Cash flow schedule - Assignment Example

The Freedonia Bauxite Terminal Project Content Introduction 2 Tender Sum 2 Cash Flow Schedule 3 Cumulative Cash Flow Schedule 4 Revised Tender Sum 5 Revised Cash Flow Schedule 5 Cumulative Cash Flow Schedule 6 References 7 Appendix 1 8 - 14 Appendix 2 15 -22 Introduction This paper looks at the amount tendered or the contract value, cash flow schedule and cumulative cash flow schedule of the Freedonia Bauxite Terminal Project. The project is expected to last for 24 months and the assumption is that work on the site will start immediately after the contract is signed. Therefore, in additional to other expenditures Month 1 will also have its portion of the other costs. It is also assumed that the income and expenses will be evenly spread over the contract period except in the case of temporary work on site and supervisory and management salaries. The foreign exchange rate is expected to change for the three countries in which the contractor has suppliers. (See Table 7 in Appendix 2 for the details). The rate of interest is expected to be at 7% per annum and the inflation rate 11.4%. The inflation rate is expected to impact all 24 months and so all the figures have been adjusted appropriately. It is normal however, for inflation and therefore the resultant salary increases to take effect after a year. However, in this case it is different. It is also normal for landscaping to take place close to the end of the contract. Landscaping will be performed throughout all of the 24 months. Tender Sum The tender sum that the contractor should submit for the project in Dalasi is DJF 68,098,434,906. Details of the make up of this figure are shown in Table 1 in the appendix. The figures were arrived at using exchange rates generated from a random sample (See Table 7 for details). Inflation has not been taken into consideration. It is assumed that the signing of the contract would have taken place in the same month that the project starts and that with the exception of irregular amounts in month 1 for all of the expenses described and month 24 for temporary site expenses, equal monthly expenses will be incurred each month from month 2 to month 23 or 24. The cost of recruiting supervisory staff from abroad, that is, air fare and agency payments would have been included in month 1 along with 1/24th of the balance of the costs after deducting these fee amounts. All the other months will also share 1/24th of the costs. The same scenario would be applied to the cost of the other tasks to be undertaken on the contract. Cash Flow Schedule A cash flow schedule or projection shows the timing of receipts and payments in relation to a business or a project. Table 2 provides a cash flow schedule showing the time when the payments will be made by the contractor for the goods and services described. Only the cash outflow section of the schedule is shown in Table2. It must be noted that the profit and contingency fund element of the cash flow has been included in the Table 2. Contingency funds are monies that are retained or set aside for uncertainties or any changes that may be required after the contract has been awarded (Touran 2003). These changes are essentially delays and other factors that lead to Time and cost overruns which increase the cost of the project (Cook et al 2008; Zayed et al 2013, Fandi and El-Sayegh 2006). Time overruns may be caused by a range of factors associated with various stakeholders in the project - the contractor, the owner, material supplier as well as acts of god (Zayed et al 2013). These can affect the owner’s income generating capacity as the starting date for a business may have to be pushed back to facilitate the completion of the project. It also affects the profitability of the contract and therefore the contractor’s bottom line. A contingency is also a guarantee of either an activity or a project. It is a percentage of the basic contract cost which has been arbitrarily determined (Cook et al 2008). The contingency amounts to approximately 11% of the contract cost and is considered fair for the 4 weeks overrun. A contingency provision of 12% is recommended for this project. Using the estimate in Table 3 this would amount to DJF 6,042,537,207 (12% of DJF 50,354,476,725). After accounting for mobilization and payments as per work completion certificates a balance of Approximately DJF 1.7bn is still being held as retention. It represents 2.5% of the contract value. The contingency amounts were reduced at the end of the contract period and so amount has been returned to the contractor. This is shown as cash inflow along with mobilization and receipts from interim work completed. Cumulative Cash Flow A cumulative cash flow schedule showing the monthly cumulative figures for both the outflows shown in Table 2 as well as inflows relating to the receipt of mobilization fees is provided in Appendix 1. The mobilization fees which was received from the owners of the project represents 20% of the contract/tender sum noted above is shown in Table 3. The inflows also takes into account the amounts related to interim work certificates for the valuation of work completed during each month. The related profit and contingency amounts were included from month 1 since the anticipated profit was taken on the work completed. This is in accordance with the accruals concept in accounting – a fundamental concept which requires expenses to be matched against the income for which they were incurred (BPP 2009, Deloitte 2014). The accruals concept underpins IFRS (Fox et al 2013). Inflation, interest rate changes and changes in the exchange rate are some of the factors that affect businesses and by extension projects. The Freedonia Bauxite Terminal Project uses materials and other resources from different countries – France; UK and South Africa. Therefore, the company is exposed to changes in the foreign exchange rate. When the DFJ devalues, this means that more money has to be paid for goods and services. Although the cash flow schedule s a projection of the future, the financial accountant or personnel engaged in its preparation may not have taken this into consideration. In order to take all the factors affecting the time value of money into consideration a revision of the tender sum, the cash flow schedule and the cumulative cash flow is necessary. Revised Tender Sum Tendering for contracts is sometimes problematic as contractors do not take into account the time value of money. The time value of money is affected by interest rate and so the values of DFJ1 today will not the same in a year’s time. Once a change in the monetary variables take place, it follows that adjustments need to be made to the profit estimated. There has been some changes in the interest rate, foreign exchange rates (namely the Rand, Sterling and the US$). The revised contract sum is DFJ 75,283,787,059. The calculations were done in Microsoft Excel. A copy of the Table which is labelled Table 4 is shown in Appendix 2. The changes have resulted in 10.6% increase in the tender amount from DJF 68,098,435,011 to DFJ 75,283,787,059. This is large and the contractor will therefore be able to get 60% of that 5.6% back (10.6% – 5%) – the excess of 10.6% over 5%. If the escalation was 5% then the contractor would get nothing. Revised Cash Flow Schedule A revised cash flow schedule is normally required due to subsequent changes in the cash flow. The figures have been derived from the revised tender summary schedule. An adjustment has been calculated for the profit figure based on the time value of money as reflected in the interest rate. It also takes into account that if the net cash flows were invested or if the present value of these cash flows are computed they would be worth less and less as the years go. Therefore, DJF 1 in month 1 is worth more than DJF1 in month 2. Time value has negative implications for investments (Titman et al 2011). The net present value formula could be used in this scenario as a means of computing the differences in the month by month values due to the fall in the value of money as time passes. The revised schedule – Table 5 s found in Appendix 2 Revised Cumulative Cash Flow The revised cumulative cash flow has been prepared to reflect a larger mobilization fee. It has been prepared in much the same was as the prior schedule, the only difference being the changes caused by the monetary variables. The increase has come about as a result of the devaluation in the value of the DJF, inflation and interest rate changes. The local labour and local material are the main factors affected by inflation. Of course, the materials and other factors of production are the ones affected by exchange rate changes – the devaluation of the DJF. The information relating to the revised cumulative cash flow schedule can be found in Table 4 in Appendix 2. References BPP Learning Media (2009). F7 Financial Reporting Study Text. 3rd ed. UK: London. BPP Learning Media Deloitte (2014). IAS 11- Construction Contracts. [Online] Retrieved from: http://www.iasplus.com/en/standards/ias/ias11. [Accessed 25th March 2014] Cook, J.J., Thal, A.E and White, E.D. (2008). Estimating Required Contingency Funds For Construction Projects Using Multiple Linear Regression. [Online] Retrieved from: http://www.decisionsciences.org/Proceedings/DSI2008/docs/320-6151.pdf [Accessed 25th March 2014 Faridi, A. and El-Sayegh, S. (2006). Significant factors causing delay in the UAE construction industry. Journal of Construction Management and Economics, 24(11), p. 1167–1176. Fox, A., Hannah, G and Helliar, C. ()2013. The costs and benefits of FRS implementation in the UK and Italy. Journal of Applied Accounting Research, 14(1), p. 86-101 Park, M. and Pena-Mora, F. (2004). Reliability buffering for construction projects. Journal of Construction Engineering and Management, 130(5), p. 626–637. Titman, S., Martin, J.D., Keown, A.J. (2011). Financial Management: Principles and Applications. 11th ed. USA: Pearson Education, Inc. Touran, A. (2003). Calculation of contingency in construction projects. IEEE Transactions on Engineering Management, 50(2), p.135–140. Zayed, T., Mohamed, D., Srour, F and Tabra, W. (2013). Assessing Time Contingency of Construction Projects Using Simulation-based Analytic Hierarchy Process. International Journal of Architecture, Engineering and Construction, 2(4),p. 259-270 Appendix Calculation of Tender Sum on Freedonia Bauxite Terminal Project Supervisory Staff (DFJ) Skilled Labour (DFJ) Unskilled labour (DFJ) Local Materials (DFJ) Plant from USA (DFJ) Components from France (DFJ) Equipment from South Africa (DFJ) Total (DFJ) Temporary work and site overheads 306,000,000 1,989,000,000 306,000,000 201,531,600 431,868,000 3,234,399,600 Cost of supervisory and managerial staff 4,743,000,000 4,743,000,000 Construction of Quay and Jetties 982,500,000 7,860,000,000 6,877,500,000 3,882,447,000 778,140,000 20,380,587,000 Construction of Rail Links 642,600,000 2,754,000,000 3,488,400,000 1,813,784,400 518,241,600 436,233,600 9,653,259,600 Construction of Roads 150,000,000 1,425,000,000 1,312,500,000 493,950,000 317,550,000 207,900,000 3,906,900,000 Warehouses 112,500,000 281,250,000 506,250,000 74,092,500 158,775,000 44,550,000 1,177,417,500 Storm Culverts and River Diversions 112,500,000 675,000,000 1,012,500,000 355,644,000 254,040,000 2,409,684,000 Landscaping 114,750,000 1,262,250,000 459,000,000 453,446,100 161,950,500 2,451,396,600 Contingency 5,754,797,316 Head Office Overheads 2,397,832,215 Profit Margin 11,989,161,075 Total 4,743,000,000 2,420,850,000 16,246,500,000 13,962,150,000 7,274,895,600 1,842,425,100 1,466,823,600 68,098,434,906 Table 1 – Tender sum for the Contract in D Dalasi (DFJ) Cash Flow Schedule – Payments Cash Flow Schedule for Fredonia Bauxite Terminal Project   Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Total Cash Outflow with contngency and Profit                                                   Temporary work and site overheads 1,700,431,460 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 52,631,660 376,071,620 3,234,399,600 Cost of supervisory and managerial staff 1,106,700,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 158,100,000 4,743,000,000 Construction of Quay and Jetties 943,347,375 845,097,375 845,097,375 845,097,375 845,097,376 845,097,377 845,097,378 845,097,379 845,097,380 845,097,381 845,097,382 845,097,383 845,097,384 845,097,385 845,097,386 845,097,387 845,097,388 845,097,389 845,097,390 845,097,391 845,097,392 845,097,393 845,097,394 845,097,395 20,380,587,210 Construction of Rail Links 463,801,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 399,541,650 9,653,259,600 Construction of Roads 177,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 162,162,500 3,906,900,000 Warehouses 59,840,313 48,590,313 48,590,313 48,590,313 48,590,313 48,590,313 48,590,313 48,590,313 48,590,313 48,590,313 48,590,313 48,590,313 48,590,313 48,590,312 48,590,312 48,590,312 48,590,312 48,590,312 48,590,312 48,590,312 48,590,312 48,590,312 48,590,312 48,590,312 1,177,417,500 Storm Culverts and Rver Diversions 111,184,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 99,934,750 2,409,684,000 Landscaping 113,138,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 101,663,400 2,451,396,600 Head Office Overheads 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 99,909,676 2,397,832,215 Total Cash Outflow 4,775,516,123 1,967,631,323 1,967,631,324 1,967,631,324 1,967,631,325 1,967,631,326 1,967,631,327 1,967,631,328 1,967,631,329 1,967,631,330 1,967,631,331 1,967,631,332 1,967,631,333 1,967,631,333 1,967,631,334 1,967,631,335 1,967,631,336 1,967,631,337 1,967,631,338 1,967,631,339 1,967,631,340 1,967,631,341 1,967,631,342 2,291,071,303 50,354,476,725 Contingency 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 239,783,222 5,754,797,316 Profit Margin 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 499,548,378 11,989,161,072 Total charged to revenue for month 5,514,847,723 2,706,962,923 2,706,962,923 2,706,962,923 2,706,962,924 2,706,962,925 2,706,962,926 2,706,962,927 2,706,962,928 2,706,962,929 2,706,962,930 2,706,962,931 2,706,962,932 2,706,962,932 2,706,962,933 2,706,962,934 2,706,962,935 2,706,962,936 2,706,962,937 2,706,962,938 2,706,962,939 2,706,962,940 2,706,962,941 3,030,402,902 68,098,435,113 Table 2 Cumulative Cash Flow Schedule for the Freedonia Bauxite Terminal Project   Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Total Receipts:                                                   Mobilization 13,619,686,981                                               13,619,686,981 Interim Work Certificates 1,624,177,754 1,624,177,754 1,624,177,754 1,624,177,754 1,624,177,754 1,624,177,755 1,624,177,756 1,624,177,756 1,624,177,757 1,624,177,757 1,624,177,758 1,624,177,759 2,706,962,932 2,706,962,932 2,706,962,933 2,706,962,934 2,706,962,935 2,706,962,936 2,706,962,937 2,706,962,938 2,706,962,939 2,706,962,940 2,706,962,941 3,509,561,888 52,776,287,254 Retention fee (2.5% of tender)                                                 1,702,460,878 Inflow 15,243,864,735 1,624,177,754 1,624,177,754 1,624,177,754 1,624,177,754 1,624,177,755 1,624,177,756 1,624,177,756 1,624,177,757 1,624,177,757 1,624,177,758 1,624,177,759 2,706,962,932 2,706,962,932 2,706,962,933 2,706,962,934 2,706,962,935 2,706,962,936 2,706,962,937 2,706,962,938 2,706,962,939 2,706,962,940 2,706,962,941 3,509,561,888 68,098,435,113 Payments:                                                   Total monthly cash outflow 4,775,516,123 1,967,631,323 1,967,631,324 1,967,631,324 1,967,631,325 1,967,631,326 1,967,631,327 1,967,631,328 1,967,631,329 1,967,631,330 1,967,631,331 1,967,631,332 1,967,631,333 1,967,631,333 1,967,631,334 1,967,631,335 1,967,631,336 1,967,631,337 1,967,631,338 1,967,631,339 1,967,631,340 1,967,631,341 1,967,631,342 2,291,071,303 50,354,476,725 Net cash inflow/(outflow) 10,468,348,612 -343,453,570 -343,453,570 -343,453,570 -343,453,570 -343,453,571 -343,453,571 -343,453,571 -343,453,572 -343,453,572 -343,453,573 -343,453,573 739,331,600 739,331,600 739,331,600 739,331,600 739,331,600 739,331,600 739,331,600 739,331,600 739,331,600 739,331,600 739,331,600 1,218,490,586 17,743,958,388 Cash b/f 0 10,468,348,612 10,124,895,042 9,781,441,472 9,437,987,903 9,094,534,332 8,751,080,762 8,407,627,191 8,064,173,620 7,720,720,048 7,377,266,476 7,033,812,903 6,690,359,330 7,429,690,930 8,169,022,529 8,908,354,129 9,647,685,728 10,387,017,328 11,126,348,927 11,865,680,527 12,605,012,126 13,344,343,726 14,083,675,325 14,823,006,925 0 Cash c/f 10,468,348,612 10,124,895,042 9,781,441,472 9,437,987,903 9,094,534,332 8,751,080,762 8,407,627,191 8,064,173,620 7,720,720,048 7,377,266,476 7,033,812,903 6,690,359,330 7,429,690,930 8,169,022,529 8,908,354,129 9,647,685,728 10,387,017,328 11,126,348,927 11,865,680,527 12,605,012,126 13,344,343,726 14,083,675,325 14,823,006,925 16,041,497,510 17,743,958,388 Table 3 Cumulative Cash Flow Schedule Appendix 2 Calculation of Revised Tender Sum for Freedonia Bauxite Terminal Project   Supervisory Staff Skilled Labour Unskilled labour Local Materials Plant from USA Components from France Equipment from South Africa Total Temporary work and site overheads   340,884,000 2,215,746,000 340,884,000 219,687,600 470,322,000   3,587,523,600 Cost of supervisory and managerial staff 5,171,400,000             5,171,400,000 Construction of Quay and Jetties   1,094,505,000 8,756,040,000 7,661,535,000 4,232,217,000   848,880,000 22,593,177,000 Construction of Rail Links   715,856,400 3,067,956,000 3,886,077,600 1,977,188,400 564,386,400 475,891,200 10,687,356,000 Construction of Roads   167,100,000 1,587,450,000 1,462,125,000 538,450,000 345,825,000 226,800,000 4,327,750,000 Warehouses   125,325,000 313,312,500 563,962,500 80,767,500 172,912,500 48,600,000 1,304,880,000 Storm Culverts and Rver Diversions   125,325,000 751,950,000 1,127,925,000 387,684,000 276,660,000   2,669,544,000 Landscaping   127,831,500 1,406,146,500 511,326,000 453,446,100 176,370,750   2,675,120,850 Contingency               6,362,010,174 Head Office Overheads               2,650,837,573 Profit Margin               13,254,187,863 Total 5,171,400,000 2,696,826,900 18,098,601,000 15,553,835,100 7,889,440,600 2,006,476,650 1,600,171,200 75,283,787,059 Rate of Exchange 169 121 159 12 Inflaton rate 11.40% 11.40% 11.40% Table 4 Revised Cash Flow Schedule for Freedonia Bauxite Terminal Project   Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Total Cash Outflow with contngency and Profit                                                   Temporary work and site overheads 1,882,878,860 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 58,517,060 417,269,420 3,587,523,600 Cost of supervisory and managerial staff 1,206,660,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 172,380,000 5,171,400,000 Construction of Quay and Jetties 1,046,272,438 936,821,938 936,821,938 936,821,938 936,821,938 936,821,938 936,821,938 936,821,938 936,821,938 936,821,938 936,821,938 936,821,938 936,821,938 936,821,937 936,821,937 936,821,937 936,821,937 936,821,937 936,821,937 936,821,937 936,821,937 936,821,937 936,821,937 936,821,937 22,593,177,000 Construction of Rail Links 513,909,405 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 442,323,765 10,687,356,000 Construction of Roads 196,336,667 179,626,667 179,626,667 179,626,667 179,626,667 179,626,667 179,626,667 179,626,667 179,626,667 179,626,667 179,626,667 179,626,667 179,626,667 179,626,667 179,626,667 179,626,667 179,626,667 179,626,666 179,626,666 179,626,666 179,626,666 179,626,666 179,626,666 179,626,666 4,327,750,000 Warehouses 66,380,313 53,847,813 53,847,813 53,847,813 53,847,813 53,847,813 53,847,813 53,847,813 53,847,813 53,847,813 53,847,813 53,847,813 53,847,813 53,847,812 53,847,812 53,847,812 53,847,812 53,847,812 53,847,812 53,847,812 53,847,812 53,847,812 53,847,812 53,847,812 1,304,880,000 Storm Culverts and Rver Diversions 123,241,313 110,708,813 110,708,813 110,708,813 110,708,813 110,708,813 110,708,813 110,708,813 110,708,813 110,708,813 110,708,813 110,708,813 110,708,813 110,708,812 110,708,812 110,708,812 110,708,812 110,708,812 110,708,812 110,708,812 110,708,812 110,708,812 110,708,812 110,708,812 2,669,544,000 Landscaping 123,713,888 110,930,738 110,930,738 110,930,738 110,930,738 110,930,738 110,930,738 110,930,738 110,930,738 110,930,738 110,930,738 110,930,738 110,930,738 110,930,737 110,930,737 110,930,737 110,930,737 110,930,737 110,930,737 110,930,737 110,930,737 110,930,737 110,930,737 110,930,737 2,675,120,850 Contingency 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,757 265,083,758 265,083,758 265,083,758 265,083,758 265,083,758 6,362,010,174 Head Office Overheads 110,451,566 110,451,566 110,451,566 110,451,566 110,451,566 110,451,566 110,451,566 110,451,566 110,451,566 110,451,566 110,451,566 110,451,566 110,451,566 110,451,566 110,451,565 110,451,565 110,451,565 110,451,565 110,451,565 110,451,565 110,451,565 110,451,565 110,451,565 110,451,565 2,650,837,573 Total Cash Outflow 5,534,928,204 2,440,692,114 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,113 2,440,692,112 2,440,692,112 2,440,692,112 2,440,692,111 2,440,692,111 2,440,692,112 2,440,692,112 2,440,692,112 2,440,692,112 2,799,444,472 62,029,599,197 Profit Margin 552,257,828 552,257,828 552,257,828 552,257,828 552,257,828 552,257,828 552,257,828 552,257,828 552,257,828 552,257,828 552,257,828 552,257,828 552,257,828 552,257,828 552,257,828 552,257,827 552,257,827 552,257,827 552,257,827 552,257,827 552,257,827 552,257,827 552,257,827 552,257,827 13,254,187,863 Total charged to revenue for month 6,087,186,032 2,992,949,942 2,992,949,945 2,992,949,945 2,992,949,945 2,992,949,945 2,992,949,945 2,992,949,945 2,992,949,945 2,992,949,945 2,992,949,945 2,992,949,945 2,992,949,945 2,992,949,941 2,992,949,940 2,992,949,939 2,992,949,939 2,992,949,938 2,992,949,938 2,992,949,939 2,992,949,939 2,992,949,939 2,992,949,939 3,351,702,299 75,283,787,059 Interest rate 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 0.005833 Discounted value of Profit 549,036,508 549,036,508 549,036,508 549,036,508 549,036,508 549,036,508 549,036,508 549,036,508 549,036,508 549,036,508 549,036,508 549,036,508 549,036,508 549,036,508 549,036,508 549,036,507 549,036,507 549,036,507 549,036,507 549,036,507 549,036,507 549,036,507 549,036,507 549,036,507 13,176,876,185 Table 5 Cumulative Cash Flow Schedule   Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Total Receipts:                                                   Mobilization 15,056,757,412                                               15,056,757,412 Interim Work Certificates 1,795,769,965 1,795,769,965 1,795,769,967 1,795,769,967 1,795,769,967 1,795,769,967 1,795,769,967 1,795,769,967 1,795,769,967 1,795,769,967 1,795,769,967 1,795,769,967 2,992,949,945 2,992,949,941 2,992,949,940 2,992,949,939 2,992,949,939 2,992,949,938 2,992,949,938 2,992,949,939 2,992,949,939 2,992,949,939 2,992,949,939 3,843,683,457 58,315,372,394 Escalation (.005 * 1,903,288,494)                                                 4,311,211,168 Retention (2.5% of Tender sum)                                               1,882,094,677 1,882,094,677   16,852,527,377 1,795,769,965 1,795,769,967 1,795,769,967 1,795,769,967 1,795,769,967 1,795,769,967 1,795,769,967 1,795,769,967 1,795,769,967 1,795,769,967 1,795,769,967 2,992,949,945 2,992,949,941 2,992,949,940 2,992,949,939 2,992,949,939 2,992,949,938 2,992,949,938 2,992,949,939 2,992,949,939 2,992,949,939 2,992,949,939 5,725,778,134 79,565,435,651 Payments                                                   Total monthly cash outflow 5,534,928,204 2,440,692,114 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,117 2,440,692,113 2,440,692,112 2,440,692,112 2,440,692,112 2,440,692,111 2,440,692,111 2,440,692,112 2,440,692,112 2,440,692,112 2,440,692,112 2,799,444,472 62,029,599,197 Net cash inflow/outflow 11,317,599,173 -644,922,149 -644,922,150 -644,922,150 -644,922,150 -644,922,150 -644,922,150 -644,922,150 -644,922,150 -644,922,150 -644,922,150 -644,922,150 552,257,828 552,257,828 552,257,828 552,257,827 552,257,827 552,257,827 552,257,827 552,257,827 552,257,827 552,257,827 552,257,827 2,926,333,662 17,535,836,454 Cash b/f 0 11,317,599,173 10,672,677,024 10,027,754,874 9,382,832,724 8,737,910,574 8,092,988,424 7,448,066,274 6,803,144,124 6,158,221,974 5,513,299,824 4,868,377,674 4,223,455,524 4,775,713,352 5,327,971,180 5,880,229,008 6,432,486,835 6,984,744,662 7,537,002,489 8,089,260,316 8,641,518,143 9,193,775,970 9,746,033,797 10,298,291,624 0 Cash c/f 11,317,599,173 10,672,677,024 10,027,754,874 9,382,832,724 8,737,910,574 8,092,988,424 7,448,066,274 6,803,144,124 6,158,221,974 5,513,299,824 4,868,377,674 4,223,455,524 4,775,713,352 5,327,971,180 5,880,229,008 6,432,486,835 6,984,744,662 7,537,002,489 8,089,260,316 8,641,518,143 9,193,775,970 9,746,033,797 10,298,291,624 13,224,625,286 17,535,836,454 Escalation Estimated Value of Contract 68,098,435,113   Revised Estimate of Contract 75,283,787,059     7,185,351,946   Percent of Contract value 4,311,211,168   Table 6 Reg No. Assumed Exchange rates for DJF (Part I of assignment) Revised Exchange rates for DJF (Part 2 of assignment) Inflation per annum Interest Rates Cost escalation (contract sum) Time overrun 063 155 111 146 11.0 169 121 159 12.0 11.4 7.0 5.5 4 Table 7 Read More