This document presents information on a proposed project to reduce traffic jams at Shahbag in Dhaka, Bangladesh. It includes a network diagram showing the activities and time estimates for the project. Key activities include planning, soil testing, demolition, pile driving, concrete work, and asphalt laying. It also provides expenditure details, projected income over 12 years, and calculations of the payback period and discounted payback period for the project. The payback period is estimated at 7.68 years and the discounted payback period is 11 years.
2. Md. Ashraful Alam Saon
ID. 104473
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3. The concern is the traffic jam
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4. Network of the Project
Vehicle from Motsho
Bhaban to Science lab
Vehicle from Science
lab to Motsho Bhaban
Vehicle from Motsho
Bhaban to Farmgate
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5. Network Analysis of the
Project
Networks are essentially a technique to
aid management in the planning and
controlling of projects
Network diagram represents
diagrammatically the tasks, or activities,
that have to be carried out
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6. Activity Name of activity
A Planning & Designing
B Soil Test
C Demolition
D Pile Driving
E Formworks for Bents & Abutments
F Reforming Steel
G Pouring Concrete
H Making Concrete Deck
I Abutments & Bents in place, Ready to set Beams
J Setting the Concrete Deck
K Asphalt Deck
L Barrier Wall
M Lamppost & Electricity Connection
N Site Cleanup & Finishing
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7. Time Estimation
Optimistic
Most likely
Pessimistic
Expected Time = (To+4Tm+Tp) /6
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8. Name of Activity, Time Estimation and Expected Time
Event-
Event
Activity Pre
requisite
Activity
Estimation of Time Expected
Time=(To+4Tm+Tp)
/6
To Tm Tp
1-2 A 12 18 36 20
1-3 B 17 24 37 25
1-4 C 13 19 31 20
3-5 D A,B 82 112 190 120
4-5 E C 93 118 215 130
5-6 F D,E 68 87 124 90
5-7 G D,E 152 171 244 180
5-8 H D,E 135 152 217 160
7-8 I G 29 34 75 40
8-9 J F,H,I 48 56 88 60
9-10 K J 13 21 53 25
9-11 L J 23 26 53 30
9-12 M J 18 21 48 25
12-13 N K,L,M 18 19 26 20
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13. Activity Total Float
(LST-EST)
Free Float
(TF-Head Slack)
Independent Float
(FF-Tail Slack)
A 10-0=10 10-10=0 0-0=0
B 5-0=5 5-5=0 0-0=0
C 0-0=0 0-0=0 0-0=0
D 30-25=5 5-0=5 5-5=0
E 20-20=0 0-0=0 0-0=0
F 280-150=130 130-130=0 0-0=0
G 150-150=0 0-0=0 0-0=0
H 210-150=60 60-0=60 60-0=60
I 330-330=0 0-0=0 0-0=0
J 370-370=0 0-0=0 0-0=0
K 435-430=5 5-5=0 0-0=0
L 430-430=0 0-0=0 0-0=0
M 435-430=5 5-0=5 5-0=5
N 460-460 0-0=0 0-0=0
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14. The Probability of the Critical path being
completed within 500 Days
Variance=
Variance for the Critical path (C-E-G-I-J-L-N)
= 9+413.44+235.11+58.78+44.44+25+1.78=787.5
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16. Objectives of Project
The main concern of this project is the reduction of
traffic jam at Shahbag, the most important place of
Dhaka. The project includes the following mission:
To save the valuable time of economically important
person like Engineer, Doctor, Teacher, Businessman.
To minimize the cost for resources like Petrol, Gas
etc.
To reduce the road accident
To save the labor hours of driver & staff of buses
To ensure the smooth running of Ambulance
To save manpower like traffic police used at
Shahbag.
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17. Project Based on PPP
The government is interested in involving private
sector in all sectors barring a few for national
security reasons. Modern and reliable
infrastructure is a must to uplift country’s economy
from the current state to a higher growth trajectory
Under the current framework, through different
type of PPP initiatives a small number of projects
have been implemented under the Annual
Development Program (ADP) that is mainly private
sector initiatives
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18. Our Agreement with Government
Govt. will provide us administrative help
like activity with the different ministry
Our income from the project will be tax free
Government will fund for the road repairing
We will collect payment for using the
bridge from the public bus for 12 years
BRTC & Government High officer will be
payment free for using the bridge
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20. Expenditure of the Project
Planning & Designing 1.5
Materials Stone 82.55
Steel 117.25
Cement 135.25
Composites 85.75
Rent of Equipment Bulldozers 42.5
Excavator 27.5
Asphalt Mixers 55.75
Bridge Formworks 12.75
Crane 88.5
Labor Cost Skilled Labor 177.75
Unskilled Labor 225.35
Maintenance cost 38.75
Miscellaneous Cost 33.85
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21. Yearly cost of project
Equipment for Project
Bulldozers
Excavator
Asphalt Mixers
Bridge Formworks
Crane
Material for Project
Stone
Cement
Steel
Composites
Year Cost
0 year 275 Million
1st Year 715Million
2nd Year 125 Million
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22. Income of the Project
Ours cash inflow will come from different buses.
We will charge for different amount for different
buses. Bus having 40 sit or less will be charged as
tk.200 & the bus having more than 40 sit will be
charged tk. 250 per day. The private car and other
vehicle will be charged for every pass over this
bridge. We plan to collect the fee from the office of
the bus weekly basis. There will be Toll Plaza at
the bridge that may cause jam.
Our positive cash inflow will come from 3 rd year.
here we estimate that our cash inflow will increase
by 5% from year 4 to 10 based on the previous
income and after 10 year it will increase by 3% .
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23. Income up to 12 years
Year Previous
Income
Increase @5%;
3%
Cash flow
1 0
2 109.95
3 172.018
4 172.018 8.6009 180.6189
5 180.6189 9.030945 189.6498
6 189.6498 9.482492 199.1323
7 199.1323 9.956617 209.089
8 209.089 10.45445 219.5434
9 219.5434 10.97717 230.5206
10 230.5206 11.52603 242.0466
11 242.0466 7.261398 249.308
12 249.308 7.47924 256.7872
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25. Payback Period
The length of time required to recover the cost of
an investment. The payback period of a given
investment or project is an important determinant
of whether to undertake the position or project, as
longer payback periods are typically not desirable
for investment positions.
Payback Period = Last year with negative NCF
+ (Absolute value of that year/ Total cash flow
in the following year)
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26. Payback Period of Our Project
Year Previous
Income
Increase Cash flow Cumulative
Cash flow
0 -275 -375
1 -710 -1085
2 -15.05 -1100.05
3 172.018 -928.032
4 172.018 8.6009 180.6189 -747.4131
5 180.6189 9.030945 189.6498 -557.763255
6 189.6498 9.482492 199.1323 -358.6309178
7 199.1323 9.956617 209.089 -149.5419636
8 209.089 10.45445 219.5434 70.00143818
9 219.5434 10.97717 230.5206 300.5220101
10 230.5206 11.52603 242.0466 542.5686106
11 242.0466 7.261398 249.308 791.8766091
12 249.308 7.47924 256.7872 1048.663848
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27. Payback Period = 7+ (149.5419636/
219.5434)
= 7.68 Years
The better investment is the one with
the shorter payback period, as our
project life time is 12 year and the
payback period is 7.68 years it can be
accepted.
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28. Discounted Payback Period
The discounted payback period is the amount of time that it
takes to cover the cost of a project, by adding positive
discounted cash flow coming from the profits of the project. The
advantage of using the discounted payback period over
the payback period is that it takes into account time value of
money
Discount Rate/ Cost of Capital:
Our total investment will be 1125 million and we have two
sources to collect the fund. But the cost of fund differs from
one another so to calculate the discount rate/ cost of capital
we use the formula for weighted average cost of capital
Bank Loan Proposal for 20 years @ 11.75% 890.85 Million
Owner Fund @15% 234.15 Million
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29. As there will be agreement with government that
no Tax will be imposed in our income for this
project so we do not adjust the cost of bank
loan with Income Tax.
The weight for bank loan = 890.85/ 1125 = 0.79
The weight for owner fund = 234.15/ 1125 = 0.21
Discount Rate = 0.79*0.1175 + 0.21*0.15
= 0.12 = 12%
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31. Discounted Payback Period
= 11+ (63.29682967/ 65.99432029)
= 11.95 Years
It is so much risky to accept the project
because it needs all most 12 year to recover
the invested money that is ours project life
time. But because of the social benefit we
can take risk to accept the project.
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33. Net Present Value
The difference between the present value of cash
inflows and the present value of cash outflows
A positive net present value indicates that the
projected earnings generated by a project or
investment (in present Taka) exceed the anticipated
costs (also in present Taka). Generally, an investment
with a positive NPV will be a profitable one and one
with a negative NPV will result in a net loss. This
concept is the basis for the Net Present Value Rule,
which dictates that the only investments that should be
made are those with positive NPV values
Accepted: NPV> Zero Rejected: NPV< Zero
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35. Internal Rate of Return
The internal rate of return on an investment or project
is the "annualized effective compounded return rate"
or rate of return that makes the net present value of all
cash flows (both positive and negative) from a
particular investment equal to zero.
IRR formula is as follows
IRR= A+ (B-A)
A= Lower discount rate
B = Higher discount rate
C = NPV @ Lower discount rate
D = Difference between NPV @ Lower discount rate
and NPV @ Higher discount rate
C
D
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37. If the IRR is greater than the cost of capital, accept the
projects.
If the IRR is less than the cost of capital, reject the projects.
As the IRR 12.07% is greater than cost of capital 12%
we can accept the project
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39. Decision Tree
A decision tree is a decision support tool
that uses a tree-like graph or model of
decisions and their possible
consequences, including chance event
outcomes, resource costs, and utility.
we are in problem that we have three
alternatives ways:
Purchase the equipments
Rent equipments internally (from Country)
Rent equipments externally (From Aboard)
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40. The possible states of economy and the
associated probability distribution are as
follows
State Probability
Favorable 0.60
Unfavorable 0.40
The cost for equipments and each state of economy are as
follows:
Alternatives State of economy
Favorable Unfavorable
Purchase Equipments (A) 425 Million 515 Million
Rent Internally (B) 215 Million 245 Million
Rent from Aboard (C) 270 Million 310 Million
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42. Using the decision tree approach we determine
the expected cost for each alternatives and we
would take the decision from the alternatives by
using the expected monetary value criterion.
EMA (A) = (425*0.6) + (515*0.4) =461
EMA (B) = (215*0.6) + (245*0.4) =227
EMA (C) = (270*0.6) + (310*0.4) =286
Thus based on the expected monetary value
criterion Alternative B (Equipments rent from
internal sources) is the best as the cost 227
million which is less than other alternatives.
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44. Risk analysis
Risk analysis is a technique used to
identify and assess factors that may
jeopardize the success of a project or
achieving a goal.
Project risk analysis is the identification
and quantification of the likelihood and
impact of events that may damage the
project
Risk analysis improves the accuracy of
traditional scheduling, cost estimation,
spreadsheet financial models, and systems
engineering skills
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45. Expected Value
Expected value is one of the fundamental concepts in
probability, in a sense more general than probability itself.
The expected value of a real-valued random variable gives a
measure of the center of the distribution of the variable.
Expected Value of our Project
Economic
Condition
Net Cash Benefit
(Xi)
Probability (Pi) Expected Value
Strike & Man made
Distress
110.613 0.06 6.63678
Normal 172.018 0.87 149.65566
Great Prosperity
(Ramadan)
193.507 0.07 13.54549
Expected Value E(x) 169.83793
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46. Standard Deviation
Standard Deviation is a measure of the dispersion of a
set of data from its mean. The more spread apart the
data, the higher the deviation. Standard deviation is
calculated as the square root of variance.
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48. Coefficient of Variance
A statistical measure of the dispersion of
data points in a data series around the
mean.
In the investing world, the coefficient of
variation allows you to determine how
much volatility (risk) you are assuming in
comparison to the amount of return you
can expect from your investment.
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51. Social Cost Benefit Analysis of the
project
Social cost benefit analysis (referred to as SCBA),
also called economic analysis, and is a
methodology developed for evaluating investment
projects from the point of view of the society (or
economy) as a whole. In SCBA the focus is on the
social costs and benefits of the projects. These
often tend to differ from the monetary cost and
benefits of the project.
The SCBA takes into account the indirect costs
and indirect benefits to the nation. While a nation
bears the indirect costs, the people of the nation
enjoy the indirect benefits.
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52. Shadow price
The shadow price takes care of the
distortions in the market price by suitably
adjusting the market price
Shadow price is a proxy value of good,
often defined by what an individual must
give up to gain an extra unit of good.
Shadow price represent the economic
value of a project.
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53. Rules associated with shadow price:
For tradable goods: shadow price is
calculated on the border price or by
exchange rate between countries.
For non-tradable goods: shadow price is
calculated in two different ways.
Consumer willingness to pay
Additional production.
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54. Cost for Project
The project costing tk. 1125 million if the project is done with
the help of a foreign company it will cost tk.1423 million.
30000 tons of cements produce indigenously are used in the
project at a cost tk. 4500 per tons. However half of the
cement will come from additional production which cost tk.
4200 per tons and half come from derivation from other
consumer who is willing to pay tk. 6500 per tons.
Other construction materials (Stone, steel etc.) cost tk.
285.55 million. These materials come from additional
production which cost of tk. 278.25million.
Labors that are unskilled will work for the project for which
project committee decide to pay 225.35 totally; the shadow
price of unskilled labor should be 217.85 Million.
Skilled labor cost tk. 177.75 million in total. These costs
reflect what are willingly to pay for the skilled labor.
Operating maintenance cost will be tk. 3.23 million annually.
Operating cost should be tk. 2.95 million from social point of
view.
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55. Benefit from the Project
After the bridge is constructed 157 million
people will pass the bridge annually. It will
save at least 1 hour for the people. The
cost per hour is tk. 115.
There will be a save in valuable resources
like diesel, petrol etc. Every day it will save
at least 350 liter resource and per liter cost
of resource is tk. 70.
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56. Costs: Benefits:
Costs types Market
price
Shadow
price( Social
Value)
Project cost
Cost of cement
Wages (unskilled labor)
Wages (skilled labor)
Maintenance costs
1125
135.25
225.35
177.75
3.23
1423
160.5
217.85
177.75
2.95
Benefits Shadow
price( Social
Value)
Savings in labor hour
cost
Savings in resources
18.055
8.82
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Amount in Million