CMA5001 : Integrated Economic and Financial Analysis of Construction Projects

Module Code: CMA5001

Module Title: Economic and Financial Management

Integrated Economic and Financial Analysis of Construction Projects

Words: 5000

Assignment task:

A 5000-word report analysing the financial and economic impacts of a major UK construction project, integrating
micro and macroeconomic principles, financial management practices, and insolvency factors to assess project
viability and industry implications.

Part 1: Case Study Analysis (50%) – 2500 words

1) Project Overview (750 words)

Select one major economic infrastructure project in the UK. For example: High Speed 2 Railway, Thames Tideway Tunnel, Heathrow Expansion, The New Hospital’s Programme, Houses of Parliament, Scottish Water Capital Investments Plans, Midland Main Line Railway Project and any other suitable examples you may find.
Describe the scope, objectives, and scale of the project.

2) Economic and Financial Integration (1750 words)

Analyse how microeconomic factors such as price elasticity of demand and supply, market structure, and competition affect the chosen construction project. Consider how these factors impact the cost of construction materials, labour, and overall project delivery.
Discuss how macroeconomic factors like inflation, interest rates, and economic growth cycles would influence the demand for your chosen construction project and explain how construction companies can mitigate potential risks associated with these macro trends.
Based on the information available, discuss the financing mechanisms or sources of finance in terms of the projects finance.
Evaluate the project's economic impact, including job creation, regional development, and its role in stimulating further economic activities.

Part 2: Putting Theory into Practice (50%) – 2500 words

1) Feasibility Study (1250 words)

Outline a hypothetical commercial building project, defining its intended use, location, and scale.
Provide a simplified financial evaluation considering initial costs, operating costs and expected revenue streams (basic cash flow analysis).
Calculate the Cost Benefit Ratio (CBR) for the project and discuss how this information informs your decision on the project feasibility, potential financial risks and how the risks can be mitigated. Plot and include a graph of your Cost Benefit Analysis (Use the template provided).
Analyse the environmental impact of the project throughout its life cycle, including construction phase, operation, and potential demolition. Consider energy efficiency, waste management, and sustainable building practices.

2) Financing and Insolvency Factors in Construction industry (1250 words)

Evaluate the various financing options available to the construction company involved in your commercial building project (e.g., debt financing, equity financing, public-private partnerships), analysing the advantages and disadvantages of each option, considering factors like project size, risk profile, and financial health of the company.
Explain the relevant UK financial reporting standards that are applicable to your project and how they are designed to promote financial transparency and accountability in the industry.
Discuss the factors that could lead to insolvency for the construction company involved in your project, using insights from recent industry cases or the selected project.

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