Financial Management Report: Investment in UK Real Estate Development

This report, prepared for Saldev Development Limited, delves into the financial management aspects of real estate development in the UK. It begins with an executive summary and table of contents, followed by a discussion of investment opportunities within the real estate sector, including rental properties and flipping houses. The report focuses on the selection of a specific site in Liverpool, evaluating its suitability based on location, transportation, customer demand, labor availability, and safety. It proposes a real estate development plan, considering underlying property issues, soil conditions, and environmental factors. The report includes locational flexibility considerations and detailed budget estimations, calculating the net present value, payback period, and discounted payback period for a proposed project. Finally, the report addresses solutions to improve financial report management in the construction industry, including labor, productivity, safety, and coordination challenges, concluding with references.

Running head: FINANCIAL MANAGEMENT
Financial management
Name of the student
Name of the university
Author’s note

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Executive summary:
The following topic deals with the various financial management theories and
techniques related to the identification of financial report and return associated with the
development of construction. Apart from that the topic also discusses about the alternative
developmental plans which the company could try to implement by using cost forecasting
and financial report assessment techniques and also gives a justified answer to the
requirement of decision making in construction of real estate sector. Lastly the topic provides
solutions to check the effectiveness of the management.

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Table of contents
Introduction:...............................................................................................................................3
Discussion:.................................................................................................................................3
Investment opportunities in real estate:..................................................................................3
On rental properties:...........................................................................................................3
Suitability of the chosen site:.................................................................................................4
Proposal and justification of real estate development:...........................................................6
 Locational flexibility.......................................................................................................8
 Budget estimation:..........................................................................................................8
Solutions to improve financial report management in construction industry..........................13
Labour problem:...................................................................................................................13
Labour productivity:.............................................................................................................14
Safety hazards:.....................................................................................................................14
Coordination hurdles:...........................................................................................................14
Conclusion:..............................................................................................................................14
References:...............................................................................................................................16

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Introduction:
The case study focuses on the development of real estate cites in UK which was
scheduled to be contracted by Saldev Development Limited and the reason behind the choice
of this site by considering the characteristics of the sites. Apart from that the reason behind
why this site should be chosen has also been stated by mentioning the characteristics. Apart
from that whether the proposed project will be successful or not has been decided upon by
calculating the overall net present value of the proposed project along with the timing to be
taken to complete the job with an added suitable conclusion at the end.
Discussion:
Investment opportunities in real estate:
Investment in real estate sector has been considered as one of an important factor for
the investors who seek them. In fact being an investor it is important that the investor knows
about the pros and cons of the investment. However it adds the different strategic approaches
in buying of the investment sectors. Hence there are many opportunities relating to the
investment procedure in the real estate sector which Saldev Development Company can look
upon. This are-
On rental properties:
This is one of the most popular investment strategies. However the policy never goes
out of style and neither goes down anytime. Hence it is a recession proof business which
means that the property will be able to survive. Hence in order to make money in real estate
business the investor should have the complete knowledge of property buying or investing
money in real estate by knowing the market analysis.,. If everything goes well the surely the
company will look to invest in the site.

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On flipping houses:
Buying flipping houses can be tough and rewarding at the same time. However the
values are to be added back to the rise and hence flipping houses are good investing places.
Therefore it is this types of houses are to be added while selling up the profit. Hence in order
to bargain homes the investor has to know about the rules and regulations. Similarly the same
could be implemented in the case of Saldev development limited.
However the selected site chosen by Saldev development limited for development
proposal is Mercy Side port, a place situated in Liverpool. However this place ben chosen by
the company because it meets the following aspects-
Suitability of the chosen site:
A company while choosing a site for development of real estate must look into
different factors. However it is important that the location thus choose by the company must
meet all the requirements which are expected by the company management. If all the
requirements are meet properly, then only the company will look to invest in that place for
development of the construction. Therefore the main criteria’s that this company must look to
invest in are as follows-
Location: the ultimate location and the site selection is an important aspect for the real estate
business. These depends upon the various aspects and factors. The determinants that the
entities may evaluate while locating a business mostly depends upon the nature of the
industry and the nature of the enterprise. Hence depending upon the enterprise and its
operations some locations totally depends upon the specific location parameters. Hence the
investors put those conditions in the needs of importance. Further the locations determinants
are not constant, however changes over time depends upon the changes in law and the market

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conditions. However the site choose by Saldev Development limited in Liverpool has meet
all the requirements location wise which made the company to invest for the location.
Transportation: Transportation is another important factor to be considered for the selection
of site. The place selected by the company for development of real estate business has to be
convenient and has to be connected with the different parts of the city through proper
transportation facilities. Hence the circulation if material would be good and the company
will be able to attract the profits easily. Apart from this the company would be able to attract
more number of customers. Since Liverpool is connected with good transportation system
through the different parts of UK, hence this site is very much convenient for development of
real estate.
Customer demand: in order to sustain in the market it is important that the company must
try to meet the customer expectation. However the customer expectation should be meet by
the considering the customer problems in an initial level. However the company must try
survey down the initial requirements of the customers which is based on the monitory power
of the customers, buying capacity. Hence it is important that the company always focus on
the customer demand. However this site is justified for choosing because it is meeting the
customer demand properly.
Availability of labour: If the company is going to use the proposed place for the factory
purpose then it is important that there are sufficient labours for the factory, Hence the
company must look after the process of the labour availability. However the labour could be
available if the place is that much crowded enough or the popularity of the place is much. If
all these problems are meet properly then the company will be able to meet the labour
requirements properly.

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Safety and security: this is considered to be an important factor for the company before
choosing a particular site for development of real estate. However the company should try to
ensure that the preferred location has meet all the security requirements in that particular
area. However it is advised that the company had meet all the security requirements and the
security occupant are granted. However Saldev developments limited has chosen this site
because being in the centre of Liverpool this place is very much safe and secure. Hence it is a
good site to investment as per the company requirements are concerned. Hence Saldev
Development Company should invest in this site (Attia et al 2013.).
Proposal and justification of real estate development:
Real estate development and constructions team advises the clients on all aspects of
real estate development, re development and construction projects. In an event the project
involves the new construction of buildings, special facilities, infrastructure, tenant space or
other construction matters. Hence the company can offer some extensive experience in the
construction and design the transactions which regularly presents the owners and tenants. In
negotiating and preparing the design and construction agreements , service agreements ,
purchase agreements, option and maintenance agreements, consulting contracts and other
project management issues. However the company can also offer extensive experience in
construction and decision making transactions which they regularly present I front of the
owners and tenants. Apart from that the lawyers have gained experience in settling down the
advising contractors on drafting on all aspects of constructions contracts which includes the
standard work form. However it also includes the contentious construction matters. However
the company is experienced with a wide variety of documentation and restrictive covenants,
utility agreements which regularly represent owners and company developers with respect to
the changed agreement policies and planned developmental method. Therefore Saldev
Development Company could try to impose some new policies and procedures in order to

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search more investment appraisals to establish a relevant the real estate proposal plan.
However in order to choose a good real estate proposal the company must take the following
decisions -
 Underlying property issues: Entities which predate statehood: most of the owners
and developers understand the need to investigate any rights and land ownerships
granted to the first nations or native peoples less commonly understand the rights
have granted to the developmental fields. Hence the ownership development interests
in agrarian districts, utilities and railroads. Hence the ownerships interest in the water
rights or mineral rights which may also prohibit development.
 Soil conditions: soil improvements are the biggest financial report factor associated
with the real estate project. The project should be placed in such a place where the
soil, quality is good and strength. Hence the soil contractors could play an important
role because they could well know about the soil conditions of that particular place.
However the soil could change drastically from site to site and geotechnical change
could well bring the required change.
 Environmental issues: The environmental issues could be many like bearing capacity
if the building house and hence the root has be strong enough otherwise it could be
tough to construct the building house. Apart from this additional costs could be added
with this value and the soil material. Another important aspect could be liquefaction
under which the seismic conditions could be added with this. If the soil reports badly
the m there is a possibility of liquiafication therefore special engineering could be
added with this. Another important factor is the land settlement like certain sites are
prone to settlement as underlying soils consolidate. However these soils are been
treated as replaced or reinforced and can have the dramatic changes in the long term
maintenance of the sites and building (Chen et al 2014).

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 Locational flexibility: Out if all the parameters the location is one of the major
important factor for choosing a well-managed construction site. However the place
where the company has chosen to start the project should be good in all aspect like
good communication service, good facilities of water and electricity. However the
customers are another important thing for the business (Ashworth and Perera 2015).
Hence the company must need to ensure that the location is very flexible in case of
housing and for office purposes.
 Budget estimation:
The budget for the proposed construction sites are as follows-
The budget is set by the clients and it is distinct from the cost plans and prepared by
the cost consultant which are likely to be focused on the
Construction cost
Land and property aquisitision
Approval cost
Planning cost
Financing cost
Declining and re allocation cost.
Contracts outside the main workers
Insurance and consultancy cost
For project 1:
Project cost Amount ( in $)
Land acquisition 3000

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Planning , design and approvals 1000
Site work and building construction 12200
Amenities and off site cost 200
Management and overhead 1760500
Total cost 1776900
The total estimated cash outflow for this project is $177690 and the project should be
taking time to complete within the next five years. In this case the given discount value is
estimated at 4.08%. Hence in order to calculate the feasibility of the project the net present
value, payback period and discounting payback period to be calculated.
Cash flow statements for project 1

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However the net income from the project after five years for the project 1 would be
$3849000 which is almost $4000000. However he meeting the additional expenses the total
outgoing cost for the fifth year is $257810. Hence the company could estimate a profit of
$3500000at the end of the fifth year.

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From the above detail it is seen that Saldev Development Limited had proposed that
the project will be completed within the next five years total initial cost of the project is
estimated at $1776900. However the companies the proposed cost of capital value is counted
at 4.085 per annum. Hence from the above calculation it is found that the net present value of
the project is almost $411000 million. However the net payback period is estimated for the
financial year is 16 years and the discounting payback period is calculated at 5 years. Hence
it is derived that the company should accept this project. However the total profit estimated at
$320000 million dollar approx. Hence it is to be concluded that the company should go with
the project or approve in other words.
For project 2:
Project cost Amount ( in $)
Land acquisition 5000
Planning , design and approvals 2000
Site work and building construction 16500
Amenities and off site cost 1000
Management and overhead 200000
Total cost 224500
The total estimated cash outflow for this project is $224500 and the project should be
taking time to complete within the next five years. In this case the given discount value is
estimated at 4.08%. Hence in order to calculate the feasibility of the project the net present
value, payback period and discounting payback period to be calculated.
Cash flow statement for the project 2 for five years

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Hence it is seen from the table that the company initially invested $224000 from
which the total incoming for the fifth year is $900000 million approx. whereas from the total
outgoing the net income is $90000 which is very less than the first project. Therefore
choosing the first project would be appropriate.

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Hence from this table it is seen that the project is estimated to be completed within 3 years
and discounted payback period is estimated at 6 years approx. Hence from payback period
point of view this project will be taken.
Solutions to improve financial report management in construction industry:
As per the report of the construction industry institute it is noted that there are about 107
construction financial report issues which are associated while managing the project.
However there are 90 types which can be associated with the construction of real estate
project. Hence the three primary classifications related to the construction financial reports
are like as follows-
Finance: although the exceeding budget on this project had become an industry oriented
form, hence financial issues are been highlighted due to bad planning and coordination.
However it is known that all the megaprojects can easily go by millions and even billions for
the budget. However the project experience just budget excess of a small percentage.
Otherwise the project will be standstill.
Schedule: however the management during construction is a growing financial report that
must be carefully managed. However when the push comes shove , however the project term
could be deciding to accept the unfinished business design which is good enough to work on
the financial report assessment value. Often the construction financial report is related to
design the better market management. Hence the contractors management more slowly Hence
the financial reports are as follows-
Labour problem:
Labour problem is considered as a major financial report in the construction business.
However sending the right people at the right time is a key responsible for the construction

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industry (Adrian and Shin, 2013). Hence it is reported that in the third quarter they are
finding it hard to cope with the ongoing skills labour shortage.
Labour productivity:
Labour shortage is an issue which is directly related to the labour shortage. However the
same could have an impact in the company overall financial report productivity. As per the
study the financial report can be varied up to 50%. Since the work is dine based on the
construction sites.
Safety hazards:
Unsafe working conditions can also be taken as another factor in construction department.
However the major job site provide safety and thinks about the well-being of the employees.
Apart from that the language barriers could be another issue relating to it.
Coordination hurdles:
If the coordination between the employees are now proper hence it would be tough to
complete any work. However there are different ways in which the communication
technology can be improved in the project success. Hence it is important that there should be
proper importance to be given to the workers.
Conclusion:
Hence it can be concluded that Saldev Development Company could try to impose
different new policies and programmes in order to check and quantify the financial report
associated with the construction of the real estate sector. However the various value financial
report theories and techniques could be developed to maintain the scheduled financial report
and uncertainties. Apart from that the company had also aimed to develop the alternative
financial report and return policies in order to cope with the financial and non-financial
financial report in the value appraisal and cost technique. Other than that it is also seen that

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the company could well go for development of the project and it will be beneficial for the
company also. Lastly the details show the possible challenges which a construction company
could face and the measures to overcome the same.

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References:
Adrian, T. and Shin, H.S., 2013. Procyclical leverage and value-at-financial report. The
Review of Financial Studies, 27(2), pp.373-403.
Ashworth, A. and Perera, S., 2015. Cost studies of buildings. Routledge.
Attia, S., Hamdy, M., O’Brien, W. and Carlucci, S., 2013. Assessing gaps and needs for
integrating building performance optimization tools in net zero energy buildings
design. Energy and Buildings, 60, pp.110-124.
Aziz, R.F. and Hafez, S.M., 2013. Applying lean thinking in construction and performance
improvement. Alexandria Engineering Journal, 52(4), pp.679-695.
Burke, J.G., Jones, J., Yonas, M., Guizzetti, L., Virata, M.C., Costlow, M., Morton, S.C. and
Elizabeth, M., 2013. PCOR, CER, and CBPR: alphabet soup or complementary fields of
health research?. Clinical and translational science, 6(6), pp.493-496.
Cardona-Morrell, M. and Hillman, K., 2015. Development of a tool for defining and
identifying the dying patient in hospital: Criteria for Screening and Triaging to Appropriate
aLternative care (CriSTAL). BMJ supportive & palliative care, 5(1), pp.78-90.
Chen, G.G., Weikart, L.A. and Williams, D.W., 2014. Budget tools: Financial methods in the
public sector. CQ Press.