Project Management

                                 Project Management

CASE STUDY : 1

Amalgamated Enterprises is a broadly diversified company with presence in a variety of sectors such as cement, textiles and industrial specialized chemicals.

After a through review of various capital projects undertaken in the last 5 years, the executive committee of Amalgamated Enterprises felt that the quality of a market and demand analysis of most of the projects was somewhat patchy.

As a marketing analyst, you have been invited by Shekhar Dutt, the managing director of Amalgamated Enterprises to do a seminar on market and demand analysis for the business heads of the company. He wants to address by you following issues.

Q1) How should one evaluate secondary information?

Q2) Discuss the steps in a sample survey?

Q3) What is your opinion about sample survey?

Q4) Briefly describe the various methods of demand forecasting?

CASE STUDY : 2

The cash flow associated with three projects P, Q, & R are given below.

		Net Cash Flow
Year	P	Q	R
0	(2000)	(2000)	(2000)
1	1400	500	500
2	600	1100	500
3	400	900	1600

Q1) What is NPV explain in detail?

Q2) How is modified NPV calculated?

Q3) Calculate the net present value of each project at discount rate of 0 percent?

Q4) Calculate the NPV of each project at discount rate of 5 percent, 10 percent, 15 percentm 25 percent and 30 percent?

CASE STUDY : 3

Microelectronics Company Corporation is currently at its target debt equity ratio of 0.5 : 1. It is considering a proposal to expand capacity which is expected to cost Rs 500 million and generate after tax cash flows of Rs 130 million per year for the next eight years. The tax rate for the firm is 30 per cent. Mahesh, the CFO of the company, has considered two financing options.

1)     issue of equity stock. The required return on the company’s new equity is 20 per cent and the issuance cost will be 12 per cent.

2)     issue of debentures at a yield of 13 percent. The issuance cost will be 3 percent.

Q1) What are the three steps involved in calculating a firm’s WACC?

Q2) What is WACC for Micro-electronics?

Q3) What is micro-electronics weighted average flotation cost?

Q4) What is NPV of the proposed after taking into account the floatation costs?

CASE STUDY : 4

N Electricals Ltd. is evaluating a capital project requiring an outlay of Rs 12 million. It is expected to generate an annual cash inflow of Rs 3 million for 6 years. The opportunity cost of Capital is 20 per cent. N Electricals can raise a term loan of Rs 8 million for the project. It will carry an interest rate of 18 p.c. and will be repayable in 8 equal annual installments, the first installment falling due at the end of the second year.

The balance amount required for the project can be raised by issuing external equity. The issue cost is expected to be 12 per cent. The tax rate for the company is 30 per cent.

Q1) What is base-case of NPV?

Q2) What is adjusted cost of capital?

Q3) What is adjusted NPV if the adjustment is made only for the issue cost of external equity?

Q4) What is the present value of the tax shield on debt finance

Project Management

CASE STUDY

You have been assigned to a project risk team of 5 members. Because this is a first time your organization has formally set up a risk team for a project, it is hoped that your team will develop a process that can be used on all future projects. Your first team meeting is next Monday morning. Each team member has been asked to prepare for the meeting by developing, in as much detail as possible, an outline that describes how you believe the team should proceed in handling project risks. Each team member will hand out their proposed outline at the beginning of the meeting. Your outline should include but not be limited to the Team objectives, process for handling risk events, Team activities, Team outputs.

Answer the following question.

Q1. Project risks can be eliminated if the project is carefully planned, Explain?

Q2. What is the difference between avoiding a risk and accepting a risk?

Q3. How you face the Schedule risk?

Q4. Explain the term RBS?

CASE STUDY

N Electricals Ltd. is evaluating a capital project requiring an outlay of Rs 12 million. It is expected to generate an annual cash inflow of Rs 3 million for 6 years. The opportunity cost of Capital is 20 per cent. N Electricals can raise a term loan of Rs 8 million for the project. It will carry an interest rate of 18 p.c. and will be repayable in 8 equal annual installments, the first installment falling due at the end of the second year. The balance amount required for the project can be raised by issuing external equity. The issue cost is expected to be 12 per cent. The tax rate for the company is 30 per cent.

Answer the following question.

Q1. What is basecase of NPV?

Q2. What is adjusted cost of capital?

Q3. What is adjusted NPV if the adjustment is made only for the issue cost of external equity?

Q4. What is the present value of the tax shield on debt finance?

CASE STUDY

Sam Company has 20 million equity shares outstanding. The book value per share is Rs 40 and the market price per share is Rs 120. Sam Company has two debentures issues outstanding. The first issue has a face value of Rs 300 million, 12 percent coupon, and sells for 90 percent of its face value. It will mature in 5 years. The second issue has a face value of Rs 200 million, 14 percent coupon, and sells for 102 percent of its face value. It will mature in 6 years. Sam Company also has a bank loan of Rs 200 million on which the interest rate is 15 percent.

Answer the following question.

Q1. What are Sam Company’s capital structure weights on a book value basis?

Q2. What are Sam Company’s capital structure weights on a market value basis?

Q3. Which weights would you use?

Q4. Why explain in detail?

CASE STUDY

Microelectronics Corporation is currently at its target debt equity ratio of 5:1. It is considering a proposal to expand capacity, which is expected to cost Rs 500 million and generate after tax cash flows of Rs 130 million per year for the next 8 years. The tax rate for the firm is 30 percent. Mahesh the CEO of the company, has considered two financing options. a) Issue of equity stock. The required return on the company’s new equity is 20 per cent and the issuance cost will be 12 per cent. b) Issue of debentures at a yield of 13 percent. The issuance cost will be 3 per cent.

Answer the following question.

Q1. What is the WACC for Microelectronics?

Q2. What is Microelectronic’s weighted average flotation cost?

Q3. What is the NPV of the proposal after taking into account the flotation costs?

Q4. Do you have any suggestion to Mahesh?

PROJECT MANAGEMENT

Attempt all questions

3)   Give a detailed description on “Detailed Project Report”. Indicate the Pros and Cons of it also. (10 Marks)

2.  What is Project  Management Information System? Why is a		Project Management Information
System considered to be of immense importance in a project?		In designing a Project Management
Information System what parameters are to be spelt out clearly in line with the objectives of the
Project management Information System?	(20 Marks)

3.    Technology and processes play crucial role in certain projects. What the key issues are in regards to choice of technology, equipment and processes at the stage of formulation of Detailed Project Report?

(10 Marks)

4.    Given the activity mean and Standard Deviation, Find the probability that the project will take

more than 10 weeks to complete.                                  (20 Marks)

	Activity	Mean	Standard Deviation
	1 – 2	5	1
	2 – 3	4	1
1 - 3		8	1

5.    For the following network data , (20 Marks)

(a) Identify the Critical Path and its duration

(b) Calculate the total network slack time.

Job	Network	Network	Estimated Time(days)
(Activity)	Initial Node	Final Node
A	1	2	2
B	1	3	3
C	1	4	3
D	2	5	3
E	2	9	3
F	3	5	1
G	3	6	2
H	3	7	3
I	4	7	5
J	4	8	3
K	5	6	3
L	6	9	4
M	7	9	4
N	8	9	3
O	9	10	2

Project Management

Q1. What are the uncertainties in demand forecasting?

Q2. Write a note on present value of a single amount

Q3. Write a note on present value and future value of an annuity . in detail with formula

Q4. What are the current concerns of the Indian VC and PE industry

Q5. Write down the meaning and scope of EIA and EIS.

Q6. Describe the nine areas of project management identified in the PMBOK

Q7. Explain the stages in life cycle approach

Q8. Write down the classification for material inputs and utilities

                   SUBJECT : PROJECT MANAGEMENT

Total Marks : 80

N.B. : 1) All questions carry equal marks. 2) All questions are compulsory.

Q1)	Write short notes			(10 Marks)
	a)	Investment Criteria
	b)	Generation and Screening of Project Ideas
Q2)	Explain briefly the various Considerations in selecting the project?			(10 Marks)
Q3)	Explain Project Organization Structure.			(10 Marks)
Q4)	Distinguish between Market Analysis and Demand Analysis?			(10 Marks)
Q5)	Discuss Project Management and explain Network Techniques for Project			(10 Marks)
	Management?
Q6)	Explain in brief the over view of project planning?			(10 Marks)
Q7)	Explain major issues in Financing of Projects?			(10 Marks)
Q8)	What is Risk Analysis and explain in brief Firm Risk and Market Risk?			(10 Marks)