Financial Management for Melbourne Airport Rail Link Project

Financial Management
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Contents
Financial Management................................................................................................................................1
Introduction.................................................................................................................................................3
Overview of the Project of Airport Rail Link................................................................................................3
Financial Budget of Project..........................................................................................................................4
Capital Expenditure.................................................................................................................................4
Business Capital.......................................................................................................................................5
Revenues Projections..............................................................................................................................6
Profitability and Financial Position Projections........................................................................................6
Key Performance Indicators........................................................................................................................7
Taxation Compliance Analysis and Other Legal Compliance........................................................................9
Accounting Records Compliance.................................................................................................................9
Conclusion.................................................................................................................................................10
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Introduction
Financial planning is the process involves estimating the funds for the project and
forecasting the revenues and expenditures associated with the project. Further, the financial
planning extends to controlling implementation of the plans. Proper monitoring and controlling
of the plans is necessary to ensure the execution of the plans in the right direction and thereby
ensuring achievement of the overall objective of the project (Smith, Smith, Smith, and Bliss,
2011). Here, a report has been prepared showing the important aspects of financial planning in a
project implementation. For this purpose, a real project namely Melbourne Airport rail link has
been chosen.
Overview of the Project of Airport Rail Link
The project to be discussed here is the Melbourne Airport rail link via Sunshine. It is
estimated that by the end of 2038 the number of passengers to use the Melbourne Airport will be
above 67 million. The project to connect the Melbourne Airport to regional and metropolitan rail
lines shall begin by 2022 (Bigbuild, 2018). The construction shall be as per the following design:
Figure 1: Melbourne Airport rail link (Bigbuild, 2018)
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It is expected that the construction of Melbourne Airport link that will be started in 2022 will
cost between $8 billion to $13 billion in total (Bigbuild, 2018). In order to ensure that the public
construction projects are in accordance with the requirements of relevant legislations it is
important to have in-depth knowledge about the appropriate legislations first. Further, it is also
essential to estimate the different elements of the cost to be incurred in the project and means of
finance to be used to arrange funds.
Financial Budget of Project
Capital Expenditure
Capital expenditure signifies the funds to be expensed in purchasing the capital assets
like land, building, plant and equipment and machineries. The capital assets are expected to be
used for more than one accounting period and hence the money spent purchase of these items is
not charged against revenues immediately. Rather, it is charged over the period of time in the
form of depreciation (Jaffe and Randolph Westerfield, 2004). In respect of Melbourne Airport
rail link, following capital expenditure is estimated to be incurred:
Capital expenditure
Resource Amount ($ Million)
Stores and Supplies 500.00
Machinery 4,000.00
Equipments 2,000.00
Land 7,000.00
Total 13,500.00
Note: The figures shown in the above table are based solely on the hypothetical assumptions.
Thus, the total capital expenditure to be incurred in the project is estimate to be around
$13.50 billion. The project would take around 15 years to complete so the capital expenditure of
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