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Project Management

Question 1

Your company is doing well and has a profit of about $50,000. You want to make your profit work harder so you have looked at some investment opportunities available.

They are

- To insulate the current company offices at a cost of $18,000 which will provide a fuel savings of $1,600 per year over the next 10 years.
- To pay the lump sum of $30,000 to the mortgage of $40,000 that has a loan term of 10 years at6.5% interest per annum.
- To invest$20,000into a new business, which has been estimated to return the double amount in 6years' time.
- To keep the profit $50,000 in an iSaver account earning a fixed interest of 4.5% per annum for 8 years.After 8 years, there will be no interest for this iSaver account.

Assumptions:

- If only a part of the profit $50,000 is invested in a project, the remaining amount is still kept in the pocket (i.e. no investment).

- The investment/cost occurs at the beginning of a year, and the investment benefits are obtained at the end of a year.

- iSaver account calculates the compound interest.

(a) Given the profityou have and assuming a discount rate of 4.8%, perform and document appropri-ate NPV calculationsfor 10 years for all possible investment options you identified. Graph the re-sults to show the payback analysisof each investment option.

You must use Microsoft Excel or an equivalent spreadsheet program to perform and present your calculations.

Do not use the Excel NPV function and demonstrate you understand the formulas by calculating the NPV. You may confirm the calculated NPV using the Excel NPV function.

Use bolding, colors etc. to ensure the data is easy to interpret.

(b) From your calculations in (a), which investment would you take up and why?

Use a Weighted Scoring Model (see an example on pages 154-155 of the textbook) to discuss the results and explain in detail why you have chosen one option over the others. It is not always just the figures that determine the final decision.

Create a report in Word or PDF format to present the outcomes of (a) and (b). Use the data, graphs etc. created within the spread sheet program to present the outcomes.

Question 2

You are in charge of building a new office for your company. After some discussion with your builder, you identified some of the key tasks, the duration and the costs to complete the building. As you are a project manager you have decided to monitor the building progressusing Earned Value Management (EVN). Answer the following questions using the following information

ID Task Name Cost ($) Start Date Duration

1 Lay foundations 18,000 November 1 2 weeks

2 Build frame 34,000 November 4 weeks

3 Install pipes and electrical 10,000 December 6 weeks

4 Make office water-tight 15,000 February 8 weeks

5 Install internal walls and bathroom 20,000 April 12 weeks

6 Install cabinetries 14,000 July 4 weeks

7 Paint office 8,000 August 2 weeks

8 Install light fixtures and appliances 9,000 August 2 weeks

NOTE: Assume that no task is scheduled to run concurrently, e.g., Task 2 starts after Task 1 com-pletes, Task 3 starts only when Task 2 completes, and so on. Also, assume that each month is made up of exactly four weeks.

(a) What is the planned value of the entire project?

(b) The project manager has managed to keep cost to what was originally budgeted above. At this point, the project has completed Task 4. Up to this point,

i. What is the planned value of the project?

ii. What is the actual cost (AC) of the project? Briefly explain how you derive the actual cost.

iii. What is the rate of performance (RP) for each task? Using the RPs obtained, calcu-late the Earned Value (EV), Schedule Variance (SV), Cost Performance Index (CPI), and Schedule Performance Index (SPI) of the project.

(c) Unfortunately, two trades resigned after Task 5 was completed and this caused the remaining tasks to exceed its original cost and schedule by 25%, 30%, 40% respectively. At the end of the project,

i. What are the CPI and SPI?

ii. How is the performance with respect to cost and time?

iii. Represent the Planned Value (PV), Earned Value (EV)and Actual Cost (AC) in a chart like the example below.

Attachment:- Template.rar