University of Cape Town Department of Civil Engineering

CIV4041F: Professional Practice

Test #1/2013
Instructions: 1. Time allowed = 105 minutes 2. The maximum score is 100 3. There are SIX questions over two pages 4. You should attempt ALL of the questions 5. This is a closed-book test 1. A shopping mall will cost an estimated R100 million to construct plus a further R10 million per year to maintain. Assuming an effective interest rate of 6% per year, what annual income from the shopping mall is required to break even on the investment assuming a design life of 25 years and no residual value? [10] 2. A toll road is being contemplated. The capital cost is estimated to be R500 million, whilst the maintenance and operating costs are likely to be in the order of an additional R35 million per year. The expected salvage value of the road after its projected design life of 30 years is R250 million. What is the Present Worth of Cost of the project assuming a real interest rate of 5% per year? [14] 3. A municipality is considering improving an existing gravel road. The road is currently costing R300,000 per year to maintain. Putting an asphalt surface on the road would cost R630,000 immediately, and an additional R195,000 per year to maintain. What is the rate of return for the surfacing option compared to doing nothing assuming a design life of 30 years and no salvage? Use the Uniform Annual Cost method. [20] 4. You wish to buy a car worth R160,000. How much must you put away each month if you wish to purchase the car cash in two years time assuming an effective interest rate of 0.25% per month on your savings? [6] 5. The tuition fee for BSc(Eng) degree studies in 1980 was R850 per year. It is projected to be R54,400 in 2016. Using the Rule of 72, estimate the average inflation rate over the period 1980 to 2016. [10]
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6.

You have been tasked to look at options for routing a new coastal road across a river estuary. A small sea-side village is situated next to the estuary. There appear to be three main options: a) A small ferry to carry vehicles across the estuary across the river at an annualised cost (to the government) of R10 million. This will result in considerable inconvenience to the through-traffic (travelling along the coast) and disruption to the villagers (additional traffic) but will cause minimum damage to the environment (shortest distance, no major capital works) and will make it easier to access the village. A detour upstream to a point where the river can easily be crossed by a small bridge at an annualised cost (to the government) of R20 million. The road will completely by-pass the village. This option will lead to increased damage to the environment (longer road distance) and some inconvenience to the through traffic (longer route). A long bridge across the estuary and through the village at an annualised cost (to the government) of R50 million. This will result in considerable damage to the environment (impact on the estuary) and disruption to the villagers (additional traffic), however the village will be directly connected to the road and inconvenience to the through traffic will be eliminated.

b)

c)

Describe how you would perform a Utility-Cost analysis taking into account: Damage to environment Disruption to the villagers Ease of access to the village Inconvenience to the through traffic

Illustrate your answer by performing the appropriate calculations using values of your own choosing where necessary. [40]

GRAND TOTAL = 100

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