DESCON ENGINEERING (PVT) LIMITED

Abstract

On July 3, 1998, Jamal Dar, Incharge Planning, Equipment and Plant Department (E&P) at DESCON Engineering, received an equipment requirement form the Proposal Department. DESCON had recently won a US $21 million project with Hyundai Engineering & Construction Ltd. The form showed that the project would require the services of a 45 ton crane, in Abu Dhabi for ten months. In a meeting held a month earlier, Razak Dawood, Chief Executive Officer at DESCON, had emphasized that all decisions regarding equipment planning should be based on sound cash flow analysis, and that the equipment cost allocated to a project should be as realistic as possible. Thus it became important to determine whether it was optimal to lease the 45 ton crane or to buy it outright.