i

FACULTY OF ENGINEERING TECHNOLOGY

SEMESTER 2
SESSION 2021/2022

BNJ30902
ENGINEERING ECONOMY
GROUP PROJECT FINAL REPORT

Course Code BNJ30902

Name of Course Engineering Economy
Title Business Proposal – UTHM Autoworks
Year & Program BNG
Section 1
Semester 1
Academic Session 2021/2022
Group No 9
No Name Matrix
1 MOHAMED FAIQ AFIF DANIEAL BIN YUSRI AN200035
2 AHMAD IRFAN FAKHRULLAH BIN NAZERI AN200047
Group Members 3 MOHAMAD IZZAUDDIN BIN AHMAD AN200071
4 MUHAMMAD ZARIFF BIN MOHD ZAKI AN200123
5 MUHAMMAD SALIHIN BIN MAN CN180090
Name of Lecturer DR. NORIRDA BINTI MOHAMED
 ABSTRACT

The proposal's purpose is to create a business model approach for Automotive

Workshop and Service. The business plan's goal is to open an automotive workshop
with an RM300,000 start-up capital. The Pagoh Industrial Park is home to the
UTHM autowork (PIP). Business models are needed for a variety of reasons,
including serving as a guideline for businesses and assisting with capital acquisition.
This suggestion will be useful to anyone looking for a strategy to reach a break even
point in three years or less in order to succeed in their own firm. As we all know, a
business model is a long-term technique of conducting company.
The research in this proposal is to construct and accommodate unique
services in car services for students and lecturers with a particular amount of money
in order to alleviate student and lecturers of Pagoh Resident itself. It's also to see
whether there are any disparities in the business plans of the companies. The
observed research consists of market research for competitive workshops at Pagoh
Industrial Parks (PIP), Johor. Business models are an essential concept with a much
broader application.
 iii

CONTENTS

ABSTRACT ii

CONTENTS iii

LIST OF TABLES vi

LIST OF FIGURES vii

LIST OF SYMBOLS AND ABBREVIATIONS viii

LIST OF APPENDICES ix

CHAPTER 1 INTRODUCTION 1

1.1. Introduction 1

1.2. Problem Statement 2

1.3. Objectives 2

1.4. Scope 2

1.5. Group project member 3

1.6. Outline of Report 3

CHAPTER 2 LITERATURE REVIEW 4

2.1. Introduction 4

2.2. Life cycle cost 4

 2.2.1. Cost and value engineering 5

2.2.2. Minimum acceptable rate of return (MARR) 5

2.3. Cost estimation technique 6

2.4. Work breakdown structure 6

2.5. Project financial planning 7

2.6. Project cost valuation 8

2.7. Summary of Research and Development 9

CHAPTER 3 METHODOLOGY 11

3.1. Introduction 11

3.2. Service 12

3.2.1. Oil and filter change 13

3.2.2. Brake repair service 14

3.2.3. Engine service 16

3.2.4. Transmission services 17

3.2.5. Scheduled maintenance 20

CHAPTER 4 RESULTS AND DISCUSSIONS 21

4.1. Introduction 21

4.2. Life cycle cost 21

4.3. Cost estimation technique 26

4.4. Project evaluation cost 27

4.5. Additional value task code of ethics 28

 4.5.1. Respect and impartiality toward human integrity 28

4.5.2. Integrity Inclusion 28

4.5.3. Efficiency and excellence 28

4.5.4. Product quality and safety 29

4.5.5. Responsibility towards the community 29

CHAPTER 5 DISCUSSIONS AND CONCLUSIONS 30

5.1. Discussions 30

5.2. Conclusions 31

REFERENCES 32
 vi

LIST OF TABLES

2.1 Summarized of minimum acceptable rate of return 9

4.0 Start-up expenses 22
4.1 Start-up assests required 22
4.2 Equipment 23
4.3 Automotive supplies and spare parts estimation 23
4.4 Summarize the start-up assumpstions 24
4.5 Estimation business plan total 26
4.6 MARR calculation 27
 vii

LIST OF FIGURES

1.5 Organization chart UTHM Autowork 3

2.2 Life cycle cost 5
3.1 Flow method of the business strategy 12
3.2 Work breakdown structure for UTHM Autowork 13
 viii

LIST OF SYMBOLS AND ABBREVIATIONS

LCCA - Life cycle cost analysis

PIP - Pagoh Industrial Park
MARR - Minimum acceptable rate of return
UTHM - Universiti Tun Hussein Onn Malaysia
PW - Present worth
 LIST OF APPENDICES

APPENDIX TITLE PAGE

No table of figures entries found.

 CHAPTER 1

INTRODUCTION

1.1. Introduction

An economy is a broad collection of interconnected production and consuming

activities that help determine how scarce resources are distributed. The production
and consumption of products and services in an economy are used to meet the
requirements of individuals who live and work within it. One of the things that
should be vital in sustaining the stability of one's self, family, and society is the
economy.
Based on a recommendation from Dr. Norirda Binti Mohamed, an instructor
of engineering economy, we students from University Tun Hussein Onn acquired a
title to be implemented. This time, we were given the task of establishing an
AUTOMOTIVE WORKSHOP AND SERVICES company in the Pagoh Industrial
Park area (PIP). With this in mind, we intend to establish a UTHM autowork
company centered on students and lecturers at the Pagoh Industrial Park.
The vehicle repair industry is extremely important all around the world. This
is due to the fact that vehicles must be repaired. Since the introduction of the vehicle,
a plethora of business opportunities have arisen in the automobile industry, one of
which is the auto repair garage. Car repairs are a company that never goes out of
style anywhere on the planet. This is because fleets of automobiles are added to
people's garages on a daily basis, and whether you have a brand-new car or one that
 2

is somewhat old, you can be sure that car repair will be required at some point in the
future.

1.2. Problem Statement

1. Students and lecturers’ movement to service their car was limited due to
Universiti timetable.
2. Price for car service and repair around Pagoh are to expensive.
3. Sales of quality and good vehicle service workshop are hard to find around
Pagoh.

1.3. Objectives

1. To create a business plan of UTHM autowork for students and lecturers in

Pagoh Industrial Park (PIP)
2. To identify the cost estimation for automotive workshop and services.
3. To study the process of starting a new business plan.

1.4. Scope

To fulfill the objectives of the project, the scope is limited to the following:
1. Focusing on Pagoh Industrial Park (PIP) area only
2. Using MARR approach as a business plan involving :
 Life cycle cost
 Cost estimation technique
 Work breakdown structure
 Project financing plan
 Project cost evaluation

3. The application of code of ethics as an additional value-added integrated to the

project.
 3

1.5. Group project member

AHMAD IRFAN
FAKHRULLAH BIN
NAZERI
(GENERAL MANAGER)

MOHAMAD IZZAUDDIN
BIN AHMAD
(EXECUTIVE MANAGER)

MUHAMMAD ZARIFF MOHAMED FAIQ AFIF MUHAMMAD SALIHIN

BIN MOHD ZAKI DANIEAL BIN YUSRI BIN MAN
(SALES MANAGER) (FINANCIAL MANAGER) (OPERATION MANAGER)

Figure 1.5 Organization chart UTHM Autowork

1.6. Outline of Report

This project is separated into four phases: literature review, methodology, data
analysis, and a result, which includes the progress of the business plan and
conclusion. Chapter 1 covers a business title and some essential details such as the
problem statement, the objectives, and the scope of the study. In Chapter 2, the
previous researcher's four research and reviews on the Minimum Attractive Rate of
Return (MARR) strategy will be written. Chapter 3 is Methodology which is
explaining the materials utilized and the procedure of the business will be thoroughly
detailed. The flowchart, equipment, risk, and business budget will be listed
throughout the chapter. The contents of Chapter 4 are focused on the discussion and
the results of this business. Finally, Chapter 5 will be the conclusion which is
presenting the outcomes of the business with recommendation.
 9

CHAPTER 2

LITERATURE REVIEW

2.1. Introduction

With the use of the Minimum Attractive Rate of Return (MARR)

strategy, this chapter begins an extended focus on the sustainable
business plan. The title of this project will be used to identify the
establishment of Engineering Economy in this section. In other words,
based on the set of experiences and learning for this semester, this
writing report will focus on the major themes of existence cycle cost,
cost evaluation technique, project finance plan, and task cost
valuation.The literature review consists of technical papers, IEEE
journals, articles, and other few resources.

2.2. Life cycle cost

The term "life-cycle cost" (LCC) or "life-cycle cost analysis" (LCCA)

refers to a way of calculating the overall cost of facility ownership. It
considers all expenses associated with purchasing, owning, and
disposing of a specific system. LCCA is notably effective for
comparing project options that meet the same performance
requirements but differ in terms of starting and operating expenses in
order to choose the one that optimises net savings [1]. There are some
subgroups that collaborate with life cycle cost.
 5

Intial
Cost

Disposal Service
Cost Cost

Preventati
Operatin ve
g Cost Maintenan
ce Cost

Figure 2.2 Life cycle cost

2.2.1. Cost and value engineering

Various costs arise when acquiring, doing, or rejecting a task.

Task-related expenses are classified as initial costs, gasoline costs,
substitution costs, activity and s costs, finance charges, and remaining
esteems.
Displaying LCCA necessitates a great deal of flexibility when
changing the types of expenses associated with materials and resources
used in a project over its lifecycle. In this manner, an engineer can gain
access to all data pertaining to the monetary impact of selecting a
combination of venture options [2].

2.2.2. Minimum acceptable rate of return (MARR)

A minimum acceptable rate of return (MARR) is the minimal profit an

investor expects to make from an investment, taking into consideration
the risks of the venture as well as the opportunity cost of choosing it
over other investments. One of the most important metrics in
 6

engineering economics is the MARR.

The minimal allowable rate of return should be determined by
the company's financial status. The company's capital cost can be
estimated by selling stocks and using retained earnings. MARRs are a
valuable tool for determining if an investment is worth the risks it entails
[3]. A successful investment is one in which the actual rate of return
exceeds the minimal acceptable rate of return.

2.3. Cost estimation technique

The process of estimating all of the costs associated with executing a

project within scope and on time is known as cost estimation. In the
early stages of project planning, the highest estimates are frequently
used and can influence whether or not a project is ultimately pursued.
When a project is accepted and an organization decides to proceed with
it, more thorough and granular cost estimates are required. In the cost
estimation technique, there are two approaches:
 Top down and bottom down approach
This method modifies past data from previous engineering projects to
estimate the costs, revenues, and other data for the current project. It is
most effective when utilised early in the estimating process, when
options are still being generated and polished thoroughly. The break
down approach is a more precise method of assessing costs. It divides a
project into small, manageable components and estimates the economic
repercussions of each. Furthermore, these smaller unit prices are
combined with other sorts of expenditures to arrive at an overall cost
estimate.

2.4. Work breakdown structure

A work breakdown structure, according to [5], is "a deliverable-oriented grouping of

the work involved in a project that specifies the complete scope of the project." It is a
hierarchical structure that is typically depicted graphically or tabularly. The graphical
 7

form is best for communicating work activities to upper management and/or clients,
whereas the tabular form is best for cost and schedule development [5]. A work
breakdown structure (WBS) is essentially a breakdown of a project's scope into
smaller, more manageable chunks. The deconstruction process can be repeated until
the desired degree of detail, lowest-level discrete deliverables, is obtained. A work
breakdown structure (WBS) determines the overall project scope [5].
A work breakdown structure is critical to the successful execution of any
software project [4] because it describes the work required to achieve the project's
objectives in detail. It also depicts the interim deliverables needed to produce the
primary project deliverables specified in the project scope specification [5]. The
success of the software project is measured in terms of cost and schedule
performance - a work breakdown structure (WBS) provides a foundation for better
cost and schedule estimation. [5] agrees with this assumption, stating that a work
breakdown structure (WBS) is typically considered as a powerful instrument for
better performance control. Furthermore, a work breakdown structure (WBS) is the
project's backbone; without it, a project manager would be attempting to manage a
shapeless project [4]. A typical work breakdown structure (WBS) reflects user and/or
system requirements while also serving as a foundation for identifying resources and
tasks for creating a project cost estimate. A well-developed work breakdown
structure also functions as a communication tool for all stakeholders [5]. [4] agrees
with this assessment and claims that a good work breakdown structure decreases the
probability of missing critical project aspects. When creating a work breakdown
structure (WBS), software project managers employ a variety of tools and
methodologies.

2.5. Project financial planning

A Financial Plan defines the Project Finance required to achieve certain

goals. The Financial Plan describes all of the expenses that a project will
incur (labour, equipment, materials, and administration costs), as well as
an estimate of the worth of each expense.
The Financial Plan, often known as a project budget, details all
of the expenses involved with a project. [4]. There are numerous
 8

advantages to good financial planning, including calculating earnings,

limiting financial risk, and arranging for unanticipated costs. Project
financial planning for UTHM Autowork begins with calculating how
much it will cost to complete a business plan, utilising either top-down
or bottom-up estimation.

2.6. Project cost valuation

The process of analysing the amount, cost, and price of the resources required by the
scope of a project is known as project cost valuation. Because cost valuation is
concerned with the process of determining expenses rather than counting the actual
cost, there is some ambiguity involved. Cost valuations are created for several
purposes throughout the project lifecycle. The cost valuation acts as a decision-
making tool at each stage of the project's lifecycle and is divided into two categories:
 Direct costs - Direct costs are expenses that are solely invoiced to a
certain project. They may include project team salaries, the price of
resources used to create tangible products, fuel for equipment, and
money spent to mitigate any project-specific hazards.
 Indirect cost – Costs that interfere with quality control, security costs,
and utilities are typically classified as indirect costs since they are shared
across multiple projects and are not directly billable to any one project.
In our project, we escalated all of the criteria in the literature review segment
and completed the report as predicted, as well as utilized more referenced
resources for clear clarifications.
 9

2.7. Summary of Research and Development

The Minimum acceptable rate of return (MARR) approaches review in previous subchapters, in terms of framework and performance of
the proposed approach, are summarized in Table 2.1 as shown below.

Table 2.1 Summarized of minimum acceptable rate of return

No Related Search Main Findings

.
[3] R. H. Mayer, “Rate Of Return Must We Bother,” pp. 13143–13150, Jun. 2002, Study main components for rate of return and why rate
doi: 10.18260/1-2--10825. of return is important in business plan.
[4] L. Prescott, “The Minimum Acceptable Rate of Return: Engineering Business practices demonstrate that industry has not
Economic Theory and Practice,” University of Alberta, Canada, 1999. lent its support to any one method for determining the
MARR
[5] R. T. Hans, “Work Breakdown Structure: A Tool for Software Project Scope In the light of avoiding software project scope rework
Verification,” Int. J. Softw. Eng. Appl., vol. 4, no. 4, pp. 19–25, Jul. 2013, doi: and promotion of better project scope control, project
10.5121/IJSEA.2013.4402. scope verification process is critical
 10

Based on the literature review about minimum acceptable rate of return that has been compared in Summary Research and
development, the most important features is its technique which are the life cycle cost, cost estimation technique, work breakdown structure,
project financial planning and project cost evaluation. Based on the components selected in this business plan, it will more systematic compared
to othe workshop system in the nearby.
 CHAPTER 3

METHODOLOGY

3.1. Introduction

In guarantee that a decision is made correctly, the proper processes must be taken.
Methodology is one of the aspects that must be stressed in order to facilitate and
expedite the decision-making and planning processes for a project.
It can also provide an overview of the process as it progresses from the
beginning to the end of the project. This plan is designed to make data and
information more easily and effectively arranged. Figure 3.1 depicts the flow method
of the business strategy.
 12

START

Idea generation for a project

Creating a proposal for a business

concept involving an automotive
workshop and services.

Create a business strategy for the

automobile workshop and services
using the MARR technique, which
includes:

1. Life cycle cost

2. Cost estimation technique
3. Work breakdown structure
4. Project financing plan
5. Project cost evaluation

No

Obtaining data on the outcome

Check the
outcome

Yes

Preparation of a business proposal

report

END

Figure 3.1 Flow method of the business strategy

3.2. Service

Among the services provided in UTHM Autowork business are:

 Oil and filter change

 Brake repair Service

 Engine services

 Transmission services

 Scheduled maintenance

As shown in figure 3.2 the work breakdown structure for UTHM Autowork.
 13

Figure 3.2 Work breakdown structure for UTHM Autowork

3.2.1. Oil and filter change

Lubrication is required on suspension components to avoid wear and the ever-

annoying sounds that occur when they are not oiled. To remove contaminants from
the fuel and air induction systems, engine oil and filter replacements are required.
The viscosity of engine oil degrades, as do its cooling and lubrication qualities,
enabling engine components to wear prematurely. Every 5,000 to 10,000km, this
service is advised (depending on the engine and the type of oil used). By providing
on-site oil change services, we aim to deliver the greatest in convenience for both
consumer and business clients.

Full-Service Oil Change includes:

 Change Oil
 Replace Oil Filter
 Chassis Lubrication
 Check and Fill Differential
 Check 4×4 Transmission Case/Front Differential Fluid
 Check for Fluid Leaks
 Check and Fill Power Steering Fluid
 Check Air Filter
 14

 Check Cabin Air Filter

 Check Hoses
 Check and Fill Windshield Washer Fluid
 Check Radiator Reservoir
 Check and Fill Battery (if not sealed)
 Check Windshield Wipers
 Check and Lubricate Door Hinges if needed
 Check Exhaust Assembly for Leaks

3.2.2. Brake repair service

To be safe on the road, you must have routine brake maintenance performed. You'll
know when to take your car in for brake service after you understand the procedure
and what has to be done. Each component of your braking system requires
maintenance. The master cylinder, lines, callipers, rotors, and pads are the five
components to consider. To properly repair your braking system, you must first grasp
what each of these components accomplishes.

 MASTER CYLINDER & BRAKE LINES

The hydraulic brakes on a car operate in this manner. The power from your
foot pedal is transferred to the brakes via fluid. The master cylinder is the
starting point for your power flow. If this is incorrect, you will not be able to
apply adequate force to your brakes. It is critical that your mechanic examine
your brake lines and master cylinder for signs of damage. They must all
inspect the purity of your brake fluid.

 CALIPERS, ROTORS & PADS

The callipers, rotors, and pads all work together to bring your car to a halt.
When you press the brake pedal, the fluid is sent to your callipers via your
master cylinder. These squeezing together puts pressure on your brake pads.
That is why you should check the callipers for damage or wear.
 15

When your callipers squeeze together, the brake pads clamp down on
your vehicle's rotor. This causes your automobile to slow down. If your brake
pads are worn out, they won't make good contact with your rotors. This might
result in additional rotor damage. You will almost certainly end up with
irregular grooves or rough patches. Furthermore, because the rotors are
subjected to a great deal of heat and friction, they frequently distort with time.

You don't want to wait until you're in need of rotors to solve your
problem. It will cost you significantly more than regular brake maintenance.
Many brake pads include a wear indicator to let you know when it's time to
change them. When it starts screeching, that's a tell-tale indication.

 BRAKE MAINTENANCE SCHEDULE

For the greatest performance, you must adhere to a certain brake maintenance
programme. Look in your owner's handbook to see what's advised for your
specific make and model. You might also use the following criteria as a basic
guideline:

Every 12,000 miles – inspect the brake pads and brake fluid. If there’s less
than a 1/8-inch on the pad lining, you’ll want to replace them. If the brake
fluid is dirty, you need to replace it.

Every 25,000 miles – most manufacturers recommend changing the brake

fluid.

Every 60,000 miles – replace or resurface the rotors, so they are smooth
again. Keep in mind you can usually only resurface the rotors once per set.

The mechanic knows when these concerns need to be dealt with, so be

sure to discuss a regular brake maintenance schedule with them.
 16

 BRAKE MAINTENANCE COST

If you want to stay safe on the road, you must keep your braking system in
good working order. Taking preventative actions not only protects you, but it
is also less expensive than dealing with problems caused by neglect.

Installing new brake pads and resurfacing your braking rotors

normally costs between RM 150 and RM 650, depending on the vehicle.
Brake repair, on the other hand, necessitates the replacement of the pads,
rotors, and includes the repair wages. This might cost you RM 1000. Can you
tell the difference?

3.2.3. Engine service

Your engine is the heart of your car; it is what keeps everything alive and moving.
So, when you think about your engine, you should consider a preventative
maintenance plan to change, check, fill, inspect, and clean the necessary components
to maintain it healthy and alive.

 Visual inspection of engine components - An experienced technicians will

visually inspect your engine and its various parts. They know just what to
look for if something is out of place, making sure nothing is overlooked.

 Replace air filters - Air filters are vital to keeping your vehicle free from
harmful contaminants and debris. Filters become clogged over time, and if
not changed often enough, it hinders performance, causing the car to run
poorly. They should be replaced during oil changes or as recommended by
the vehicle manufacturer.

 Replace fuel filters - Fuel filters keep dirt and debris that may be in your gas
tank from reaching your engine. Your vehicle needs clean gas, or you will
start to have problems such as poor gas mileage, problems starting, and lack
of power. Having it replaced when these warning signs begin to happen will
prevent costly repairs down the road.
 17

 Crankcase vent filter - This prevents gas build-ups and keeps the airflow in
your engine clean. If sludge build-up occurs, it can prevent the clean air
circulation, and you can start to have problems such as oil leaks and to use
more oil than usual to run your engine.

 Fuel pump - A fuel pump delivers the gas to your engine from the fuel tank.
It maintains a consistent flow of gasoline to the engine, keeping your vehicle
running smoothly. If the flow is inadequate, the engine becomes sluggish and
runs poorly. It is recommended not to allow your car to go below 1/4 of a
tank of gasoline. Running on fumes can damage your fuel pump.

 Ignition wires - Ignition wires or more commonly known as spark plugs

wires, are responsible for igniting the fuel that causes the car to crank. These
can become degraded and worn out over time, causing the vehicle not to start
correctly, poor gas mileage, and the engine may begin to shake. Ignition
wires are inspected visually, as well as through the computer diagnostics, and
should be replaced if a faulty wire is found.

3.2.4. Transmission services

Transmission service, like engine oil replacement, is part of normal

maintenance. We've outlined the numerous sorts of transmission services provides,
as well as why they're vital and what each service entails.

i. Automatic Transmission Fluid Exchange

Transmission gears transfer power from the engine to the drive wheels, automatically
changing to offer the most power and efficiency for your driving pace. The gears are
cooled and lubricated using a specific transmission fluid. This fluid degrades with
time, and its lubricating properties deteriorate. Changing the fluid at the proper
intervals can help avoid premature transmission wear and damage.
 18

This service includes:

• The old transmission fluid must be removed and replaced with fresh, clean
fluid of the quality suggested by your vehicle's manufacturer.

ii. Automatic Transmission Drain and Fill

Automatic transmission fluid lubricates, cools, and cleans the transmission's internal
components. It also aids in the maintenance of the hydraulic pressure required for the
transmission's operation. Over time, the additives in transmission fluid might be
depleted.

This service includes:

• Removing the transmission fill or drain plug to remove the old automatic
transmission fluid.
• Reconnecting the transmission fill or drain plug. 
• Removing the transmission fill or drain plug to remove the old automatic
transmission fluid. 

iii. Automatic Transmission Filter Replacement:

The automatic transmission filter cleans the automatic transmission fluid by

removing dirt and pollutants.

This service includes:

• The transmission pan is being removed.
• Removing and replacing the old transmission filter with a new transmission
filter.
• Removing the old gasket material.
• Inserting a new pan gasket, and reinstalling the pan.
• Adding additional automatic transmission fluid to the right level in the
transmission.
 19

iv. Automatic Transmission Fluid Exchange & Filter Replacement:

Automatic transmission fluid lubricates, cools, and cleans the transmission's internal
components. It also aids in the maintenance of the hydraulic pressure required for the
transmission's operation. Over time, the additives in transmission fluid might be
depleted.

This service includes:

 Changing the transmission fluid, which includes the torque converter and
transmission cooler.
 The transmission pan is removed.
 Remove and replace the old transmission filter with a new transmission filter.
 Getting rid of the old gasket material.
 Replacing the pan gasket and reinstalling the pan.
 Refilling the transmission to the right level with fresh automatic transmission
fluid.

v. Manual Transmission Service:

Gears, bearings, shafts, and other internal components are lubricated with manual
transmission fluid. Heat, pressure, and friction can cause the additives in manual
transmission oil to break down over time. Furthermore, when the gears wear, little
metal particles may fall off, and these metal particles may mix with the fluid. Water
may pollute a variety of fluids.

This service includes:

 Removing and emptying the old manual transmission fluid
 Refilling the manual transmission fluid with the kind and quantity of fresh
fluid specified by the manufacturer.
 20

3.2.5. Scheduled maintenance

i. Every Three Months or 5000KM

Every three months or 5,000KM, the following maintenance checks should be

performed:
• Transmission, power steering, and wiper fluid levels
• Oil and air filter for the engine
• Belts, hoses, and exhaust
• All lights, both inside and out
• Gasoline filter
• Tread depth, tire pressure, and wear & tear

ii. Every six months or 10,000KM, whichever comes first.

Along with the above listed maintenance inspections, these should be

performed every six months or 6,000 miles:

• Vehicle battery and cables

• Chassis lubrication
• Windshield wipers 
• Vehicle polishing

iii. Every 12 months or 20,000KM

In addition to the three-month and six-month services, the following checks

should be conducted yearly:
• Coolant levels 
• Transmission fluid levels 
• Brake system 
• Steering and suspension
 21

CHAPTER 4

RESULTS AND DISCUSSIONS

This chapter will focused on the presentation of the collected data and results that had
been obtained from business planning. The results of business plan are investigated and
discussed. The results are presented in table in order to make it understandable.

4.1. Introduction

In Pagoh, there are a few automotive workshops that offered many services with a
different price range. From our observation, at range of 15km of the campus in Edu Hub
Pagoh there are around 5-7 automotive workshop. From here, we identify that,
eventhough there are 5-7 automotive workshop nearby sometimes the price for the
service is quite unreasonable. Competitors that presence nearby is Unitech UTHM
(Campus). We have come out with the idea to promote this UTHM Autowork by
spreading brochures to all the students’ residential colleges and campus.

4.2. Life cycle cost

Business plan project: UTHM Autowork

 22

Start-up Summary.

I. The start-up expenses include:

Table 4.0 Start-up expenses

Items Total amount
Legal expenses for obtaining licenses and permits RM1,500
Insurance (general liability, workers' compensation and RM5,000

property casualty)
Pre-paid rent shop lot expenses for one month RM 2,500
Premise’s remodeling RM 5,000
Utilities (Wi-Fi connection installment) RM 500
Total RM16,500

II. The required start-up assets of RM 18,400 include:

 Operating capital in the total amount of RM 10000 which includes.

 Start-up inventory of RM 3500 which includes:

Table 4.1 Start-up assests required

Items Quantity Total amount
Mechanic’s hydraulic lift RM 8,000
2 units
per unit
Diagnostic machine 1 unit RM 3,500

Automotive repair tools 3 units RM 3,300

set per unit
Engine crane 2 units RM 800 per
unit
Hydraulic car jack 4 units RM 300 per
unit
First Aid Kit 1 unit RM 100
Gloves 10 units RM 20 per
unit
 23

LED Headlamp 10 units RM 10 per

unitAir
24L Air compressor 4 units RM 1500 per
unit
Total RM 38,600

III. Equipment for the total amount of RM6,540 which include:

Table 4.2 Equipment

Items Quantity Total amount
Workbench 3 RM 3,300
Table 2 RM 800
Chairs 12 RM 1,440
Cash register 1 RM 1,000
Total RM 6540

IV. Automotive supplies and spare parts which include:

Table 4.3 Automotive supplies and spare parts estimation

Items Total amount
Oil for oil changes -
All purposes cleaner -
Air conditioning coolant -
Radiator fluid -
Transmission fluid -
Power steering fluid -
Brake fluid -
Brake cleaner -
Total estimated RM 5,000 per month
 24

Table 4.4 Summarize the start-up assumptions.

START-UP REQUIREMENTS

Start-up Expenses

Legal RM 1,500

Utilities (Wi-Fi connection installment) RM 500

Insurance RM 5,000

Rent RM 2,500

Renovation RM 5,000

TOTAL START-UP EXPENSESS RM 14,500

Start-up Assets

Cash Required RM 10,000

Start-up Inventory RM 38,600

Long-term Assets RM 6,540

TOTAL ASSETS RM 55,140

START-UP FUNDING

Start-up Expenses to Fund RM 14,500

Start-up Assets to Fund RM 66,640

TOTAL FUNDING REQUIRED RM 81,140

Assets

Non-cash Assets from Start-up RM 56,640

Cash Requirements from Start-up RM 10,000

Additional Cash Raised RM 0

 25

Cash Balance on Starting Date RM 10,000

TOTAL ASSETS RM 55,140

Liabilities and Capital

Liabilities

Current Borrowing RM 0

TOTAL LIABILITIES RM 0

Planned Investment

Mohamed Faiq Afif RM 60,000

Muhammad Zariff RM 60,000

Mohamad Izzauddin RM 60,000

Ahmad Irfan RM 60,000

Muhammad Salihin RM 60,000

Additional Investment Requirement RM 0

TOTAL PLANNED INVESTMENT RM 300,000

Loss at Start-up (Start-up Expenses) RM 14,500

TOTAL CAPITAL RM 285,500

TOTAL CAPITAL AND LIABILITIES RM 285,500

Total Funding RM 81,140

 26

4.3. Cost estimation technique

Cost estimation is essential during all stages of a project, but notably during project
conceptualization, preliminary design, detailed design, and economic analysis. Cost
estimating results are used for a variety of purposes, including setting a selling price for
quoting, bidding, or evaluating contracts, determining whether a proposed product can be
manufactured and distributed profitably, determining how much capital can be justified
for process changes or other improvements, and establishing benchmarks for productivity
improvement programmes.

I. BOTTOM-UP APPROACH

Based on this business plan, it has been determined that the bottom-up method of cost
estimating is appropriate. It divides a project into small, manageable components and
estimates the economic repercussions of each. These smaller unit expenses are joined
together with other sorts of charges to create an approximation of the total cost. Works
best when the desired outcome (a product or service) has been defined and specified in
depth. It entails estimating individual work items or activities and adding them up to
arrive at a business plan total.

Table 4.5 Estimation business plan total

Cost item Cost type Cost
Insurance and taxes Indirect costs RM 5,000

on facilities
License fees (Legal) Indirect costs RM 1,500
Direct labour Direct costs RM 2,500
Material (Supplies) Direct costs RM 5,000
Utilities (Wi-Fi Indirect costs RM 500

instalment)
Rent Indirect costs RM 2,500
 27

Equipment Indirect costs RM 45,140

Total RM 7,500 RM 54,640 RM 62,140

Total Indirect cost (fixed cost) = RM54,640

Total direct cost (variable cost) = RM7,500

Total cost = RM54,640 + RM7,500 = RM62,140

4.4. Project evaluation cost

 New equipment evaluation

 Make a purchase with PW Present Worth.

Engineers have proposed new equipment to increase service to more high-end autos.
The building cost is RM300,000, and after a three-year research cycle, the equipment
would have a market value of RM150,000. After deducting additional operating costs
from the revenue generated by the new output, higher efficiency attributable to the
equipment would amount to RM50,000 per year. The company's MARR is 20% per
year.

Table 4.6 MARR calculation

Investment Cost : RM300,000

Market Value : RM150,000

Study Period : 3 years

Attributble : RM 50,000/year

MARR : 20%

PW = PW of cash inflows – PW of cash outflows,

PW(20%) = RM50,000(P/A, 20%,3) + RM150,000(P/F,20%,3) – RM300,000

= -RM107,870
 28

Based on PW decision rule, if PW (i = MARR > 0, the project is economically justified.

If the present worth is lower than or equal to zero, the project is unacceptable

4.5. Additional value task code of ethics

The organisation has articulated the ethical values that guide all of its acts and
operations. The ethical principles listed below are the core criteria to which all
addressees contribute in the performance of their duties and the fulfilment of the
corporate mission. In no case shall behaviour in violation of the principles outlined in
this code be justified by the premise that the conduct in question is for the benefit of the
organisation or the perpetrator.

4.5.1. Respect and impartiality toward human integrity

Individual rights must be respected since they are important to the organisation. There
shall be no discrimination based on political and trade union beliefs, religion, ethnicity,
nationality, age, gender, sexual identity, health state, economic situation, or any other
personal traits in general.

4.5.2. Integrity Inclusion

The organisation expects employees to adhere to the highest levels of individual and
organisational ethics. The organisation does not accept or justify any threat or act of
violence aimed at promoting activities that are opposed to the law in effect and/or the
Code of Ethics.

4.5.3. Efficiency and excellence

The organisation is dedicated to continuously improving its products and operations in

accordance with the community's vision. Management economics and the utilisation of
business capital must be followed in all job procedures in order to meet the highest
quality standards. To ensure thorough compliance with current laws and regulations, the
organisation also commits to preserving and protecting its property and equipment, as
well as controlling its capital and properties with all essential precautions.
 29

4.5.4. Product quality and safety

The organisation seeks to achieve the highest levels of quality, safety, and efficiency in
its products. To that goal, all quality-related data is properly and completely recorded.

4.5.5. Responsibility towards the community

The corporation considers the demands of the society in which it operates while it
pursues its business, contributing to its survival where possib
 30

CHAPTER 5

DISCUSSIONS AND CONCLUSIONS

This chapter is divided into two pieces. Section 5.1 discuss the project's most
important findings. Finally, in Section 5.2, the conclusion is expanded upon.

5.1. Discussions

UTHM Autoworks is a place for the students and lectures in pagoh can service and
repair their vehicles with reasonable price.It is headquartered in Pagoh Industrial
Park (PIP), which is home to several public universities as well as other enterprises.
We need to rent a shop to build this workshop that cost RM2,500 per month and we
decide to open the workshop everyday from 10 a.m. to 10 p.m. .There are many
services are provided at this UTHM autoworks such as oil and filter change, brake
repair service, engine services, transmission services and scheduled maintenance.

To run and start this autoworks we have the start-up expenses and start-up
assets which are have total cost RM16,500 and RM38,600 respectively. Example of
start-up expenses are included legal for obtaining licenses and permits, Insurance
(general liability, workers' compensation and property casualty), rent shop lot
expenses for one month, premise’s remodeling and utilities while example for start-
up assets are included 2 units of mechanic’s hydraulic lift, a diagnostic machine, 3
units of automotive repair tools set, 2 units of engine crane, 4 units of hydraulic car
jack, a first aid kit, 10 units of gloves, 10 units of LED headlamp and 4 units of 24L
air compressor.
 31

This autoworks also need equipment such as workbench, chairs, table and
cash register that cost RM6,540. The total automotive supplies and spare parts cost
RM5000 per month. There are direct cost and indirect cost in this business. The
direct cost just include direct labour and material (Supplies) that cost RM2,500 and
RM5,000 respectively while insurance and taxes on facilities, license fees (Legal),
Utilities (Wi-Fi instalment), rent and equipment are all examples of indirect costs
associated with this business that cost RM54,640. So,the total direct and indirect
costs is RM62,140.

5.2. Conclusions

UTHM autoworks can provide the highest quality and convenience especially for the
UTHM students, lectures and staff because there have a lot of services that this
autowroks provided with the reasonanle price. We also worked hard to treat our
customers with respect to provide them with the most pleasant experience possible.

The automotive industry and alsoministry of international trade and industry

has proven that UTHM Autoworks is a viable business. The autowork's success has
been attributed to the business's preparation for day-to-day operations and the
installation of appropriate equipment based on consumer needs. Outstanding
products and well-planned marketing techniques have also contributed to the
autowork's success.
 32

REFERENCES

[1] Corporate Finance Institute, “Life Cycle Cost Analysis - Overview, How It
Works, Applications,” Corporate Finance Institute. .
[2] NBRB, “What is Minimum acceptable rate of return ,” capital.com. .
[3] R. H. Mayer, “Rate Of Return Must We Bother,” pp. 13143–13150, Jun. 2002,
doi: 10.18260/1-2--10825.
[4] L. Prescott, “The Minimum Acceptable Rate of Return: Engineering
Economic Theory and Practice,” University of Alberta, Canada, 1999.
[5] R. T. Hans, “Work Breakdown Structure: A Tool for Software Project Scope
Verification,” Int. J. Softw. Eng. Appl., vol. 4, no. 4, pp. 19–25, Jul. 2013, doi:
10.5121/IJSEA.2013.4402.
 33

APPENDIX

Appendix A: Ground Rule

Appendix B: Leader and Observer comments
Appendix C: Presentation Link
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Appendix A: Ground Rule

 35

Appendix B: Leader and Observer comments

Through this project it is shown that student can gain benefit from it such as
student can gain experience from setup their own workshop. In addition, student also
can use their knowledge that they have gain during their study. This project also
gives the student to prove their ability in the workshop. As the leader of this group, I
think that this project is very good for all of the mechanical engineering especially
the students who are from automotive courses.
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Appendix C: Presentation Link