The final decision to sell or build will be based on the advantages and disadvantages of each choice. This is because the two options are the two primary ways of generating revenue for the company (Nor, Abdullah, & Fakulti, 2010). In this case, the company would be better off selling the land. This is because the financial health of the company would increase since it will generate immediate cash flow. It would mean that the organization would move quickly to other pending projects. The company would also make considerable profits because of the continuous increase in the value of the land. However, selling the land can be challenging because the right buyer might not be found immediately. It would also mean that there would be no new customer to the company. Therefore, this would be a loss to the company in the future.
On the other hand, it is advantageous to build since the company will reap more profit because of value addition from construction process. The company will also enjoy strong prices from selling new beautiful and high quality homes to buyers. Holding the developed home can also generate income through strong rental income and benefits from depreciation allowancesv(Nor, Abdullah, & Fakulti Alam Bina, 2010). However, it is a capital intensive and risky choice since the company funds the construction. This impact the financial health of the organization considering the time required to construct. It is also because housing project is expected to increase and the potential cost of redesigning the whole project. Therefore, critical analysis and calculation has to be made to determine the best option.
A proper monthly budget is essential to estimate the total amount of money need to build the project. Below is a 24-month budget to help monitor the cash flow in the company based on the information provided in the case study.