ASSIGNMENT

MAY 2018 SEMESTER

SUBJECT CODE ; MSM 706

SUBJTCT TITLE ; PROJECT MANAGEMENT

LEVEL ; MASTER

STUDENT’S NAME ;THURA CHO

MATRIC NO ;

PROGRAMME ;

ACADEMIC ;

FACILITATIOR

LEARNING CENTER ;MIE

1
 Question 1

Answer

Cash Flow Statement

Y-1 Y- 2 Y- 3 Y- 4 Y- 5
Sales - 40000 50000 50000 50000

Terminal - - - - 10000
Value
Costs 5000 5000 5000 5000 5000
Fixed Costs

Variable cost - 8000 10000 10000 10000

Investment 20000

Net cash flow (25000) 27000 35000 35000 45000

(a) Payback Period

Year 1 Year 2 Year 3 Year 4 Year 5

(25000) 20000 37000 72000 117000

Payback Period = 2 Years

(b) Net Present Value (NPV)

Year 2 Year 3 Year 4 Year 5

0.9091 0.8264 0.7513 0.6830 0.6209

So, NPV = (-25000 x 0.9091)= (27000x0.8264)+(35000 X 0.7513)+ (35000 X 0.6830)+ (

45000 X 0.6209) = 77730
= -22727.5 + 22312.8 + 26295.5 + 23905 +27940.5
Answer = RM 77,726.3 (Approx.)

(c) IRR

Year 1 Year 2 Year3 Year4 Year 5

Take Discount
2
 Rate
90% (13,158) 7,479 5,103 2,686 1,817
120% (11,364) 5,579 3,287 1,494 873
IRR = 119

(d)
Answer

Profit and loss Statement

RM
Year- 1 Year- 2 Year - 3 Year - 4 Year - 5
Sales 40,000 50,000 50,000 50,000
Terminal - - - - 10,000
Value
Costs

-Fixed 5,000 5,000 5,000 5,000 5,000

-Variable Cost - ,8000 10,000 10,000 10,000

Depreciation 2,000 2,000 2,000 2,000 2,000

(10 % of Inv.)

Profit & Loss (7,000) 25,000 33,000 33,000 43,000

(e) Answer
Profit = 7,000 +25,000 + 33,000 + 33,000 + 43,000
= RM 127,000
Investment = RM 10,000
Average Annual Profit= RM 127,000 / 5
= RM 25,400
Average Profitability = RM 25,400 / 20,000 x 100
= 127 %

3
 Question 2

Answer

Activity Times (day) Preceding Activity

A 10
B 8
C 6
D 6 A
E 6 B
F 8 B
G 4 C
H 7 D,E
I 5 F,G,H

D
10 2 5
A 66 7 H
B 8 E
F 8 I
6 7
1 C 3
6 4
4 G

a) The Critical path is 7-6-5-2-1.

b) 28 days will take to complete this project.

4
Question 3

Answer

Work Breakdown Structure (WBS)

The word breakdown structure (WBS) is tool and technique which is used to crumble smaller and more
manageable components or work package of project scopes. Project Manager should create it with his
team members for many purposes. Firstly, WBS could help to classify project major deliverables. Total
view of project which can be seen in small, manageable components has been created. And finally, it
helps to make a common understanding of project deliverables. The project success can determine the
work breakdown structure. It helps to make the fundamental of all kinds of project management scopes,
such as plan, cost, estimate, resource distribution, scheduling, etc. There are some reasons why we could
create WBS in a project;

 Accurate and clear organization of project

 To make clear assignments to the teams of project
 Specify the milestones of project and main points
 Assist to plan appropriated risk, cost and time
 Clarify the scope of project for the organizations to be better understanding the similarly.

Below techniques will assist to construct a WBS;

- elements coding
- developing the graphic diagrams,
- developing a WBS dictionary,
- Utilizing checklists of development.

Elements coding

The NASA is needed to consider for responsibilities and costs in a case by law that consist with
authorization of Congressional and money available. The Agency Wide Coding Structure uses for all
scopes of financial associated with funds appropriated by congress. Project Supervisor performs with
stakeholder of budget to hunt the account number of the WBS, when developing a WBS. Each of PWBS
elements is established a PWBS code of element to use for it’s verified across the life of project nature.
Elements coding system of a simple which is logically shows an element level and relevant subordinate
elements of lower-level are applied. A system of multiple coding facilitates relations among all of
project members. Each coding system have to trace to the PWBS code system.

An extra coding structure might need to be accommodated brief requirements Other than technical,
timetable and financing data for individual element. Another brief requirement may contain account’s
code, structure of organization and structure of financial.

5
To Prepare Diagram
The WBS is normally established to develop a visual display. A view of the
WBS assists the observer in understanding how components of lower-level project can be supported and
Can be assistant to components of upper level. This kind of diagram is named "goes into tree"or a
"family tree “diagram.

Dictionary Preparing (WBS)

A WBS lists and meaning is WBS elements. It is priority constructed for the
PWBS by the project manager of NASA, and is extended in great detail at lower steps by contractors as
the CWBSs are constructed.
The WBS definition summery describes individual WBS element and the resources and processes
required to produce individual element. This assists a link to the detailed technical data. The WBS may
also include an index which lists the WBS elements in indented format to display their hierarchical
mutual relationship.
Following each and every element definition should contain the following:
• System design expressed number - a coded link to quantitative technical engineering definition of
process activities and manufacture accomplished.
• Financial content - for resource identification.
• Technical description - a brief quantitative description of form, interface, and function.
• Work experiment -find the process to finish the work.
A WBS dictionary should be reviewed to reflect changes and should be sustained in a
current situation throughout the whole life of the project.

Using Checklists

Checklists are a very useful tool to be ensure proper WBS construct.

Below are three checklists:
- PWBS development,
- Contractor-(proposed PWBS changes),
- CWBS development.

PWBS Checklist
The PWBS checklist assists to ensure that all major factors have been considered during development.
1. Has the PWBS subdivided the end product into discrete and logical? Product-oriented elements?
2. If some elements following level 3, are they expected risk?
3. Are the requested PWBS elements totally accomplish, totally compatible, and totally subsequently?
4. Does the PWBS aid for further all project manufactures’ logical subdivision requiring the utilization
of resources?

Contractor-Proposed for PWBS Changes Checklist

6
The below major cases might be taken into account before approving contractor-proposed for PWBS
Changes.
1. Can the review PWBS still provide a meaningful structure for relating the objectives of the various
systems and subsystems to each other and to the total project?
2. Does the revised PWBS still define the deliverables and products which NASA is purchasing?
3. Does the reviewed PWBS still provide a meaningful structure for measuring and controlling the
technical, schedule and cost performance of the deliverable?

4. If the proposed PWBS change is unstable, what impact would be occur on the contractor’s
Management capabilities?
5. If the proposed PWBS change approve, what impact would be happened on other contractors'
CWBSs?

7
Question 3

Answer

WBS for Organize a Picnic Party

Picnic Party

Planning Locatio
Catering Entertainment People
Transportation

Budget
Music
Food Beverage Games
Play
Coordinator s
Friend List Invitations

Burger Snacks, Fruits

Juice Water

8
Question 3 ; Case 1

Answer

If I were the project manager, I will use Gantt Chart as it can offer many benefits such as more
productive, better communications, long term forecast and track on results. Reasons of using Gantt
Chart are as follows.

Avoid Completion Confusion; In order to provide the users an excellent time frame of the major tasks ,
Gantt Charts were specially designed. Therefore, users can easily be visualize and anticipated the major
milestones and related action plans. All the tasks can be well scheduled and monitored in monthly,
weekly, daily or yearly basis owing to the comprehensive method of Gannt Charts.

Keep Everyone on the Same Page: Since Gantt Chart offers practical action plan, all stakeholders can
easily take their responsible tasks with full understanding and cooperate with concerned persons with
team spirit even if there is very complicated work. Bearing the united spirit for achieving the set goal,
every stakeholder can efficiently perform the assigned task mentioned in Gantt Chart.

Understand Task Relationships: Gantt Charts highlight what tasks need to perform, how they should
be performed at what time and how they interrelate with other activity for meeting a targeted goal. On
this account, all stakeholders can fully aware importance of work timing and possible impacts to
mitigate offering smooth work flow, team spirit, pleasant and successful work environment.

Effectively Allocate Resources: Using Gantt Charts vividly shows what kind of personal and material
resources are needed to accomplish an assigned task. Referring to the Gannt Charts, new concepts and
ideas on applying some resources to be additionally used to timely perform the task can be considered.
Meanwhile, budget allocation for the spending project cost can be easily calculated in line with the
estimated project goal.

Get a Handle on the Future: Advantages of using Gantt Charts are enabling to set up possible
timeframe for project development, informing same project timing to all stakeholders, making decision
on application of resources and encouraging to timely monitor the progress of work . All in all, Gantt
Charts can handle the better future of the organization and fulfill its mission and vision laid down for
organizational reputation and success.

9
The Gantt Chart’s Advantages
 The use of a Gantt chart performs it necessary to take a plan. The plan is presented very clearly on these
charts that it can be easy to understand in detail and as a whole not only by the executive himself but
also by those above him.

The Gantt chart compares what is accomplished with what was done – it keeps the executive advised as
to the progress made in the execution of his plan. If the progress is not satisfactory it shows the reasons
why. The executive’s time is thus saved because each time a figure receives and decides either it is good
or bad. It determines once for all what figures will satisfy and record them on it.
Happens and effects with their relations to time are taken out so enormous that it becomes possible for
the conduct to view future status with considerable accuracy.
Moreover, Gantt chart is significantly compact. There is continuity in the Gantt chart which emphasizes
any break in records or any lack of knowledge.
The Gantt chart is too easy to create. None experience is necessary and only straight lines are used. The
principles are too simple that anybody with average intelligence could be trained to create these charts.
Gantt chart is easy to read; lines are not cross each other and all records are moved with time across the
sheet from left to right. Charts can be drawn in pencil or black ink convey an impression of
practicability, simplicity, economy and strength which it is impossible to obtain by the use of colored
inks or even squared white paper. Since no colors need be used on Gantt charts to be printed are as easy
to understand and effective as originals.
The Gantt charts are obvious the passing of time and thereby assists to reduce idleness and time waste.
The Gantt charts are shown facts in their mutual relation be time and is therefore dynamic. The charts
themselves become the activity for action .

10
Part B

Question 1

Answers

(a) Financial Analysis can be defined as the process of sourcing business’s financial strength
and weakness through creating relationship between income statement and the elements
of balance sheet. The information which is related to the financial statement is very
important by which interpretation and analysis is made.

There are five categories of ratios used in financial analysis:

1- The ratios of activity
2- The  ratios of liquidity
3- The ratios of solvency
4- The  ratios of profitability
5- The ratios of valuation.

There are two techniques for project selection.

1-Benefit Measurement: Many projects information such as benefits, profits, revenue, etc. can
be evaluated with Comparative approach

2-Constrained Optimization: Alternatively, there will be many inputs about a project in the
project selection method and these are formed mathematically usually with the help of software
programs and these programs outlines are possible outputs of the project mathematically.

(b) A feasibility study is an analysis which is used to measure the ability and similarly to
complete a project successfully including all relevant factors.

We will see many components of a feasible study;

-The Description
-Market feasible Study
-Technical feasible Study
-Financial feasible Study
-Organizational feasible Study

C ) The differences between present value of cash inflow and the present value of cash outflow of the
project over the project life cycle time can be defined as the Net Present Value (NPV) of a project.

To evaluate the profitability of investment of project . NPV is used for Capital Budgeting.

The formula for calculating NPV can be seen as the following;

11
a project’s internal rate of return (IRR) is defined as interest rate at which the net present value (NPV) of
that equals zero project.

Internal rate of return (IRR) is used for a project very attractiveness or investments in project. The
project is desirable if the company’s required rate of return reaches the IRR of a new project. If IRR fall
less than the required rate of returned, the company should eliminate the project.

The formula for IRR is:

0 = P0 + P1/(1+IRR) + P2/(1+IRR)2 + P3/(1+IRR)3 + . . . +Pn/(1+IRR)n

where P0, P1, . . . Pn equals the cash flows in periods 1, 2, . . . n, respectively; and
IRR equals the project's internal rate of return.

12
Q2 (Case 2)

Answer
Most Expect
Optimis Pessimis
likely ed
Predeces tic Time tic Time Varian
Activity Time Time
sor (months (months ce
(mont (month
) )
hs) s)
Concept
A - 3 12 24 12.5 12.25
Development
Plan Definition              
Define Project
B A 1 2 12 3.5 3.36
Scope
Develop broad
C A 0.25 0.5 1 0.5 0.02
schedule
Detailed cost
D A 0.2 0.3 0.5 0.3 0.00
estimates
Develop staffing
E A 0.2 0.3 0.6 0.3 0.00
plan
Design and
             
Construction
Detailed
F B,C,D,E 2 3 6 3.3 0.44
engineering
Facility
G F,H 8 12 24 13.3 7.11
construction
Mobilization of
H B,C,D,E 0.5 2 4 2.1 0.34
employees
Procurement of
I F,H 1 3 12 4.2 3.36
equipments
Start up and
             
Turnover
Pre start up
J G,I 0.25 0.5 1 0.5 0.02
inspection
Recuriting and
K J 0.25 0.5 1 0.5 0.02
training
Solving start up
L J 0 1 2 1.0 0.11
problems
Centerlining M K,L 0 1 4 1.3 0.44

35.5 23.74

13
 Critical Path A,B,F,G,J,L,M

Expected Time 35.5 weeks

Sum of variance
23.74
along critical path
standard deviation 4.87
Number of months required to complete the project at
43.5 weeks
probability 0.95 =

Reference; Work Breakdown Structure Reference Guide

14
 National Aeronautics and Space Administration, Work Breakdown Structure Reference
Guide .May 1994

Reference; Nishadha , 19.8.2017

https://creately.com/blog/diagrams/5-reasons-to-use-gantt-charts/

Reference; CLARK, W.,WALTER, N. FRANK,W (1922). Book title: The Gantt Chart A working Tool

Of Management.

Reference; https://www.investopedia.com/exam-guide/cfa-level-1/financial-statements/financial-
analysis-techniques/introduction/

https://blog.masterofproject.com/project-selection-methods/

Reference; https://www.investopedia.com/terms/n/npv.asp

https://www.investinganswers.com/financial-dictionary/investing/internal-rate-return-irr-2130

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