Economic Analysis of Prison Systems

This assignment requires a critical economic analysis of prison systems. Students must investigate the financial implications of imprisonment, including operational costs, lost productivity, and potential savings from alternative sentencing programs. The analysis should also explore the impact of incarceration on communities and consider the broader social and ethical dimensions of this complex issue.

Running head: VENTURE PROJECT ECONOMICS AND FINANCE
Venture Projects Economics and Finance
Name of the Student:
Name of the University:
Author’s Note:

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VENTURE PROJECT ECONOMICS AND FINANCE
Table of Contents
1. Introduction..............................................................................................................................3
1.1 Project Background...........................................................................................................3
1.2 Project Objectives and Justification..................................................................................4
1.3 Assumptions and Constraints............................................................................................6
2. Literature Review....................................................................................................................6
2.1. Overview of Project Economical Analysis Techniques and Tools...................................7
2.1.1. Equivalent Uniform Annual Cash Flow..................................................................10
2.1.2. Present worth (Net Present Value)..........................................................................12
2.1.3. Internal Rate of Return............................................................................................12
2.1.4. Modified IRR...........................................................................................................13
2.1.5. Cost-Benefit Analysis..............................................................................................13
2.2 Other Decision Making Models - Multi-Attribute Decision-Making Model.................15
2.2.1 MCDM in Financial Decision Making for Projects...............................................16
2.2.2 MADM....................................................................................................................16
2.2.3 Analytical Hierarchy Process (AHP).......................................................................17
2.2.4 Best Practices for Business Growth.........................................................................17
2.2.5. Business Growth Strategies.....................................................................................19
2.2.6 Profitability Index..................................................................................................20
3. Recommendations for case project financial model or plan..................................................21

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Reference List and Bibliography...................................................................................................22

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1. Introduction
With the advent of science and technology there have been various venture projects that have
been developing all over the globe in order to improve the economic and the operational
structure of the world. It has been observed that there are various projects that have been
constructed in order to build new buildings and artifacts that would enhance the lifestyle of the
human beings living in this world(Schaper, 2016).
This paper therefore is being constructed in order to undertake a fundamental analysis of on
ongoing project that is functioning in Melbourne so that a clear idea about the background of the
project along with its objectives can be understood. The assessment of the economic analysis and
tools and techniques would even be discussed and the cost benefit analysis of the project can
even be understood so that a clear cut idea about the project can be taken into consideration. This
paper therefore has considered Ravenhall Prison Project that has been operating from the year
2014 and still continuing so that precise knowledge about project and the cost associated with it
can be gained.
1.1 Project Background
The Ravenhall Prison Project is being constructed in order to provide a new medium-security
prison facility in order to provide accommodations to around 1000 prisoners and this project has
been predicted to be completed by the end of 2017. In the year 2014 on 15th September, the
Victorian state made a contract with GEO consortium in order to build, finance, design, operate
and maintain a new medium-security prison for men, which would be situated in Ravenhall, in
the west of Melbourne(Treasury and Finance - Ravenhall Prison - Project Summary 2017).
Ravenhall has been a key part of the prison expansion program of Victoria. The prison even has

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the ability to expand in future in order to accommodate around 1300 prisoners if deemed
necessary.
The new prison that is under construction would deliver the infrastructure and prison beds in
order to aid in explaining for the correctional services that have been demanded in Victoria. The
prison has been constructed on the existing Crown land at Ravenhall that is contiguous to the
Metropolitan Remand Centre and the dame Phyllis Frost Centre. The land is specifically flat in
nature and comprises of open paddocks that consists of vestige native grassland patches and few
trees that are scattered. The required planning along with the cultural heritage and environmental
approvals for this area are in place.
This project has been a joint venture of the public private partnership in which the private
sector is accountable for constructing, financing, operations, design and maintenance that are
custodial in nature. This project would provide increased value for money with respect to the
correctional services and even provide increased quality.
GEO Consortium was appointed to deliver the project after the completion of a tender
process and a contract was signed in the year 2014 in September. GEO Consortiu, consists of
John Holland Group, Capella Capital, Honeywell and GEO Group Australia. The essential
alliance partners are inclusive of the Gathering Place and Melbourne City Mission, Kangan
Institute and YMCA who would deliver services and programs in both post-release and the
prisoners under custody(Treasury and Finance - Ravenhall Prison - Project Summary 2017). The
health services within the prison would be given by Correct Care Australasia and the forensic
services of mental health at the prison would be given by Forensicare.

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1.2 Project Objectives and Justification
The construction of the project has been undertaken in order to improve the safety of the
society by humanely and securely preserving the prisoners and giving them with services and
programs that have been constructed in order to decrease the extent of reoffending.
This project reveals a key investment in the infrastructure and services of the prison with the
help of which GEO Consortium would deliver an innovative facility that would perform a key
role in the correctional system of Victoria. This project would be influential for generating
economic advantages as well as increasing employment with the establishment of 700 jobs
during the period of peak construction and ongoing jobs that would be more than 600. The
construction of the project would lead to development of new jobs in that area and thereby
increasing the employment rate and in a way benefit the economy(Burchardt et al., 2016). The
objectives of the project and the area of the focus has been explained as follows:
 Provide added capacity in the prison system of Victoria
 Provide added forensic metal health services to the prisoners
 Provide supplementary capability in order to lower the reoffending
 Encourage practices that are innovative in nature and effective operations that would
assist the value for money
The justification for the construction of the research project has been in order to secure
and safeguard the communal harmony and to maintain the prisoners in the prison cell in an
effective manner. The construction of a prison that would consist of various innovative
amenities would boost the confidence of the prisoners and would help them in turning over a
new leaf and start their life effectively(Gatti, 2013). The project construction is done in order
to focus on various aspects like targeted approach for the prisoners who are having

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challenging behavior, indigenous prisoners and improved responsiveness towards the
complexities of the young prisoners.
1.3 Assumptions and Constraints
The project has been constructed by depending on the financial capacity and the assumptions.
The assumptions of the project include identifying the financial capability of the participants and
the participating members in order to deliver the project within its completeness(Block et al.,
2017).
There are various constraints that are related to the project like the risks that are associated
with the planning of the project and gathering approvals for the planning, risks in the site like the
native titles and contamination of the sites, construction risks and the design risks in order to
construct the prison project and lastly the operational and the financial risks that are associated
with the completion of the prison project. Therefore, the risks are allocated and transferred
effectively in order to reduce the level of risks and thereby helping in improving and smooth
flow for the construction of the prison project.
2. Literature Review
The literature review would comprise of the various data and tools that have been used by the
project on order to determine their operational activities and to undertake economic analysis and
the cost benefit analysis of the Ravenhall Prison Project. This section of the paper would provide
an extensive research and analysis of the cash flows, the present worth, internal rate of return
along with the profitability index and business growth strategies and its best practices so that the
project can be concluded precisely. The use of the MADM and MCDM financial analysis

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process would be influential for understanding the process that would be used in order to
understand the current financial and economic position of the Ravenhall Prison Project.
The project explains about the literature review and the explanation regarding the economic
analysis and the cost benefit analysis of the Ravenhall Prison Project. A small overview of the
risk evaluation model of Ravenhall Prison Project in Melbourne Victoria will be discussed in this
section. The process of economic analysis are defined as the mathematical and statistics and
graphics. The economic analysis is based on the various methods of the economic sensitivity and
in order to make effective recognition of the similar input, it is essential to investigate two or
more processes.
2.1. Overview of Project Economical Analysis Techniques and Tools
Australia is regarded as a vivacious free democracy of the market and there has been
vibrant economic progress that has been possible due to absence of any sort of recessions. The
effective process of the government has been beneficial for the economy and a free well-
functioning legal system, bureaucracy has led to effective entrepreneurial enhancement.
Australia is considered as an attractive and dynamic position for investment(Stiglitz,
&Rosengard 2015). In most of the scenarios, the government has decreased the investment and
has influenced the private sector to undertake investments. This has been observed in the
Ravenhall Prison Project where investments are undertaken mainly by the private sector. The
country has been effectively competitive in the technological areas and services. The income tax
rate is around 45% and the rate of corporate tax has been 30%.
One of the optimistic parameters of project start up in Australia has been rate of start up
being higher as they have the probability of contributing to the expansion. The new business
ventures in Australia like the variations in funding sources and projects like the Ravenhall Prison

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Project tries to make use of the equity finance during the primary stages of the constructions. The
country has been experiencing shocks and problems in the during the past few years but during
the first quarter of 2017, the economy has recovered from this situation and this has led to rise in
the confidence for the business and the consumers and this in way would have a positive impact
on the investment of the business and spending of the investors. The Australian economy is
considered to be within a solid base in spite of the various weaknesses in the investments that are
non-mining in nature. With respect to Ravenhall prison project in Australia it has been observed
that the project has been experiencing growth and as this is an on-going process and this has led
to rise in investments(Coates 2014). The Australian economy has remained very is strong in spite
of the rise in the price of diesel and this has led to the fall in the disposable income for the
consumers. The economy of the country has been developing with the rise in the rate of interest
which is being used for reducing the rate of inflation. The growth of the economy has been
possible as the government has been reducing the rate of taxation. This would encourage the
investors of the project business to increase their investments in the Ravenhall Project Prison.
This has led to the construction of the prison much more effectively. The analysis of the
Ravenhall Prison has been possible by undertaking economic analysis like the construction of the
variables that are available in the project and the identities, functions and the equations that have
been seen in the project report of Ravenhall Prison Project.
The economic assessment of the project has been possible by looking at the expenses and
the total funding that has been undertaken for the completion of the project. The table below
would provide an overview of the economic evaluation of the project.
Particulars Amount
Residual
Value

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Non-Current Assets:
Trademark 500000 0
Patent 750000 0
Property,Plant& Equipment 15000000 4500000
Furniture & Fittings 1000000 150000
Motor Vehicle 1500000 600000
Computer Equipment 1500000 0
Preliminary Expenses:
Business Registration 100000
License Fees 150000
Deposit for Electricity 100000 100000
Deposit for Telephone &
Internet 50000 50000
Recruitment Cost 30000
Share Issuance Cost 35000
Bond Issuance Cost 20000
Other Miscellaneous Expenses 75000
Working Capital:
Purchase of Raw Material 30000000
Wages & Salaries 20000000
Manufacturing Overhead 13000000
Selling & Marketing Expenses 690000
General Administrative
Expenses 338250 64028250
TOTAL START UP COST 84838250
Capital Funding:
Equity Capital 38177213
5 yrs. Bond 27996623
Loan From Bank 18664415
TOTAL CAPITAL
EMPLOYED 84838250

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The notice that has been allocated to each of the employees who are performing for the
construction of the Ravenhall Prison Project has been given in the form of the table which
provides a guideline of the process that would be utilized for the completion of the project within
the scheduled time period.
Assignment Start date Submission Duration
Start up 15/09/2014 31/12/2017 3 years
Activity 1- Researching
the Australian markets
and its economic
scenario
20/09/2014 21/12/2014 3 months
Activity 2- Financial
evaluation of project
13/03/2015 31/12/2015 9 months
Activity 3-
Determining the
financial viability of
project by selecting the
best alternative
31/03/2017 09/04/2017 2 weeks
2.1.1. Equivalent Uniform Annual Cash Flow
The equivalent uniform cash flow of Ravenhall Prison Project has comprises of the
outflow and the inflow of the cash flow(Dopp et al., 2014). The cash flow from the operating
expenses refers to the payments made to the suppliers, direct labor cost. The annual cash flow for
the organization has been given below:
Particulars Year 1 Year 2 Year 3

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Cash Flow from Operating
Activities:
Cash Sales $56,000,000 $61,418,000 $67,360,192
Collection from Debtors $77,000,000 $91,449,750 $100,297,513
Cash Purchase ($24,000,000) ($26,322,000) ($28,868,654)
Payment to Suppliers ($30,000,000) ($38,902,500) ($42,666,317)
Direct Labor Cost ($36,666,667) ($43,547,500) ($47,760,721)
Manufacturing Expenses ($26,000,000) ($28,515,500) ($31,274,375)
Insurance ($12,000) ($12,300) ($12,608)
Rates & Taxes ($6,500) ($6,663) ($6,829)
Salary of Office Staffs ($91,667) ($102,292) ($104,849)
Cleaning Charges ($5,000) ($5,125) ($5,253)
Electricity for Office ($13,750) ($15,344) ($15,727)
Telephone & Internet ($7,333) ($8,183) ($8,388)
Salary of Marketing Staffs ($137,500) ($153,438) ($157,273)
Sales Commissions @1.5% on
Sales ($700,000) ($767,725) ($842,002)
Travelling charges @2% on Sales ($350,000) ($383,863) ($421,001)
Income Tax Expenses ($1,833,185) ($2,222,795) ($2,646,860)
Cash Inflow/(Outflow) from
Operating Activities $13,176,398 $11,902,524 $12,866,848
Cash Flow from Investing
Activities:
Purchase of Non-Current Assets ($20,250,000)
Preliminary Expenses ($560,000)
Sale of Assets
Return on Deposits
Cash Inflow/(Outflow) from
Investing Activities ($20,810,000) $0 $0
Cash Flow from Financing
Activities:
Share Issue $38,177,213
Bonds Issue $27,996,623

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Loan From Bank $18,664,415
Interest Payment ($3,732,883) ($3,732,883) ($3,732,883)
Dividend Payment ($1,497,101) ($1,815,283) ($2,161,602)
Repayment of Bond
Repayment of Loan from Bank
Cash Inflow/(Outflow) from
Financing Activities $79,608,266 ($5,548,166) ($5,894,485)
Net Cash Increase/(Decrease) for
the period $71,974,664 $6,354,358 $6,972,363
Add: Opening Cash Balance $0 $71,974,664 $78,329,022
Closing Cash Balance $71,974,664 $78,329,022 $85,301,385
2.1.2. Present worth (Net Present Value)
The net present value for the project has been given below with respect to the variable
inflation rate, growth rate and the WACC. The Net Present value at 25 inflation rate has been
3418865, ta 2.50% has been 358505005 and at 3.50% has been 36484023. It has been observed
that with respect to the current position of the project, the Net Present Value has been 38505005
as the rate of inflation has been 2.505, the growth rate has been 7% and the WACC has been
8.71%.
2.1.3. Internal Rate of Return
The Internal Rate of Return for Ravenhall Prison project has amounted to 10.04%
suggesting that the project has a positive effect and the project can be viable for further
investments(Welsh et al., 2015). The IRR would rise and fall with respect to the changes in the
inflation rate, growth rate and WACC. The IRR has indicated that investments can be an
effective in the prison project as government has interference on this project and therefore return
on investment would be fruitful for the investors.

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2.1.4. Modified IRR
The IRR can get modified with respect to the changes in the rate of inflation, growth rate
and the WACC of the economy and the project. It is seen that the IRR has been 9.64% at 2%
inflation rate and 10.22% at 3.50%. IRR would have a value of 9.10% at 5% growth and 10.58%
at 9% growth. With respect to the WACC at 6.50% the percentage will be 12.11% and 8.05% at
10.50%.
2.1.5. Cost-Benefit Analysis
The cost benefit analysis has been discovered to be the process with the help of which the
business decisions are evaluated. The advantages of the stipulated condition or the actions related
to the business are summed and then the expenditures related undertaking that action is
evaluated(Hardin, 2015). The cost benefit analysis of Ravenhall Prison Project has been
analyzing the overall costs that are related to the project and the funds that are generated with the
help of the various financial institutions and the capitals invested by GEO Consortium. The
overall analysis of the cost is given in the table below:
Particulars Year 1 Year 2 Year 3
Inflation Rate 2.50% 2.50%
Sales Growth Rate 7% 7%
Sales Volume 40000 42800 45796
Selling Price Per Unit $3,500 $3,588 $3,677
Total Sales Revenue $140,000,000 $153,545,000 $168,400,479
Cost of Good Sold per unit:
Raw Material Consumed ($1,500) ($1,538) ($1,576)
Direct Labor Cost ($1,000) ($1,025) ($1,051)

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Total Cost of Goods Sold p.u. ($2,500) ($2,563) ($2,627)
Total Cost of Goods Sold
($100,000,000
)
($109,675,000
)
($120,286,056
)
GROSS PROFIT $40,000,000 $43,870,000 $48,114,423
Variable Manufacturing Overhead p.u ($650) ($666) ($683)
Total Variable Manufacturing
Overhead ($26,000,000) ($28,515,500) ($31,274,375)
Depreciation on Property,Plant &
Equipment ($2,100,000) ($2,100,000) ($2,100,000)
Total Manufacturing Overhead ($28,100,000) ($30,615,500) ($33,374,375)
General Administrative Expenses:
Depreciation on Furniture & Fixtures ($100,000) ($90,000) ($81,000)
Depreciation on Computer Equipment ($180,000) ($158,400) ($139,392)
Amortization of Patent ($100,000) ($100,000) ($100,000)
Amortization of Trademark ($150,000) ($150,000) ($150,000)
Insurance ($12,000) ($12,300) ($12,608)
Rates & Taxes ($6,500) ($6,663) ($6,829)
Salary of Office Staffs ($100,000) ($102,500) ($105,063)
Cleaning Charges ($5,000) ($5,125) ($5,253)
Electricity for Office ($15,000) ($15,375) ($15,759)
Telephone & Internet ($8,000) ($8,200) ($8,405)
Total General Administrative
Expenses ($676,500) ($648,563) ($624,309)
Selling & Marketing Expenses:
Depreciation on Motor Vehicle ($180,000) ($158,400) ($139,392)
Salary of Marketing Staffs ($150,000) ($153,750) ($157,594)
Sales Commissions @0.5% on Sales ($700,000) ($767,725) ($842,002)
Travelling charges @0.25% on Sales ($350,000) ($383,863) ($421,001)
Total Selling & Marketing Expenses ($1,380,000) ($1,463,738) ($1,559,989)
Net Operating Profit/(Loss) $9,843,500 $11,142,200 $12,555,750

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Interest Expenses:
Interest on Bond ($1,959,764) ($1,959,764) ($1,959,764)
Interest on Loan From Bank ($1,773,119) ($1,773,119) ($1,773,119)
Total Interest Expenses ($3,732,883) ($3,732,883) ($3,732,883)
Net Profit before Tax $6,110,617 $7,409,317 $8,822,867
Income Tax Expenses ($1,833,185) ($2,222,795) ($2,646,860)
Net Profit after Tax $4,277,432 $5,186,522 $6,176,007
Gross Profit Margin 28.57% 28.57% 28.57%
Net Profit Margin 3.06% 3.38% 3.67%
Return on Equity 11.20% 13.59% 16.18%
2.2 Other Decision Making Models - Multi-Attribute Decision-Making Model
There are are various other decision making models that are available to the management
of the project in order to evaluate the activities of the project and undertake decisions
accordingly. The use of the decision model is dependent on the management and the
management makes proper utilization according to their needs in the prison project. There are
various models include the Multi-Attribute Decision Making Model, Multi-Criteria Decision
making Model, Analytical Hierarchy Process etc. These models can be used in an effective
manner for the Ravenhall Prison Project and better decisions with respect to the operational
activities can be constructed, which would lead to the completion of the project before the
assigned deadline.

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2.2.1 MCDM in Financial Decision Making for Projects
The MCDM process makes use of equipment and tools that contributes in the quality of
the financial process of economic decision making and to the quality of the resulting decisions.
MCDM considers problems related to financial decisions as a multiple criteria as financial
decision problem occurs due to the issues in different accounting figures which could have an
effect on the financial report of the prison project(Medina et al., 2014). These problems mainly
arise due to the effective assignment of the scarce capital and the alternate uses of the resources.
Hence, it is essential for the management of the prison project looks to allocate the resources in
an effective manner by taking help of this model as this would be influential for using the
resources required for the project in the areas were these resources require more significance so
that the project can be completed within the stipulated time limit and the each and every aspect
of the project receives equal importance according to the priority.
2.2.2 MADM
The multi attribute decision making model is a significant part of innovative decision of
science. It anticipates that there are various set of substitutes for the various attributes, which the
management undertaking the decision requires to assess and evaluate. The goal of this model has
been to discover the demanded substitute for assisting the process of decision making. The
problems that have been associated with the MADM has been rectified by taking help of the
traditional processes like the simple additive weighing method, analytical hierarchy process and
TOPSIS process. The MADM process looks into the different attributes related to the project
rather than the price. In this scenario, it has been observed that Ravenhall Prison Project has
looked in to the attributes of providing a safe restoration place for the prisoners in Australia and

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to accommodate a larger number of prisoners at one place(Wang et al., 2014). It is even seen that
looking after the primary needs of the prisoners by providing proper beds and primary benefits
are even considered overlooking the price involved. The project has even been constructed in
order to provide safety and security to the citizens of Australia.
2.2.3 Analytical Hierarchy Process (AHP)
The analytical hierarchy process is a technique that is structured for evaluating and
organizing the decisions that are complex in nature and this has been done by depending on the
mathematical process.
With respect to the Ravenhall Prison Project, the main objective has been to construct the
prison at the lowest cost with the help of proper quality material and within the stipulated time. It
is seen that various criteria are constructed by looking at the cost, safety and capacity(Gabay et
al., 2014). These aspects would be taken into in choosing the best alternate strategy that would
be used by the management in order to complete the prison project effectively. Hence, it can be
said that making use of the strategy would be influential for the development of the prison
project effectively.
2.2.4 Best Practices for Business Growth
One of the biggest challenges in business growth is sustainable growth. The short term as well as
the long term gains both need to be kept in mind while implementing the procedures for business
growth. Different businesses have different reasons for the purpose of sustainability but the main
fundamental concepts are the same.
The Authenticity of the business purposes need to be maintained. The authorities
concerned must repeatedly examine their sense of purpose as well as ensure that the organisation

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serves the purpose of the project properly. There should also be a constant as well as consistent
sense of growth. It also should involve continuous pragmatic innovation. The authentic purpose
of a company contributes to its USP. It is better for an organisation to have a clear value and an
aim for the purpose of the business growth. The prison project needs to utilise the practices of
safety as well as security which is one of the features it aims to achieve (Cooke& Williams,
2013).
Partnership as well as collaboration is also an extremely important factor for the
successful establishment of the business growth. Though the idea of achieving everything
singularly in case of a business project is tempting and logical in case of not much availability of
funds, the best thing to do is to find the best possible partners for the prison project. The
collaboration with the suitable partners in case of the prison project will help in the expansion
and proper growth and will also be sustainable. It is necessary to know exactly what to do at a
particular time because the needs of different projects are different (Thompson, 2012, October).
The project should be done in such a way that the prison expansion concept is deemed
successful and helps in the establishment of the successful steps in the business growth. The
prison should have proper facilities along with the concept of improvement as well as
rehabilitation options (Vaara& Whittington, 2012).
A business ecosystem is a financial community of organisations as well as individuals
which operate in different ways. It is necessary to understand the needs of the prison project are
different from other commercialisation projects like malls or shopping centres or other places.
The business ecosystems encourage the companies undertaking the innovative as well as difficult
projects by fulfilment of their competitive capabilities (Sherman, 2014).

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In order to ensure that the business needs of any particular project is met, it should be
maintained that the leaders or the authorities under whom the project is taking place, need to be
aware at every particular stage of growth. Retrospection, self-awareness, as well as a keen sense
of strategy is necessary which is both for the short as well as the long term (Healy&Palepu,
2012).
The authorities in charge of the prison project should adopt an adaptive as well as a
flexible nature of leadership. By being mindful as well as understanding the business strategies
give the best results for any given project. The continual investment in the capabilities of
individual workers as well as organisations helps in the benefit of the organisations (Goodstein
&MacKenzie, 2013).
2.2.5. Business Growth Strategies
The business growth strategies should focus on the nature of the project at hand. It should
be understood that the nature of the prison is different. The expansion of the prison needs to be
the main focus of the organisation which is engaged in the construction project (La Vigne&
Samuels, 2012). The expansion projects need to be properly undertaken and the details need to
be stated in advance as well (Crawley, 2013). The prisons should not be built in a morose or a
depressive way so that the residents or the inhabitants of the place should not be de-motivated. It
should not happen that the people who are prisoners find it difficult to move back to normalcy.
There should not be any dark corners or dark places which might cause the prisoners to
move to a dark part of their conscience. The prison architecture should in no way be linked with
the levels of violence as well as drug use. There should be an openness as well as connectivity to
the prisons as the closed, dark as well as the privacy of the prisons are bound to affect the

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mindsets of the prisoners and they might engage in fighting, assault, self-harm, consumption of
drugs. It might also cause escapes from the prisons.
In other words it can be said that the prison projects should correspond or comply with
the rehabilitation revolution in order to be a positive impact on the prisoners to facilitate their
stay with good experiences and positivity.
The cost efficiency needs to be kept in mind while implementation of the project. The
cost of prisons is considerable and they also cause the drainage of the vital resources from the
segments of health-care, education, housing as well as the other social programs. The de-funding
of the prison sector and ensuring the good environment does not lack the resources that need to
be taken care of.
The exposure of the impact of the public-private finance initiatives show that the cost
savings are never delivered. The reduction of the quality of services and the facilities should not
be done in a way to actually harm the people. The prisons are never cost efficient. Since the
prisons and their buildings waste money as well as the vital resources, the business strategies
should revolve around the quality of the prison and the money as well.
The private prisons do not always form a clear advantage of the public sector
counterparts. The nature of the prison market as well as their proper management need to be
done to explain the findings carefully. The cost as well as the quality needs to be uncompromised
as the prison projects are huge and influential to the company’s reputation. The quality of the
prison, the provided facilities should constitute the business strategies of the prison project.

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2.2.6 Profitability Index
Profitability Index is even known as the profit investment and value investment ratio for
any developing project and this has been a mechanism for ranking the projects as it permits to
quantify the amount of the value developed due to the investment per unit. With respect to the
current profitability index of Ravenhall Prison Project, it can be observed that profitability index
has been 0.42 or 42.20% and hence it can be said that the project is an effective one and
undertaking investment in this project would lead to effective construction of the project within
the stipulated timeline.
3. Recommendations for case project financial model or plan
The project has been established by undertaking numerous researches of the Australian market
and evaluation of the financial statements and the project background and the scope of the
project. The country has been regarded as the democratic market that is vibrant and has been
functioning like this for over 25 years and this development has been possible due to the limited
level of recessions. The effective process of the government has benefited the Ravenhall Prison
Project due to an effective and well-functioned legal system. The presence of such an effective
legal system and government regulations has revealed an effective economic system and this has
motivated the private sector to undertake investments in such projects. Hence it is seen that GEO
Consortium has undertaken investment in the prison project and this in way would improve the
revenue for the organization and even complete the project in an effective manner. According to
the financial estimations of the Ravenhall Prison Project, it has been observed that this project
would be enormouslyachievable to make sure the growth and stability in the Australian region. It
has been recommended that the project should undertake the activities that they have been
performing currently as this has been an effective process and sustainable use of the project

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VENTURE PROJECT ECONOMICS AND FINANCE
would lead to the proper return on investment for GEO Consortium and completion of the
project in a timely manner with effective facilities available within the prison.
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