Assignment on Project Evaluation of a Hi-Tech Park in Bangladesh

Name of Student: Shakina Ismail

Class Roll: 8
Exam Roll: 707
Subject: Development Economics
Course: Project Planning and Evaluation (C-403)
Course Instructor: Al-Amin Parvez
Name of Institute: Dhaka School of Economics (DScE)
Date of Submission: 31st December 2020
Introduction

To contribute to fourth industrial revolution, it is crucial to promote industrial sector and

increase foreign investments. Building Hi-tech park could be one of the major steps that may
help facilitate the growth of the industrial and technological sectors. This paper is about one of
the Hi-tech parks in Bangladesh, which is named as Chittagong University of Engineering and
Technology (CUET) IT Business and Incubator Centre, which is a currently ongoing project in the
port city Chattogram. This article will evaluate feasibility of the hi-tech park while conducting
stakeholder analysis and utilizing net present value model.

The Hi-Tech Park in Chattogram connects Rawzan Pahartoli highway road in Kaptai which
eventually leads to one of the hill tracts areas, Rangamati. Total area of under construction
building is 36,000 sqft which is around 3344.5 square meter and total number of floors is 6. The
number of total training and trainee designed under this project is 16000. Employment under
this project is 6400 (BHTPA, 2020). The duration of this project is June 2017 to December 2021.

The Hi-tech park project consists of following parts such as:

1. One 10 storied incubation building

2. One 6 storied training building
3. Two 4 storied dormitory building and
4. Development of Existing lake

This project is significant since it will create an IT hub which was badly needed in the port city,
Chattogram. This project will also create skilled manpower, help digitalize hill tracts area,
Rangamati and increase foreign investment.

Objectives

The objectives of this project defined by the government are:

● Preparing skills of SSC and HSC level students as skilled manpower in IT

● Facilitating create entrepreneurship in the information and communication technology
 ● Establishing a linkage between academia and IT industry
● Creating self-employment opportunities or start-ups for the youth of Bangladesh in
Information and communication technology (ICT) sector

Project will pay off after 10 years of its starting point which will be in 2031; these 10 years will
be utilized to initiate and increase the number of start-ups and other companies.

Evaluation Method with Financial Model

To evaluate the project cost benefit analysis has been done while using net present value as
one of the financial methods. Detail calculation has been provided below:

Cost Benefit Analysis

Estimated Cost:

Estimated cost of this hi-tech park will be ($ 31,200 * 3344.5) = $ 104, 348,400 since average
cost of hi-tech construction site of Bangladesh is $ 31,200.00 per square meter.

Benefits:

The project’s earning or revenue will come from employment opportunities through tax (both
personal income and corporate tax), VAT and foreign investment.

Cash Inflow of the Hi-Tech Park Project in 10 Years

Quantity
Particulars Amount (in $ in 1 year) Total ($)
(years)

Tax 3000000 10 30,000,000

VAT 3000000 10 30,000,000
Foreign Investment 4000000 10 40,000,000

Miscellaneous 2000000 10 20,000,000

Total     =$ 120,000,000

The project has been evaluated following Net Present Value (NPV) financial model.
 n
Ft
Project NPV = I0 + ∑ Where
i=1 ( 1+k ) t

I0 = Initial Investment (since it is an outflow, the number will be negative)

Ft = net cash inflow for period t

K = required rate of return

Here for Hi Tech park in Chattogram

I0 = $ 104, 348,400

t = 10 years

Ft = 120,000,000

K= 30% = 0.3

NPV= I0 + 8,695,652.2

So, here it shows NPV is a positive value. It illustrates the hi-tech park project will pay off in 10
years; thus, it will be a cost-effective project for the government of Bangladesh.

Stakeholder Analysis

Apart from financial model, stakeholder analysis has been selected to use as non-financial
model while evaluating the project. Stakeholder analysis has been done thorough various
focused group discussions (FGDs), round table discussion and in-depth interview when policy
analysts, environmentalists, businessmen, local authorities, and other stakeholders have
attended and shared their views. This stakeholder analysis helped mitigate the negative
impacts of the project as follows:

● Natural environment would be disrupted by 52.6% (B., 2002).

● Social crime would increase by 36.8% (Ibid)
● Pressure would increase on agricultural land by 31.6%
● Socio-economic environment would be disrupted by 21.1%
● Some people would be displaced by 15.8%
 ● Others by 10.5%

Expected Results

The hi-tech park will bring following positive results to the communities such as:

● Job opportunities would increase by 93.2% (B., 2002).

● Roads and other facilities would increase by 45.9% (Ibid)
● Land value would increase by 28.5%
● Opportunities for business would increase by 27.1% and
● Others by 1.4%

Limitations

● long term project: thus, it needs to wait several years to acknowledge the results
● Slower speed in construction work due to pandemic
● Economic downturn due to pandemic

Recommendations

The following steps could be taken to mitigate the risks and challenges of the project:

● Environmental assessment should be done

● Consultation with local and foreign companies should be done to find out their
requirements regarding facilities in the hi-tech park.
● Private ownership and change of ownership might work

Conclusion

In a nutshell, the above mentioned financial and non-financial analysis as well as evaluation of
the hi-tech park in CUET illustrates that it will be a cost-effective project for the government
which will pay off after 10 years of completion of the project. The evaluation has been done
through net present value model and stakeholder analysis which showed the hi-tech park will
be cost effective for the government.

References
Bangladesh Hi-Tech Park Authority. (2020). Retrieved December 20, 2020, from
http://bhtpa.gov.bd/site/page/c10a39bb-f846-47d1-b1f5-020e7c07aa37/-

B. (2002, July). Project Formulation Study for the Establishment of Hi -Tech Park at Kaliakoir,
Gazipur. Retrieved December 15, 2020, from http://bhtc.bhtpa.gov.bd/wp-
content/uploads/2015/06/Feasibility-study-report-khtp-2-buet.pdf