Financial Analysis of Smart Construction Bridge Project Report

This report provides a comprehensive financial analysis of a bridge construction project undertaken by Smart Construction Company under a Build, Operate, and Transfer (BOT) agreement with the New South Wales government. The analysis assesses two scenarios: outsourcing the repair and construction of the bridge versus not outsourcing. It evaluates the financial implications of each option, including cost breakdowns, funding sources (government payments, loans, and REIT), and the impact of a cyclone-related delay. The report conducts a detailed financial analysis, calculating key metrics like Annual Rate of Return (ARR), Net Present Value (NPV), and Internal Rate of Return (IRR) to determine the most financially viable approach. The analysis considers the initial construction costs, additional costs due to damages, and the impact on the project's profitability. The report concludes with a recommendation on the preferred course of action based on the financial projections and other considerations such as environmental sustainability.

Contents
Part B.....................................................................................................................................................2
Background............................................................................................................................................2
Scenario A: Outsourcing the Repairs and Construction of the Bridge...................................................2
Pros........................................................................................................................................................3
Alternative B : Not Out Sourcing......................................................................................................4
Pros....................................................................................................................................................5
Cons...................................................................................................................................................5
Cost Related Analyses.......................................................................................................................5
Part C Financial Analysis......................................................................................................................6
Assumptions......................................................................................................................................6
Funding.................................................................................................................................................6
Part B Loan........................................................................................................................................7
Additional Funding............................................................................................................................8
Setting Up an REIT.........................................................................................................................10
Revenues.........................................................................................................................................10
Outflows..........................................................................................................................................10
Costs incurred......................................................................................................................................12
Operating Costs...................................................................................................................................12
5. Financial Analysis..........................................................................................................................13
5.1 Costs of Goods Sold..................................................................................................................13
5.2 Profits and Profits After Tax......................................................................................................14
Annual Rate of Return (ARR).........................................................................................................15
5.4 Net Present Value......................................................................................................................15
5.5 Internal Rate of Return..............................................................................................................15
Other Considerations For Analysis:.....................................................................................................18
Environmental Sustainability...............................................................................................................18

Part B
Background
The given bridge is being built by Smart construction Company under the build , Operate and
transfer agreement with the government of New South Wales. The Government of New
South Wales has agreed to pay Smart construction Company AUD100 million for the bridge
and will alow Smart Construction Company to operate the bridge for a holding period of 10
years. During the 10 years, Smart construction will operate the bridge, incur all the
operational costs. Smart construction will also, operate the toll post at the bridge and will be
allowed to collect a toll fee from every vehicle that makes use of the bridge. Smart Company
has the right to make all decisions regarding the operation of the bridge , subject to
limitations set by the NSW government. The revenues from the toll fee will be shared by the
NSW government and Smart Construction. The Bridge, under construction has an estimated
construction cost of AUD 320,000,000 and approximately 60% of the construction work was
completed. A cyclone caused damage worth AUD 120,000 and delayed the completion of the
project by four months. The company has two alternatives
Scenario A: Smart Construction could outsource part of the project to other reputed Company
and allow for the project to be completed on time,. This will increase the costs but will help
the Company start earning revenues earlier, helping reduce the payback period.
Scenario B: Smart Construction could seek an extension of time for the project and complete
the construction. The damages of AUD 120,000 would stil. be incurred by Smart construction
by the rest of the cost projections will be the same. This will be the least expensive option but
could jeopardise the project due to the delay in construction
This part of the report assess the financial costs, especially accounting for the damages as will
as provides some financial analysis to understand the current financial returns on investment
in the bridge.
Scenario A: Outsourcing the Repairs and Construction of the Bridge
While Smart Projects has the experience of construction of bridges in Australia, the changing
dynamics of the climate would require calling in experts from Ae7 Private Limited, a
construction Company based out of Dubai. The Company has built high value projects like
bridges on the water Canal road and several other public infrastructure projects. The
Company has quoted a cost price of AUD 159,000,000 for repairs. This includes using pre-

cast concrete blocks to replace the current concrete work on the bridge and the repair of the
suspension. It is possible for Smart Construction Private Limited to keep working while Ae7
continues to repair the Bridge. However, the Company has realized the importance of pre-
cast concrete to improve the structural integrity of the bridge and has decided to use that
material, instead of the current concrete being used. Additionally, greater investment will be
used for better materials, as directed by the NSW government.
Figure 1Work Break Down Structure
The non-cost related pros and cons are as follows
Pros:
 The construction of the bridge will be completed on time, providing the Company a
chance to uphold its reputation and relationship with the Government Of New South
Wales
Bridge
Connex
Completed
(60% - Damages)
(AUD 192,000,000
- 120,000,000)
i,e AUD 180,000,000
Foundation
(100%) Cable
Anchorages
(10%)
Work To Be Completed
Repairs + 40%
AUD (159+ 128,000,000)
= AUD 287,000,000
Repairs
(Part of
Foundation)
Construction
of Road)

 Outsourcing the construction will also, benefit the project by way of knowledge
transfer. Ae7 has plenty of experience in building bridges such as this one and
working with Ae7, may help Smart Construction Private Limited identify other
shortcomings in the bridge or understand smarter ways of building and operating the
bridge. This might help improve the quality of construction and help in the overall
construction and operation of the bridge. For example, at the suggestion of Ae7,
Smart Construction has decided to use Solar LED based lamps , instead of regular
lighting for the bridge, This could help reduce the operational costs of bridge but
reducing the electricity consumption by anywhere between 10% - 35%. In addition,,
the Company can also consider Carbon financing later for the bridge.
Cons:
 There might be inconsistencies in the structure and quality of the bridge due to
two different firms operating on the same project.
 There could be inconsistencies since the firm would lack experience of building
infrastructure projects in Australia.
Table 1 Total Costs Outflows for the Bridge, In case of Scenario A
Alternative A:
Outsourcing
Total Additional Costs to be Incurred 387000000
Month 1 32000000
Month 2 32000000
Month 3 32000000
Month 4 32000000
Month 5 32000000
Month 6 32000000
Month 7 77400000
Month 8 77400000
Month 9 77400001
Month 10 77400002
Month 11 77400003

Total Costs to be
Incurred
579000006
Scenario B : Not Out Sourcing the Maintenance and Repairs of the Bridge
Smart Construction can seek an additional four months and complete the project within 15
months, instead of the previously estimated 11 months. The Company will still incur the costs
for repairing the damage of AUD 120,000. The Company has also, decided to seek better
quality materials and processes so that a cyclone would not cause serious damages to the
bridge, again. Hence, the Company has decided to invest more and the total expected
expenditure owing to the improvement in the quality is $248,000,000
Table 2 Total Cash Outflows during the Build Phase of the Operation
Alternative B: Not Outsourcing Total Costs (AUD)
Total Costs Yet to be Incurred : AUD 368000000
Month 1 32000000
Month 2 32000000
Month 3 32000000
Month 4 32000000
Month 5 32000000
Month 6 32000000
Month 7 38666666.67
Month 8 38666666.67
Month 9 38666666.67
Month 10 38666666.67
Month 11 38666666.67
Month 12 38666666.67
Month 13 38666666.67
Month 14 38666666.67
Month 15 38666666.67
Total Costs to be Incurred 385333333.333

Non- Cost Related Pros and Cons of Scenario B
Pros
There will be uniformity in the quality of construction, ensuring that the standards of the
Company are met.
Cons
The form will have to seek and extension from the NSW government. This could damage the
reputation of the firm as well as jeopardise the possibility of contracting future project with
the Government of NSW
Cost Related Analyses: Choosing an Alternative
As mentioned earlier, 60% of the expected expenditure has been expended. Additional
expenditure was compared and the results are as follows:
Project Costs (in AUD)
AUD value of Project completed (60%) 192000000 192000000
AUD value of Project Left 128000000 128000000
Additional Costs (To be fulfilled for
Cyclone) 159,000,000 120,000,000
Additional Costs(for improvement of
project) 20,000,000
Total Additional Costs 460000000
Expenditure Above The original
Estimated Costs 159000000 140000000
Percentage increase in Project Costs 49.6875 43.75
The damages related to the cyclone have resulted with an increase in the project costs by 43%
at the minimum and 49% at the maximum. The initial evaluation of the project had margins
for an increase in the evaluation by 7%. On its own, scenario B will cost slightly less than 6%
of an increase in costs. It will offer additional benefits. Hence, scenario A i.e. Outsourcing the
repair and maintenance of the project has been chosen.

Part C Financial Analysis
Assumptions
 The Operational Costs of the Project will not change much
 There was no insurance taken for the project in the past. Hence, the Company
will receive no insurance payout to cover the cost of the damages.
 There is no depreciation of Capital on the bridge while building since the project is
supposed be completed in 11 months.
 Interest rates on all loans are fixed, with yearly compounding, and were known at the
time of the tender.
 Assume that all annual increases in toll will occur on the anniversary of the opening
of the bridge or at the end of a financial year. Annual increases will not occur not on
the new calendar year.
Funding
 . In this case for the Build, Operate and Transfer Project, the NSW government will
allow Smart Construction Private Limited to build and operate a toll for a holding
period of 10 years, apart from AUD $100 million payment that Smart Construction
Limited will be paid for building the project.
According to this framework, the Government has paid 10% of the sum to be paid at
the beginning of the project, 55% of the total amount over construction of the project
and 35% of the amount due upon the construction of the project.
Funding - Part A: Payment by New South Wales Government
The New South Wales had agreed to the following payment schedule, as a part of the contract
in January 2018.
Table 3 Payment Schedule from New South Wales
Total (in AUD) % of Total
Cost
Month 0 1000000 10
Month 1 500,000 5
Month 2 500,000 5
Month 3 500,000 5

Month 4 500,000 5
Month 5 500,000 5
Month 6 500,000 5
Month 7 500,000 5
Month 8 500,000 5
Month 9 500,000 5
Month 10 500,000 5
Month 11 500,000 5
Completion 3,500,000 35
Total 10000000 100
Funding - Part B: Loan
 As mentioned earlier, the initial costs estimated for the Bridge were at AUD 320,
000,000. According to initial estimates, approximately AUD 220,000,000 were to be
secured by Smart Construction for completion of the project, from various sources.
Smart Construction managed to secure a loan from the ICICA Infrastructure Funding
Corporation. Smart Construction was to finance the project by borrowing under two
loans. One loan was secured against the operating income. That is, monthly
repayments were to be paid out of the net operating income. A second loan was
obtained by made by the parent company and is ‘psuedo’ Equity. It will be lent to the
RDC by the parent Company Smart Construction Company at the prevalent rate. This
loan will be used to fund the purchase of the project and any upfront expenses, net of
other loan proceeds. All net cash at the end of each month will be used by the RDC to
repay the equity loan. Any surplus cash after the presumed Sale of the project and
repayment of any loans, will also be used to repay the equity loan
The required funding for expected to be obtained as below
Table 4 Loan Payments
Year Principal Interest Total Payment
2018 1,09,29,442.71 86,10,165.63 1,95,39,608.34
2019 1,72,33,992.68 1,20,75,419.8
3
2,93,09,412.51

2020 1,82,96,947.64 1,10,12,464.8
7
2,93,09,412.51
2021 1,94,25,463.33 98,83,949.18 2,93,09,412.51
2022 2,06,23,583.41 86,85,829.11 2,93,09,412.51
2023 2,18,95,600.90 74,13,811.61 2,93,09,412.51
2024 2,32,46,073.66 60,63,338.86 2,93,09,412.51
2025 2,46,79,840.61 46,29,571.90 2,93,09,412.51
2026 2,62,02,039.18 31,07,373.33 2,93,09,412.51
2027 2,78,18,123.62 14,91,288.89 2,93,09,412.51
2028 96,48,892.24 1,20,911.93 97,69,804.17
Funding Part C: Additional Funding
The increase in costs brought about due to the cyclone has necessitated raising additional
capital. Smart construction has decided that it will minimize its risks by raising capital
through an REIT in order to be less burdened by loans. However, the REIT may not be able
to raise the complete amount given today’s macro economic climate. Hence, Smart
Construction will provide a loan of AUD 109 million to RDC, in order to be able to fund the
project. The terms and conditions and payment structure will be the same as the loan from
ICICA. The loan will have monthly instalments starting May 2018 and the payment schedule
will be as given in the table below.
Table 5 Loan Payments for Loan Funded by Smart Construction
Year Principal Interest Total Payment Balance Loan Paid To
Date
(A) (B) (A + B)
2018 54,15,042 42,65,946 96,80,988 10,35,84,958 4.97%
2019 85,38,660 59,82,822 1,45,21,482 9,50,46,298 12.80%

2020 90,65,306 54,56,176 1,45,21,482 8,59,80,992 21.12%
2021 96,24,434 48,97,048 1,45,21,482 7,63,56,558 29.95%
2022 1,02,18,048 43,03,434 1,45,21,482 6,61,38,510 39.32%
2023 1,08,48,275 36,73,207 1,45,21,482 5,52,90,235 49.28%
2024 1,15,17,373₹ 30,04,109₹ 1,45,21,482₹ 4,37,72,862₹ 59.84%
2025 1,22,27,739₹ 22,93,742₹ 1,45,21,482₹ 3,15,45,123₹ 71.06%
2026 1,29,81,919₹ 15,39,562₹ 1,45,21,482₹ 1,85,63,203₹ 82.97%
2027 1,37,82,616₹ 7,38,866₹ 1,45,21,482₹ 47,80,588₹ 95.61%
2028 47,80,588₹ 59,906₹ 48,40,494₹ 0₹ 100.00%

Setting Up an REIT
 To isolate risk, the Company can form an infrastructure REIT called Road
Development Company (RDC) , which would be a subsidiary of Smart Construction
Company Limited and would be floated on the Sydney Stock Exchange. The REIT
could also seek other financing . RDC’s only assets will be infrastructure projects
above the value of AUD200 million and any relevant agreements. The RDC will sell
shares to the project, in lieu of cash.. For the initial round, REIT could seek funding of
AUD 50 million.
 If the REIT is unable to meet its targets, Smart construction will provide further loans
to cover the deficit amount. However, if the REIT exceeds its target, the excess
amount will go towards repayment of the loan provided by Smart Construction.
 The total funding through the REIT will not be greater than 5% of the total valuation
of the project.
Revenues
 In this case, the Government is planning to introduce the toll for the bridge it will be
called BridgeConnex. The Government has allowed for a revenue sharing model that
will allow the Company to share the revenues
 Significant revenues will be obtained from tolls. According to the Government
estimates of traffic volume approximately 100,000 vehicles use the road every day.
Based on several calculations including season pass and other concessions and levies,
the average revenue is expected to be $3.50 per vehicle. The NSW government has
capped a maximum individual vehicle toll initially, making allowance for a maximum
annual increase in the levy of 3% as a part of the Contract.
 RDC will be responsible for the operation of the toll, repair and maintenance of the
road as well as other expenses. The revenue sharing model will be 66% gross
revenues will be retained by RDC while 34% of the revenues will be transferred to the
NSW government. The total revenues accrued from a given month should be paid off
to the government, at most, by the 10th of the following month.
 Government estimates suggest that for the first five years, an average of 100,000
vehicles will use the services. However, based on some market research government
estimates in the first year, 90% of the government estimates in the second year and is
expected to average at the government estimates of 100,000 vehicles over the life of

the project. The consulting firm does not expect the number of vehicles to be greater
than government estimates over the period of the last eight years of the project. It is
expected that there will be an increase in the toll tax, at the allowed rate of 3% per
annum but the per vehicle revenue has been capped by the Government at AUD 5
over the life of the project.
Table 6 Revenue Inflows (All Revenues are in AUD)
Year
No. of
Vehicles
Per day
Revenu
e Per
Car
Revenu
e Per
Day
Annual
Revenue
Revenue Share Paid
to the
NSW Government Revenue Inflows
Year 1 140000 3.5 490000 178850000 60809000 118041000
Year 2 180000 3.605 648900 236848500 80528490 156320010
Year 3 200000 3.713 742600 271049000 92156660 178892340
Year 4 200000 3.824 764800 279152000 94911680 184240320
Year 5 200000 3.939 787800 287547000 97765980 189781020
Year 6 200000 4.0574 811480 296190200 100704668 195485532
Year 7 200000 4.179 835800 305067000 103722780 201344220
Year 8 200000 4.304 860800 314192000 106825280 207366720
Year 9 200000 4.433 886600 323609000 110027060 213581940
Year 10 200000 4.566 913200 333318000 113328120 219989880
Costs incurred
Depreciation
The bridge will require an initial investment of over AUD 385,000,000 in both cases. The
depreciation of the bridge is estimated on a straight line basis for every year over the life of
the project. It is valued at 3% of the total cost of the project. It is important to note here that
the bridge is expected to have a life of at least 30 years while the project holding period is for
10 years.
Debt Servicing
In order to understand the going concern of the project on a standalone basis, the revenues of
the project are given as below:
Table 7 Loan Payments as a percentage of Total Costs and Total Revenues (in AUD, unless specified)
Year Total Loan Total Loan Total Loan

Payments
Payments as a %
of Costs (in %)
Payments
% of Revenues (in
%)
2018 29220596.34 100
2019 43830894.51
88.005194953679
7 37.131924085699
2020 43830895.51
87.552533320633
3
28.039209765915
4
2021 43830896.51
87.082223360761
6
24.501270713994
8
2022 43830897.51
86.593805456993
4
23.790068053507
5
2023 43830898.51 86.086828680556
23.095512138147
4
2024 43830899.51
85.560853033541
8
22.421556757458
7
2025 43830900.51 85.015451837061
21.769137703580
5
2026 43830901.51
84.450214261129
4
21.136902541545
7
2027 43830901.51
83.864747661293
8 20.521820108011
2028 14610298.17
62.374161816181
3
6.6413501248330
1
Operating Costs
The total final costs of these jeans are 60% of the total revenue. No other costs are applicable:
The fixed and variable costs for the lab are as follows:
 Personnel costs = AUD 50,00,000 Per Annum
 Cost of other materials = AUD 500,000 Per Annum
 Other costs – AUD 250000 per annum
 Maintenance of books and other accounting expenditure related to the agreement of
shred revenues with the government = AUD 50000 per annum.
These costs will increase by 3% per annum over the life of the project, according to the
current inflation targeting by Reserve Bank of Australia.

All costs given below are in Australian Dollars
Table 8 Total Operational Costs amounting for Inflation (in AUD)
Year Personnel Costs
Costs of
Materials
Other
costs
Govt.
Partnership
Costs
Total (At current
Costs)
Costs (inflation
accounted)
2019 5000000 500,000 250000 50000 5800000 5974000
2020 5250000 500,000 250000 50000 6050000 6231500
2021 5512500 500,000 250000 50000 6312500 6501875
2022 5788125 500,000 250000 50000 6588125 6785768.75
2023 6077531.25 500,000 250000 50000 6877531.25 7083857.187
2024 6381407.8125 500,000 250000 50000 7181407.812 7396850.046
2025 6700478.203125 500,000 250000 50000 7500478.203 7725492.549
2026 7035502.11328125 500,000 250000 50000 7835502.113 8070567.176
2027 7387277.21894531 500,000 250000 50000 8187277.218 8432895.535
2028 7756641.07989258 500,000 250000 50000 8556641.079 8813340.312
Total Costs Incurred
The total costs incurred are as follows. These include costs of debt servicing as well operational costs
(accounted for inflation).
Table 9 Total Costs Incurred
Year Operational Costs Loan 1 Payments Loan 2 Payments Total Costs
2018 19539608.34 9680988 29220596.34
2019 5974000 29309412.51 14521482 49804894.51
2020 6231500 29309412.51 14521483 50062395.51
2021 6501875 29309412.51 14521484 50332771.51
2022 6785768.75 29309412.51 14521485 50616666.26
2023 7083857.187 29309412.51 14521486 50914755.697
2024 7396850.046 29309412.51 14521487 51227749.556
2025 7725492.549 29309412.51 14521488 51556393.059
2026 8070567.176 29309412.51 14521489 51901468.686
2027 8432895.535 29309412.51 14521489 52263797.045
2028 8813340.312 9769804.17 4840494 23423638.482

Costs of Goods Sold or Cost of Obtaining Revenues
‘Costs of Goods Sold’ is essentially, the total cost of building the bridge to operating and
transfer of the project. (Seigel & Shim, 2000). Costs of goods sold can be viewed as all the
Total Costs that are projected to be accrued over the life of the project. Here, the total costs
for the project are added. The initial investment has been taken in to account by way of
depreciation.
 Depreciation has been included in costs and divided uniformly over the period of ten
Years
Table 10 Total Cost of Goods Sold or Cost of Obtaining Revenues for the Project Per
Year
All costs given below are in AUD
Year
Costs (inflation
accounted) Depreciation Total
2019 5974000 14370000 20344000
2020 6231500 14370000 20601500
2021 6501875 14370000 20871875
2022 6785768.75 14370000 21155768.75
2023 7083857.187 14370000 21453857.187
2024 7396850.046 14370000 21766850.046
2025 7725492.549 14370000 22095492.549
2026 8070567.176 14370000 22440567.176
2027 8432895.535 14370000 22802895.535
2028 8813340.312 14370000 23183340.312

Sensitivity Analysis
Using the information above the cash flows can be calculated as follows:
Profits and Profits After Tax
Profits are takes as Revenues minus Total Costs. However, without the effects of taxation,
profits, in isolation, may not be a good measure to understand the overall profits and can
skew the understanding of the value of investment. Hence, ‘profits after tax’ is the metric that
is analysed. ‘Profits after tax’ would reflect the true profits i.e profits that are expected to be
accrued after the deduction of taxes to be paid. Profits and Profits After Tax also account for
depreciation , since depreciation is tax deductible.
Table 11 Total Profits and Profit After Tax Per Year
Year
Total Costs
(in AUD)
Total Revenues
(in AUD)
Profits
(in AUD)
Profits After Tax (in
AUD)
2018 20344000 29220596.34 8876596.34 6213617.438
2019 20601500 49804894.51 97697000 68387900
2020 20871875 50062395.51 135718510 95002957
2021 21155768.75 50332771.51 158020465 110614325.5
2022 21453857.187 50616666.26 163084551.25 114159185.875
2023 21766850.046 50914755.7 168327162.813 117829013.9691
2024 22095492.549 51227749.56 173718681.954 121603077.3678
2025 22440567.176 51556393.06 179248727.451 125474109.2157
2026 22802895.535 51901468.69 184926152.824 129448306.9768
2027 23183340.312 52263797.05 190779044.465 133545331.1255
2028 216716146.555 23423638.48 196806539.688 137764577.7816
Total
Revenues
Operational
costs
Loan Payments
for Loan 1
Loan Payments
for Loan 2
Share of
Revenues Paid to
Government
Taxes
Cash Outflows/
Negative Flows
Cash Inflows/
Positive Flows
Dividends for
REIT
Figure 2: Cash Inflows and Outflows

Annual Rate of Return (ARR)
Accounting Rate of Return is a very simplistic measure that helps understand the rate of
return without accounting for the discount rate, that is, it provides the rate of return without
considering the time value of the investment that would be made into the bridge over the
period of time.
Accounting Rate of Return (ARR) was calculated as Average Returns over 10 years /
Average Investment over 10 years (Seigel & Shim, 2000) The Average Returns were taken as
the total expected revenues from over the period of ten years divided by 10. The Average
Investment was taken as the total costs (Total Initial Investment + Total Costs Over ten
Years) and divided by 10.
The Initial Investment, however, will be paid off by the government i,e 100 million dollar.
Hence, the rest of the investment is take n as the total investment. These are accounted for in
the cash outflows, as show above (Total Costs). Depreciation is not accounted for, in this
metric.
Table 12 Annual Rate of Returns
Year Annual Rate of Returns
2018 -70
2019 95.9047786626865
2020 148.575251713919
2021 178.793448568833
2022 184.793990851819
2023 190.91986926263
2024 197.120600818922
2025 203.372409584026
2026 209.677449742679
2027 216.062946921502
2028 587.425259181389
Net Present Value
Net Present Value is usually, the most commonly used metric that is used to value projects
such as the Bridge. The Net Present Value (NPV) of the Investment is calculated using the

series of cash flows that will be accrued in the future. (Frederick, 1999). NPV takes into
consideration the value of investment discounted at the desired Discount Rate (here taken as
14%). Discount Rate is that Rate of Return that is the assigned value for forgoing present
consumption in favour of future returns. Generally, the Internal rate of Return for projects of
Smart Construction is 14%. Hence, the assigned discount rate was taken at 14%
Net Present Value and Internal Rate of Return ‘Internal Rate of Return’ is that Rate of
Return, where the Net Present Value is reduced to Zero. It provides an idea about the idea of
the attractiveness of a project. The Internal Rate of Return was calculated from a series of
trial and error to observe at which percentage does the value of NPV come the nearest to
zero.
Table 3 Present Value
(in AUD)
Year Total Costs Total Revenues Profits Profits After Tax Present Value
2018 20344000 29220596.34 8876596.34 6213617.438 ($414,241.16)
2019 20601500 49804894.51 29203394.51 20442376.157 ($1,362,825.08)
2020 20871875 50062395.51 29190520.51 20433364.357 ($1,362,224.29)
2021 21155768.75 50332771.51 29177002.76 20423901.932 ($1,361,593.46)
2022 21453857.187 50616666.26 29162809.073 20413966.3511 ($1,360,931.09)
2023 21766850.046 50914755.7 29147905.651 20403533.9557 ($1,360,235.60)
2024 22095492.549 51227749.56 29132257.007 20392579.9049 ($1,359,505.33)
2025 22440567.176 51556393.06 29115825.883 20381078.1181 ($1,358,738.54)
2026 22802895.535 51901468.69 29098573.151 20369001.2057 ($1,357,933.41)
2027 23183340.312 52263797.05 29080456.733 20356319.7131 ($1,357,087.98)
2028
216716146.55
5 23423638.48
-
193292508.07
3
-
135304755.651
1 $9,020,317.04
Year Total Costs
NPV $3,634,998.90
XIRR 7

Income Statements
Table 13 Income Statement for 2019 and 2020 (All figures in AUD, unless stated otherwise)
INCOME STATEMENTS
(Projected)
Twelve Months Ended December 31
2019 2020
Revenue:
Product 49804894.51 50062395.51
Total revenue 49804894.51 50062395.51
Cost of revenue:
Total cost of revenue 8876596.34 29203394.51
Operating income 49804894.51 42,619,092
Other income, net 0 0
Income before income taxes 29190520.51 42,619,092
Provision for income taxes 8757156.153 12785727.747
Net income 20433364.36 29833364.74
Table 14 Income Statement for 2021 and 2022 (All figures in AUD, unless stated otherwise)
Twelve Months Ended
December 31
2021 2022
Revenue:
Product 50062395.51 49804894.51
Total revenue 50062395.51 49804894.51
Cost of revenue:
Total cost of revenue 20871875 21155768.75
Operating income
50062395.51
49804894.51
Other income, net 0 0
Income before income taxes 29190520.51 29203394.51
Provision for income taxes 8757156.153 20442376.16

Net income 20433364.36 8761018.353
Table 15 Income Statement for 2023 and 2024 (All figures in AUD, unless stated otherwise)
Twelve Months Ended December 31
2023 2024
Revenue: 51227749.56 51556393.06
Product
Total revenue 51227749.56 51556393.06
Cost of revenue:
Total cost of revenue 29147905.651 29132257.007
Operating income 51227749.56 51556393.06
Other income, net 0 0
Income before income taxes 29132257.01 29115825.88
Provision for income taxes 8739677.1021 8734747.7649
Net income 20392579.9 20381078.12
Table 16 Income Statement for 2025 and 2026 (All figures in
AUD, unless stated otherwise)
Twelve Months Ended December 31
2025 2026
Revenue:
Product 51556393.06.4 51901468.69
Total revenue 51556393.06 51901468.69
Cost of revenue:
Total cost of revenue 29132257.007 29115825.883
Operating income 51556393.06 51901468.69
Other income, net 0 0
Income before income taxes 29115825.88 29098573.15
Provision for income taxes 8734747.7649 8729571.9453

Net income 20381078.12 20369001.205
Table 17 Income Statement for 2027 and 2028 (All figures in AUD, unless stated otherwise)
Twelve Months Ended December 31
2027 2028
Revenue:
Product 52263797.05 23423638.48
Total revenue 52263797.05 23423638.48
Cost of revenue:
Total cost of revenue 29115825.883 29080456.733
Operating income 52263797.05
Other income, net 0 0
Income before income taxes 29098573.151 23423638.48
Provision for income taxes 8729571.9453 - 57987752.4219
Net income
20369001.205
7 -135304755.6511
Other Considerations For Analysis:
The report has made all the calculations to ensure business sustainability. However, business
sustainability goes beyond financial sustainability. Any good project should be built on three
pillars or the “Triple Bottom Line” of business sustainability. This was a term introduced by
John Elkington in 1994. (Hindle, 2009) and encompassed three aspects of Financial ,
Environmental and Social. The given report has taken into consideration the financial aspects
of the bridge. However, it needs to also consider other considerations. Financial
sustainability has been discussed above. However, modern firms, especially firms that
manage public property have an additional responsibility towards the society. It is also good
for business as it will establish smart construction as the brand for building environmentally
sustainable infrastructure projects.

Environmental Sustainability
Environmental Sustainability is an important aspect of public infrastructure as more and more
organizations imbibe the value of environmental sustainability.
The two other important considerations are mentioned below:
 Environmental: This aspect requires consideration of alternative materials and
processes in building the project in order to create an environmentally sustainable
public infrastructure. Consideration for the environmental aspect of the project will
help reducing the carbon footprint of the project. Usually, public infrastructure tends
to have a very high carbon footprint due to the use of cement, electricity, water etc.
Additionally, the operation of the bridge will require roadside lighting for at least six
hours a day. There are also additional processes that require the consumption of
electricity in huge amount. The introduction of products and processes in the value
chain by making efforts to source and environmentally sustainable products etc. Will
help reduce this carbon footprint greatly.
Recommendations:
o Energy Reduction: Smart construction may start analysing the amounts of
energy input used in various processes right from mixing cement to welding
anf finishing. This implies that a consultant will be hired who will analyse
each process and will make reduction in the energy footprint of each process.
o Water: Construction of cement based infrastructure requires big amounts of
water. Hence, water saving processes must be adopted.
 Ecologically Sensitive Materials: The Company could also consider ecologically
sensitive materials, eco friendly paints etc. The Company could test other materials as
some materials may help decrease the operational costs later on due to low
requirement of maintenance and repair. Construction of the bridge may lead to further
deforestation. Hence, the firm can start a drive to plant more trees. Additionally, the
sides of the roads could be decorated with native Australian shrubs, in order to
enhance the value of the bridge.
 Social: The social aspect relates to the impact that the bridge is a part of the larger
society. On its own, the bridge will have marginal social benefits as construction of
the bridge will help the commuters travel to their locations more easily and help
elevate the local economy. However, the Company can also, look into hiring more