibilities to fulfil. A project manager is a leader who supervises a project from start to finish,
from bidding to hiring and scheduling. Project managers are fully responsible for a project's
success and have enough knowledge about engineering economics that can make them easily
handle the project with minimum errors and losses.

For this project, project engineer that working for developer company need to make new
development a residential at Glenmarie Johor, Bandar Dato Onn, Johor. As a project engineer that
have knowledge about engineering economy are responsible to choose one of the suggested sites
that have been proposed. Before run the project, the project engineer needs to consider and study
many things such as company’s finance performance, the benefit cost ratio and many other things
that related with financial in order to minimize the error and losses during and after the project.
 CHAPTER 2

2.1 Financial Management

2.2 Company Background

Company Profile

Company’s Name AME Elite Consortium Berhad

Registration Number 201801030789 (1292815-W)
Company Address No. 2, Jalan I-Park SAC 1/1 Taman
Perindustrian I-Park SAC, 81400 Senai, Johor
Telephone (+60)7 5959 666
Fax (+60)7 5959 668
Email corporate@ame-elite.com
AME Elite Consortium Berhad has been in business for over 25 years. AME Elite Consortium
Berhad's business has expanded from construction to a variety of other activities over the years.
AME Elite Consortium Berhad is a full-service industrial property development, construction,
engineering, and property management firm. We specialise in industrial park development and
large-scale manufacturing plant construction. Our primary business activities are classified as
follows:

1. Development of industrial parks

2. Construction of large-scale manufacturing plants and industrial buildings
3. Provision of engineering services
4. Provision of property investment and management services
2.3 Company Vision and Mission

2.3.1 Vision

AME strives to be a leader in the construction industry, and we ensure quality construction, timely
delivery, a safe working environment, cost-effectiveness and customer satisfaction, profitability,
and a reputation as a trustworthy developer.

2.3.2 Mission

i) Explore & Nurture Potential Opportunity

To be a significant driving force in today's construction industry by servicing client's demand for
quality construction through a highly responsive and proactive service portfolio.

ii) Quality Collaboration & Services

To be the leading contractor in every market in which we penetrate, and in every aspect of our
operations, leading the way in providing products of high quality, reliability, and value-for-money

iii) Enhancing Local Industrial Development

AME Construction unwaveringly holds on to its mission objectives, which include: an
uncompromising commitment to quality, safety & environmentally friendly, cost-effective, and
timely delivery while maintaining the highest level of quality and client-driven with client
satisfaction being the utmost importance
2.4 Company Organization Chart

NAME: MOHAMAD AMIRUL HAKIMI BIN ABU BAKAR SOBRI

POSITION: PROJECT MANAGER

NAME: NURRUL RIFFQAH BINTI MUHAMMAD SUFFIAN

POSITION: QUANTITY SURVEYOR

NAME: NUR ADLINA BINTI BADRUL HISHSAN

POSITION: STRUCTURAL DESIGNER
NAME: MUHAMMAD ALIFF HAIQAL BIN RIDZUAN
POSITION: ARCHITECT

NAME: MOHAMAD RASYID BIN ROSLY

POSITION: QUANTITY CONTROL
2.5 Company Performance

2.5.1 Balance Sheet

As at 31 March 2022
Based on the recapitulation table above, it is observed that:
i. The total equity and liability of the group has an increase in 2022. The year 2022 has RM
320,713,348 more than the year 2021.
ii. The total equity and liability of the company has an increase in 2022. The year 2022 has
RM 2,393,919 more than the year 2021.

2.5.2 Cash Flow

As at 31 March 2022
Cash flow (continue)
As at 31 March 2022

Cash flow is the net amount of cash and cash equivalents flowing into and flowing out of a
business. Inflows are represented by money received, and outflows are represented by money
spent. For the cash flow for the group in 2022, they generate as much as RM 68,905,257 from
operating activities. Then, a total of RM12,014,704 net cash that has been used by the group in
investment activities. Furthermore, a total of RM 17,580,494 of net cash was used in the group
that year for financing activities. Finally, in 2022, this group experienced a decrease in net cash of
RM 86,276,430 from RM 255,941,313 on 1 April 2021 and had a total of RM 169,664,883 on 31
March 2022.
2.5.3 Income Statement

For the Year Ended 31 March 2022

 CHAPTER 3

3.1 Project Management

3.2 Benefit-Cost Ratio

Benefit-cost ratio or also known as B-C ratio is a method of calculating ratio of benefits to costs.
In project evaluation, it is significant to consider the time value of money fot the timing of cash
flows or benefits occuring after project inspection. The B-C ratio can be understood as the ratio of
equivalent worth of benefits to the equivalent woth of costs. The equivalent worth can be present
worth (PW), annual worth (AW), or future worth (FW). There are four formulas of B-C ratio that
have been developed. The formulas are as follows:
a) Conventional B-C ratio with PW
PW (benefits of the proposed project)
B–C=
PW (total costs of the proposed project)
b) Conventional B-C ratio with AW
AW (benefits of the proposed project)
B–C=
AW (total costs of the proposed project)
c) Conventional B-C ratio with PW
PW (benefits of the proposed project)
B–C=
PW (total costs of the proposed project)
d) Conventional B-C ratio with PW
AW (benefits of the proposed project)
B–C=
AW (total costs of the proposed project)
The chosen financial institution for this project business financing is RHB Bank. The interest rate
of RHB Bank starts from 8.45% per annum. The interest type is variable interest rate. For the B-C
ratio calculation in this project, 9%per annum of interest rate is used.

Figure 3.1 ahows the table of Discrete Cash Flow that we used.
 ITEMS SITE A
YEARS
0 1 2 3 4 5
COSTS (RM)
Labour cost 650,000
Personnel cost 150,000
(welfare)
Safety cost 80,000
Administration 250,000
cost
Cost of 300,000
facilities, site
offices, staffs
and parking
facilities
Earthwork 3,500,000
Sub-structure 800,000
work
Structural 4,000,000
works
Infrastructure 2,900,000
works
Machineries 1,200,000
and equipment
Mechanical 800,000
and electrical
works
Maintenance 15,000 15,000 15,000 20,000 20,000
Other cost 90,000 92,000 92,000 92,000 94,000
(Electricity,
water, etc)
Total cost 14,630,000 105,000 107,000 107,000 112,000 114,000 15,175,000
(RM)
BENEFITS (RM)
Government 14,650,000 30,000 30,000 35,000 35,000 35,000
Allocation
Student Fees 200,000 200,000 200,000 200,000 230,000
Corporate 63,000 63,000 65,000 65,000 65,000 70,000
Social
Responsibility
(CSR)
Total benefit 14,713,000 293,000 295,000 300,000 300,000 335,000 16,236,000
(RM)
3.2.1 SITE A

a) Conventional B-C ratio with PW

PW (benefits of the proposed project)
B–C=
PW (total costs of the proposed project)
𝑃𝑃
16 236 000 (𝐴𝐴 ,9%,5)
B–C= 𝑃𝑃
15 175 000 (𝐴𝐴 ,9%,5)

16 236 000 (3.8897 ,9%,5)

B–C=
15 175 000 (3.8897 ,9%,5)
16 236 000
B–C=
15 175 000
B – C = 1.07>1 ; Project accepted
b) Conventional B-C ratio with AW
AW (benefits of the proposed project)
B–C=
AW (total costs of the proposed project)
16 236 000
B–C=
15 175 000
B – C = 1.07>1 ; Project accepted

c) Conventional B-C ratio with PW

PW (benefits of the proposed project)
B–C=
PW (total costs of the proposed project)
PW(B)−PW(O&M)
B–C=
I−PW(MV)
16 236 000 (3.8897 ,9%,5)−545 000 (3.8897,9%,5)
B–C=
15 175 000 (3.8897 ,9%,5)
B – C = 1.03 > 1 ; Project accepted

d) Conventional B-C ratio with PW

AW (benefits of the proposed project)
B–C=
AW (total costs of the proposed project)
AW(B)−AW(O&M)
B–C=
CR
 16 236 000−545 000
B–C=
15 175 000
B – C = 1.03 > 1 ; Project accepted
 Items SITE B
Years
0 1 2 3 4 5
COSTS (RM)
Labour cost 650,000
Personnel cost (welfare) 150,000
Safety cost 12,000
Administration cost (Accountants, 250,000
project paperwork, etc.)
Cost of facilities, site offices, 450,000
staffs and parking facilities
Earthwork: 5,200,000
i) Site clearance
ii) Excavation for cut and
fill
iii) Slope stabilization
Sub-structure works 1,500,000
Structural works 4,000,000
Infrastructure works 3,600,000
i) Roadworks
ii) Surface water drainage
iii) Water reticulation
system
iv) Sewerage system
v) External works and
ancillary buildings
Machineries and Equipment 2,100,000
Mechanical and electrical works 1,200,000
Maintenance 18,000 18,000 18,000 22,000 22,000
Other cost (Electricity, water, 100,000 100,000 100,000 100,000 100,000
etc.)
Total cost (RM) 19,112,000 118,000 118,000 118,000 122,000 122,000 19,710,000
BENEFITS (RM)
Government Allocation 14,650,000 30,000 30,000 35,000 35,000 35,000
Student Fees 200,000 200,000 200,000 200,000 230,000
Corporate Social Responsibility 63,000 63,000 65,000 65,000 65,000 70,000
(CSR)
Total benefit (RM) 14,713,000 293,000 295,000 300,000 300,000 335,000 16,236,000
3.2.2 Site B

a) Conventional B-C ratio with PW

𝑷𝑷𝑷𝑷 (𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃 𝒐𝒐𝒐𝒐 𝒕𝒕𝒕𝒕𝒕𝒕 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑)
B–C=
𝑷𝑷𝑷𝑷 (𝒕𝒕𝒕𝒕𝒕𝒕𝒕𝒕𝒕𝒕 𝒄𝒄𝒄𝒄𝒄𝒄𝒄𝒄𝒄𝒄 𝒐𝒐𝒐𝒐 𝒕𝒕𝒕𝒕𝒕𝒕 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑)
𝑷𝑷
𝟏𝟏𝟏𝟏 𝟐𝟐𝟐𝟐𝟐𝟐 𝟎𝟎𝟎𝟎𝟎𝟎 (𝑨𝑨′ 𝒙𝒙 𝟗𝟗% 𝒙𝒙 𝟓𝟓)
B–C= 𝑷𝑷
𝟏𝟏𝟏𝟏 𝟕𝟕𝟕𝟕𝟕𝟕 𝟎𝟎𝟎𝟎𝟎𝟎 (𝑨𝑨′ 𝒙𝒙 𝟗𝟗% 𝒙𝒙 𝟓𝟓)

𝟏𝟏𝟏𝟏 𝟐𝟐𝟐𝟐𝟐𝟐 𝟎𝟎𝟎𝟎𝟎𝟎 (𝟑𝟑.𝟖𝟖𝟖𝟖𝟖𝟖𝟖𝟖 𝒙𝒙 𝟗𝟗% 𝒙𝒙 𝟓𝟓)

B–C=
𝟏𝟏𝟏𝟏 𝟕𝟕𝟕𝟕𝟕𝟕 𝟎𝟎𝟎𝟎𝟎𝟎 (𝟑𝟑.𝟖𝟖𝟖𝟖𝟖𝟖𝟖𝟖 𝒙𝒙 𝟗𝟗% 𝒙𝒙 𝟓𝟓)
𝟐𝟐𝟐𝟐 𝟒𝟒𝟒𝟒𝟒𝟒 𝟗𝟗𝟗𝟗𝟗𝟗
B–C=
𝟑𝟑𝟑𝟑 𝟒𝟒𝟒𝟒𝟒𝟒 𝟔𝟔𝟔𝟔𝟔𝟔
B – C = 0.82 < 1.0 (Project rejected)

b) Conventional B-C ratio with AW

𝑨𝑨𝑨𝑨 (𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃 𝒐𝒐𝒐𝒐 𝒕𝒕𝒕𝒕𝒕𝒕 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑)
B–C=
𝑨𝑨𝑨𝑨 (𝒕𝒕𝒕𝒕𝒕𝒕𝒕𝒕𝒕𝒕 𝒄𝒄𝒄𝒄𝒄𝒄𝒄𝒄𝒄𝒄 𝒐𝒐𝒐𝒐 𝒕𝒕𝒕𝒕𝒕𝒕 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑)
𝟏𝟏𝟏𝟏 𝟐𝟐𝟐𝟐𝟐𝟐 𝟎𝟎𝟎𝟎𝟎𝟎
B–C=
𝟏𝟏𝟏𝟏 𝟕𝟕𝟕𝟕𝟕𝟕 𝟎𝟎𝟎𝟎𝟎𝟎
B – C = 0.82 < 1.0 (Project rejected)

c) Modified B-C ratio with PW

𝑷𝑷𝑷𝑷 (𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃 𝒐𝒐𝒐𝒐 𝒕𝒕𝒕𝒕𝒕𝒕 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑)
B–C=
𝑷𝑷𝑷𝑷 (𝒕𝒕𝒕𝒕𝒕𝒕𝒕𝒕𝒕𝒕 𝒄𝒄𝒄𝒄𝒄𝒄𝒄𝒄𝒄𝒄 𝒐𝒐𝒐𝒐 𝒕𝒕𝒕𝒕𝒕𝒕 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑)
𝑷𝑷𝑷𝑷 (𝑩𝑩) − 𝑷𝑷𝑷𝑷 (𝑶𝑶&𝑴𝑴)
B–C=
𝑰𝑰 − 𝑷𝑷𝑷𝑷 (𝑴𝑴𝑴𝑴)
𝟏𝟏𝟏𝟏 𝟐𝟐𝟐𝟐𝟐𝟐 𝟎𝟎𝟎𝟎𝟎𝟎 (𝑷𝑷/𝑨𝑨 𝒙𝒙 𝟗𝟗% 𝒙𝒙 𝟓𝟓) − 𝟓𝟓𝟓𝟓𝟓𝟓 𝟎𝟎𝟎𝟎𝟎𝟎 (𝑷𝑷/𝑨𝑨 𝒙𝒙 𝟗𝟗% 𝒙𝒙 𝟓𝟓)
B–C=
𝟏𝟏𝟏𝟏 𝟕𝟕𝟕𝟕𝟕𝟕 𝟎𝟎𝟎𝟎𝟎𝟎 (𝑷𝑷/𝑨𝑨 𝒙𝒙 𝟗𝟗% 𝒙𝒙 𝟓𝟓)
𝟔𝟔𝟔𝟔 𝟏𝟏𝟏𝟏𝟏𝟏 𝟏𝟏𝟏𝟏𝟏𝟏 − 𝟐𝟐 𝟑𝟑𝟑𝟑𝟑𝟑 𝟎𝟎𝟎𝟎𝟎𝟎
B–C=
𝟕𝟕𝟕𝟕 𝟔𝟔𝟔𝟔𝟔𝟔 𝟗𝟗𝟗𝟗𝟗𝟗
B – C = 0.79 < 1.0 (Project rejected)
 d) Modified B-C ratio with AW
𝑨𝑨𝑨𝑨 (𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃 𝒐𝒐𝒐𝒐 𝒕𝒕𝒕𝒕𝒕𝒕 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑 𝒑𝒑𝒑𝒑𝒐𝒐𝒋𝒋𝒋𝒋𝒋𝒋𝒋𝒋)
B–C=
𝑨𝑨𝑨𝑨 (𝒕𝒕𝒕𝒕𝒕𝒕𝒕𝒕𝒕𝒕 𝒄𝒄𝒄𝒄𝒄𝒄𝒄𝒄𝒄𝒄 𝒐𝒐𝒐𝒐 𝒕𝒕𝒕𝒕𝒕𝒕 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑)
𝑨𝑨𝑨𝑨 (𝑩𝑩) − 𝑨𝑨𝑨𝑨 (𝑶𝑶&𝑴𝑴)
B–C=
𝑪𝑪𝑪𝑪
𝟏𝟏𝟏𝟏 𝟐𝟐𝟐𝟐𝟐𝟐 𝟎𝟎𝟎𝟎𝟎𝟎 − 𝟓𝟓𝟓𝟓𝟓𝟓 𝟎𝟎𝟎𝟎𝟎𝟎
B–C=
𝟏𝟏𝟏𝟏 𝟕𝟕𝟕𝟕𝟕𝟕 𝟎𝟎𝟎𝟎𝟎𝟎
B – C = 0.79 < 1.0 (Project rejected)

3.3 Summary

As mentioned before, if B-C ≥ 1.0 project will be approved while if B-C ratio < 1.0 project will
be rejected. After the comparison of the project at Site A and Site B, project at Site A is
approved since the B-C ratio calculated is 1.03 which is greater than 1.0.
 CHAPTER 4

4.1 Conclusion

The benefit-cost ratio, often known as the BCR, is a measurement that is utilised to analyse the
efficiency of a potential investment or project. To determine it, simply divide the overall benefits
of a project by the whole expenditures of the project. If the BCR is higher than 1, it implies that
the benefits of the project will be more than the costs; therefore, it will be a profitable investment.
When the BCR is less than 1, it implies that the costs of the project outweigh the benefits; hence,
this indicates that the project is not a good investment. The benefit-cost ratio (BCR) is a helpful
tool because it offers decision-makers a straightforward and easy-to-grasp measurement of a
project's overall performance, and it can assist them in making speedy comparisons of the relative
benefits offered by various projects.

As engineering team, one of our responsibilities in this effort is to perform an analysis of

engineering economics, the primary focus of which is on the time value of money at both locations.
The project at Site A is approved after all of the comparisons that were done with the project at
Site B. This is because the benefit-cost ratio that was computed was 1.03, which is more than 1.0
and has the potential to yield benefits.
 APPENDIX 1 - MINUTES OF MEETING

Meeting
1 Date: 10/01/2023 Time 10.38a.m.-11.30a.m.
No.:

Method of
Google Meet
Meeting:

1. MOHAMAD AMIRUL HAKIMI BIN ABU BAKAR SOBRI

2. MOHAMAD RASYID BIN ROSLY

Attendance: 3. MUHAMMAD ALIFF HAIQAL BIN RIDZUAN

4. NUR ADLINA BINTI BADRUL HISHSAN

5. NURRUL RIFFQAH BINTI MUHAMMAD SUFFIAN

Meeting Agenda

No. Details Person in Charge

Mohamad Amirul
1. Distribute the task among team members. Hakimi bin Abu
Bakar Sobri

2. Breafing session about the project. All group members

3. Breafing session about the video content. All group members

Prepared by

Mohamad Amirul Hakimi bin Abu Bakar Sobri

Figure show the briefing session via Google Meet.