Student Name YASSINE MOUH MOUH

Student ID 229516234
Module Title FINANCIAL AND PROJECT
MANAGMENT
Date of Submission 25 MAY 2023
Student mail Bi34cv@student.sunderland.ac.uk

Content :
1 Part A......................................................................................................................3
1.1 Question Number 1........................................................................................................3
1.1.1 Payback period............................................................................................................................3
1.1.2 ROCE:...........................................................................................................................................4
1.1.3 Net present value:.......................................................................................................................5
 1.1.4 Problems that arise for the net present value method of investment appraisal when capital is
limited and to solve such a problem:...........................................................................................................6
1.2 Question 2 Bill Electronic:...............................................................................................7
1.2.1 Ratio Calculation..........................................................................................................................7
1.2.2 Report based on ratio result analysis:.........................................................................................7

2 PART B Concrete Masonry Corporation:...................................................................8

2.1.1 Introduction:................................................................................................................................8
2.1.2 Project scope statement:..........................................................................................................10
2.1.3 Technical and economic point of view:.....................................................................................10
2.1.4 Work breakdown structure.......................................................................................................11
2.2 5-Network Diagram.....................................................................................................12
2.2.2 Cost Estimation..........................................................................................................................13
2.2.3 Direct cost:.................................................................................................................................14
2.2.4 Indirect cost:..............................................................................................................................15
2.2.5 Risk Assessment and Management:..........................................................................................16
2.2.6 Execution of the project:...........................................................................................................17
2.2.7 Closure of the project:...............................................................................................................17
2.2.8 Conclusion:................................................................................................................................17

3 References.............................................................................................................18
4 Appendix 1:............................................................................................................19

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1 Part A
1.1 Question Number 1
1.1.1 Payback period
1.1.1.1 Project X payback period calculation
Cash flows from year 1 to year 2 are 90,000 and total cash flows from year 2 to year 3 are
120,000, and the initial investment is 110,000
110,000 - 90,000= 20,000
Z x 30,000 = 20,000
Z = 20,000 / 30,000 = 0.67
Payback period = 2 + (20,000/30,000) = 2.67 (Years)
1.1.1.2 Project Y payback period calculation
Cash flows from year 1 to year 3 are 150,000 and total cash flows from year 3 to year 4 are
250,000, and the initial investment is 200,000
200,000 - 150,000 = 50,000
Z x 100,000 = 50,000
Z = 50,000 / 100,000 = 0.5
Payback period = 3 + (50,000/100,000) = 3.50 (Years)

1.1.1.2.1 Advice by using the payback method of investment appraisal:

As we found by analyzing the two results (In 2,67 years for Project X and in 3,5 years for Project
Y, the cash revenues get back the initial capital), we advise KK Smith and Sons to choose Project
X because its payback time is shorter than Project Y so a quick return on investment.
1.1.2 ROCE:

Project X:
Average Profit = 60,000 / 5 years = 12,000

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 Average investment = 110,000 / 2= 55,000
ROCE = (Annual profit / Average investment) x 100 = 21.82%

Project Y:
Average Profit = 105,000 / 5 years = 21,000
Average investment = 200,000 / 2= 100,000
ROCE = 21.00%
advice based on ROCE result:
Project X outperforms Project Y in terms of ROCE. The ROCE ratio gauges the operating profit
produced per dollar of capital invested. It suggests that greater profit is made for every dollar
invested in capital. For instance, Project X's ROCE is larger than Project Y's ROCE, indicating that
Project X has a higher percentage of profits. Reinvesting capital results in investments with
considerably greater rates of return, which boosts the rise of profit per share. A project for business
expansion that is successful will have a high ROCE. I consequently advise the business to choose
Project X.
1.1.3 Net present value:
1.1.3.1 Project X:

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1.1.3.2 Project Y:

1.1.3.3 The chosen project using the NPV method:

Since Project X NPV is higher, we encourage KK Smith to choose Project X rather than Project Y,
keeping in mind the time value of money and not outright disregarding future cash flows, as this
shows: Project X will be more advantageous over its entire lifespan than the other one.
1.1.4 Problems that arise for the net present value method of investment appraisal
when capital is limited and to solve such a problem:
The NPV is used for capital budgeting or investment measurement and illustrates how a project's
impact on shareholders' wealth will be measured in terms of present value. Positive NPV initiatives
increase wealth and are anticipated to be authorized because management's goal is to maximize
shareholder wealth.
The NPV method appears to have the specific advantage of taking into account the fundamental
tenet that the value of money in the future will be less valuable than in the present. The cost of
capital from the prior period is subtracted from each period's cash flows. The NPV technique takes
into account both the cost of capital and the risk associated with generating future estimates. A ten-
year cash flow forecast is typically more speculative than a one-year forecast. Net present value is
less affected by long-term profits than by cash flows from earlier periods. On the other hand, the
NPV method has the drawback that it necessitates an estimation of the firm's capital costs. If the
cost of capital somehow decreases too much, investments won't be the best choice. If the cost of
capital is too high, then many worthwhile investments will have to be given up. NPV solely
considers the cash inflows and outflows of one specific project. It does not include any additional

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costs, sunk costs, or other upfront fees paid for a particular project. As a result, the project's
profitability may be off.
The NPV approach is also ineffective when examining projects of various sizes. The shape of the
NPV efficiency is significantly influenced by the input dimension because the NPV method yields
a monetary result.
NPV is impacted by both interest rates and inflation: lower interest rates are associated with higher
inflation, and vice versa. The present value of cash flows decreases as the discount rate increases.
This implies that the current value of future cash flows drops as the discount rate rises.
To overcome financial restraints, businesses could enlist the help of affluent investors. They should
also make investments in gold and future bonds to mitigate the effects of inflation. The business
can potentially apply for a bank loan to get more funds.

1.2 Question 2 Bill Electronic:

1.2.1 Ratio calculation

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1.2.2 Report based on ratio result analysis:
1.2.2.1 Profitability ratio:
Since a greater ROCE has always been preferred, the ROCE for the year 2018 was 38% and
decreased to 23.68% for the next year. This failure would be particularly concerning since it would
mean that the company's capital allocation in 2019 was less effective than it was in 2018, which
would mean that the company produced less profit in 2019. In order to maintain a better ROCE and
generate more profit for capital invested in the next years, the company should boost sales, which
will directly affect operational profit.
For a business to cover fixed expenses like bank fees and tax obligations, a large operating margin
is necessary (Manglik and Akhil Goyal, 2016).
An organization that has a high operating margin is properly run and may be less dangerous than
one that has a low operating margin. The operating margin ratio decreased from 19.73% in 2018 to
13.68%, which is not excellent. As high operating margins are typically preferred to low operating
margins, the corporation must boost profits while also seeking to cut expenditures.
Generally speaking, a relatively high gross profit margin indicates that a company is better run and
more financially stable than other businesses in the same industry. The efficiency of a company's
profitability may often be gauged by looking at its gross profit margin. It gauges how well a
business utilizes its direct labor force and raw commodities (Maverick, 2021). The corporation is
degenerating, as is evident. The gross profit margin has been falling annually by 4%, from 40,27%
in 2018 to 36,13% in 2019. The business should take quick action to stop this leakage, boost
revenues, and cut expenditures. The gross profit margin, while taking into account the associated
costs, reflects how successfully a company's management team generated more revenue in 2018
than in 2019. Bell Electronics needs to make more money and spend less money in order to
produce earnings that are at least as good as those from prior years.
1.2.2.2 Liquidity ratio:
The likelihood that the company will be able to pay its obligations increases with the current ratio.
The ability of a business to fulfill its short-term obligations is assessed using the current ratio
(Corporate Finance Institution, 2022). A low current ratio suggests that the business might have
trouble paying its short-term obligations. As a result, the company's current ratio grew from 1.09
times to 1.33 times, showing that it is improving and that it has a solid ability to pay back short-
term debt.

1.2.2.3 Efficiency ratio:

To start, the duration of the trade receivables settlement period went up from 26 days in 2018 to 41
days in 2019. Due to the immobilization of cash that may be employed for more profitable goals,
the corporation should ideally shorten the time of trade receivables. It will be appreciated if the

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payables payment days have increased from 29 to 32 days because it offers a free source of cash
and shouldn't hurt supplier relationships. Similar considerations apply to days of inventory
turnover, which should ideally decrease given that maintaining goods costs the business money.

2 PART B Concrete Masonry Corporation:

2.1.1 Introduction:
Understanding the project management life cycle have the same importance for a small project with
specific goals or for a bigger project with initiatives from multiple departments and broad business
ramifications.
The lengthy procedures needed to effectively complete a project are outlined in the project
management life cycle. US businesses waste $122 million for every $1 billion invested in a project,
according to Project Management Institute research (businesswire.com, 2016).
Since 57% of failed projects were managed poorly, effective project management can help save
resources and money (Threlfall, 2014). The phases of the project management life cycle are
concept development, project objectives definition, execution planning, and project completion.
The project management life cycle generally consists of four stages: initiation, planning, execution,
and delivery or closure. The project's development can be seen in the aforementioned stages.
2.1.1.1 Initiation
The initiation phase consists of identifying a business need, problem, or opportunity and exploring
how a team may address, resolve, or take advantage of it. At this point, the project manager should
establish a project goal, evaluate its viability, and identify important project deliverables
(Westland, 2007).
The following steps, according to Westland, could be taken during the project initiation phase:
To assess whether the project will provide a solution for these issues, do a feasibility analysis to
identify the key issues that the project must address. Determine the project's stakeholders. In order
to assess a project's viability, a business case must weigh the project's possible costs and
advantages. As a working agreement between the project manager and collaborators, a statement of
the task should be created that details the aforementioned objectives, scope, and outcomes.
2.1.1.2 Planning:
The planning stage starts once the project has been decided upon based on the opportunity analysis,
the task definition, or the project commencement document.
This phase of the project management life cycle involves organizing teams, breaking the project
down into smaller tasks, and arranging how those activities will be carried out. Organize minor
projects within a larger one while ensuring that each one adheres to the schedule. Smaller goals
have higher success rates (Brotherton, Fried, and Norman, 2008).

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The following actions may be conducted during the project planning phase, according to the
Brotherton, Fried, and Norman papers: Creating a project plan that details the project's phases,
timeframe, tasks, and any potential obstacles creating a budget estimate, a financial strategy, and
process graphics. The gathering of resources, the foreseeing of potential dangers, and the
anticipating quality difficulties should all be part of this step.
2.1.1.3 Execution:
The project manager created a plan, gained corporate permission, assembled his team, and more.
Executing the plan is the focus of the execution phase. In this stage, the project manager's duties
include overseeing task completion, organizing team members' activities, keeping an eye on
deadlines, and ensuring that the work is finished in accordance with the original plan (Westland,
2007).
2.1.1.4 Closing:
The team moves onto the closure stage once a project has been finished. The project manager now
presents the findings, discloses project expenditures, and assesses the project's success. Even if the
project's primary tasks have been completed, the project manager still has crucial tasks to
accomplish, such as determining what aspects of the project succeeded and failed (Westland,
2007).
2.1.2 Project scope statement:
Eight industrial pre-stressed concrete assembly machines and related equipment must be
transported to Poland by the Concrete Masonry Corporation in six months, starting at the end of
September and concluding before the first of April. Six months is the appropriate amount of time
for the project to take because, if it were completed sooner, the project's execution and delivery
would have been subpar. Additionally, in light of the increased rivalry, the corporation shouldn't
take longer; instead, shipping should be done on both land and water.
The crew, which consists of manager Kevin Lewis and five part-time helpers, should go to the
region and become adjusted to the local climate in order to accomplish the job on schedule. The
crew will travel by road from Germany to Poland and by water from the United Kingdom to
Germany, thus the route needs to be reviewed before transit since it demands greater care.

The project's budget of 900.000£ is appropriate in light of the project's magnitude, the length of
time required to finish it, and the strategic significance it will play—particularly in light of how the
competition has evolved.
2.1.3 Technical and economic point of view:
Due to numerous international market constraints and other globalized trade agreements, The
Concrete Masonry Corporation has been in rivalry with other prestressing producers from across
the world. The firm is concerned about increasing trade rules as a result of Brexit, falling market

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share, and the need for a new strategy to be competitive. It is also concerned about growing import
and export expenses. The Concrete Masonry Corporation picked Poland to improve the flexibility
and efficiency of its manufacturing supply and Eastern Europe moved its manufacturing to
continental Europe. By continuing to be a part of the EU and the single market, as well as by
utilizing the cheaper labor and processing costs in the region, Eastern European countries can avoid
these costs.
2.1.4 Work breakdown structure
According to Siami-Irdemoosa, DIndarloo, and Sharifzadeh (2015), the project work breakdown
structure-a hierarchy of the tasks necessary to accomplish a project’s goals is essential to effective
project management planning.

4 STAGES OF THE PROJECT DELIVERY OF 8 MACHINES

-stressed concrete assembly machines and associated equipment to Poland

Initiation Preparation Execution Close out

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 Follow up from the
Looking over the
Selecting machines to be
Deciding on a location. delivery. main office.
transported.
preparing personnel to
Selecting time. Checking financial
Checking the road.
receive equipment
Staff selection. Selecting delivery method. situation
After-delivery inspection
Selecting delivery
the team's visit to the new of machines. after finalising the
company.
Determining whether
location. project.
Getting the team ready for
machines are able to
the project.
Estimating costs and doing Start supplying
evaluating the project's operate.
2.2 5-Network diagram financial viability.
financial analyses. Preparing machine for potential customers in
use.
April.
2.2.1.1 Activity time and duration table

2.2.1.2 The network diagrams

For a network diagram made using the MS Project program that was learned in class, please refer
to Appendix 1.

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2.2.1.3 EST, EFT, LST, LFT, and critical phat:

2.2.1.4 The critical path in our project is:

1. Choosing the team
2. Visiting the area
3. Preparing staff for the project
4. Preparing machines
5. Checking the road
6. Choosing the best transportation company
7. preparing the delivery zone
8. Transporting the machines
9. Customs control
10. Installation of the machines
11. Instructing the machines
With a total duration of 26 weeks
2.2.2 Cost estimation

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2.2.3 Direct cost:
2.2.3.1 Activity 1 Team cost:
Kevin Lewis would receive 30 000 £ for six months from Concrete Masonry Corporation even
though the highest salary for a project manager in the UK is 76 000 £ a year and the average salary
of a project manager is 46 000£ a year.
The annual salary for the five assistants is up to 37 277 £ a year.
The business chose to pay them 15 532 pounds per month for six months, or 93 192 pounds
overall. As a result, the team's entire project cost will be 93 192 pounds plus 30 000 pounds which
equals 123 192 £.
2.2.3.2 Activity 4: Preparing machines
The business should test and inspect the machines to make sure everything is in working order
before transferring them.
inspecting the equipment for each machine, 12 procedures must be followed to control and
examine the mechanical state (Machinery and Equipment Product, 2022). For a total of 72000£ for
8 machines, the cost of controlling each unit is also close to £9,000.

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2.2.3.3 Activity 8 Transporting machines.
From the United Kingdom to Germany, the shipment will be by sea, and from Germany to Poland,
it will be by road.
There are eight 40-foot containers needed for this assignment. Each container requires 4589 £ in
transportation expenses to get from the UK to Germany and then Poland. The price is typically
greater than usual as a result of the rise in petrol prices around the world, which has directly
affected transportation costs. The 8 containers will run you 36 720 £ in total.
2.2.3.4 Activity 9 Costumes control.
The corporation must pay 14% of the price of goods brought into Europe because the United
Kingdom is no longer a member of the European Union (European-union. Europa, 2021). One
industrial prestressed concrete assembly machine costs an estimated 200 000$ (Made-in-
China.com, 2022), which is equivalent to 170 011 £. Since there are eight machines in total, the
overall value is 1 360 088£, and costume control will cost 14% of that amount, or 190 412,32 £.
 Activity 11 iinstructing the machines:
After receiving 8 pieces of equipment, they will need to be tested. Testing equipment is projected
to cost £2,500 per piece, making the total estimated cost of the testing machinery £20 000.
Total direct cost is 442 324,32 £
2.2.4 Indirect cost:
2.2.4.1 Activity 2 Visiting the area:
Each team member will likely spend about 6500 pounds on the excursion, for a total of 39 000
pounds.
2.2.4.2 Activity 3 Preparing staff for the big mission:
The manager's preparation will cost 6 000 dollars, and each assistant's preparation will cost 4 500.
The preparation will cost 28500£ and include thorough instruction in industrial prestressed
concrete assembly machines, norms of international trade, physical preparation, and knowledge of
Eastern European cultures.
2.2.4.3 Activity 5 checks of the road:
For £ 7344, a logistics professional will assess the route for Concrete Masonry Company. Before
recommending the best course of action and the most efficient time to begin the transportation, the
company will check the route.
2.2.4.4 Activity 6 Choosing the transport company:
For a charge of £ 1000, the company can get advice about high-quality transportation provider
 Activity 7: Setting up the delivery zone:
There will be a new production facility available before the project starts. But the facilities must be
prepared before the machines show up. The facility will cost 176 780,48 pounds to build, or 85
pounds per cubic meter of C8-15 ready-mix concrete (EasyMix Concrete UK Ltd., 2020).

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2.2.4.5 Activity 10: Machine installation:
The devices will be installed by experts. Installing one unit will cost 6765.6 pounds. regarding
eight machines. The total estimated cost of the project is 56 124,8 £.
£751 073,6 is the sum of the direct and indirect charges. A contingency fund of £148,000 has
also been put up by the director in case of risk or unanticipated situations. Consequently,
£900,000 is the project's overall budget.

2.2.5 Risk assessment and management:

2.2.5.1 Risk assessment:
The first danger is the weather, the project's most important tasks will be performed in winter, and
the crew must be accustomed to working in inclement weather. The crew must be prepared to work
in bad weather because any delay might affect the project deadline. The second biggest risk for the
project relates to transportation. We already know that it will take 8 weeks to deliver goods from
the UK to Poland. There should never be a delay in transportation.
Risk management:
To reduce or remove the risk, the organization might take the following actions: We are all aware
that expatriates represent a big financial commitment for the business and that, should the situation
deteriorate and the team prove unable to handle the weather, other critical jobs may require their
assistance. In order to easily replace the gap, the main office should constantly have expatriates
prepared to function in any environment.
In order to reduce risk, the company should first think about the route, be aware of the countries the
equipment will travel through during shipment, and be familiar with the laws and regulations
governing transportation. In order to monitor the health status and speed up operations if it
worsens, the firm should always be prepared for the worst-case scenario. to lessen the chance of
risk. 10%, or £90000, of the project budget, was put aside by the project manager as emergency
funds.
2.2.6 Execution of the project:
Because of his expertise and mechanical engineering degree, manager Kevin Lewis is the ideal
candidate for the job. In addition to the network diagram and project cost implementation, he will
examine the project from beginning to finish and allocate duties to the assistants based on the
previously provided work breakdown structure. The third assistant will be responsible for
maintaining contact with the transport firm, the Polish team, and the headquarters while the first
assistant will be in charge of the area and work with the other two to prepare the equipment. This
associate needs great communication skills, knowledge of logistics, and a feeling of accountability.
The last associate needs to be well-versed in mechanical engineering. He will be in charge of the
machines' testing and preparation for use, as well as their installation at the new location.

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2.2.7 Closure of the project:
The project is going well, and the amount of time and money allocated to it is the ideal
combination. Simply said, the project's manager and headquarters should be aware of the risks
involved and prepared for everything. In the worst case, the company will still be ready to start
serving customers in April, but it could have to pay more if something goes wrong, like the cost of
expediting the delivery process turning out to be more expensive than anticipated. But the project
will be finished on schedule if the appropriate people are involved, there is adequate time, and the
budget is reasonable.
2.2.8 Conclusion:
The project's final product is fantastic, and it was on time and under budget. However, I have a few
suggestions. the company should add more time for the probability of being in some trouble for
example weather, select the best team that won't be impacted by the weather or anything else, and
provide training to all of its employees as they will start working in other countries.

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3 References
https://hbr.org/2016/04/a-refresher-on-payback-method (accessed the 27 May 2023)

"Corporate Finance" by Jonathan Berk and Peter DeMarzo. (Accessed the 27 May 2023)

"Financial Management: Principles and Applications" by Sheridan Titman and Arthur J. Keown.
(Accessed the 27 May 2023)

"Valuation: Measuring and Managing the Value of Companies" by McKinsey & Company.
(Accessed the 27 May 2023)

"Fundamentals of Corporate Finance" by Stephen A. Ross, Randolph W. Westerfield, and Bradford

D. Jordan. (Accessed the 27 May 2023)

"Investment Valuation: Tools and Techniques for Determining the Value of Any Asset" by Aswath
Damodaran. (Accessed the 27 May 2023)

"Ratio Analysis Fundamentals: How 17 Financial Ratios Can Allow You to Analyse Any Business
on the Planet" by Axel Tracy. (Accessed the 27 May 2023)

https://www.glassdoor.co.uk/Salaries/project-manager-salary-SRCH_KO0,15.htm (Accessed the

27 May 2023)

https://www.glassdoor.co.uk/Salaries/assistant-project-manager-salary-SRCH_KO0,25.htm
(Accessed the 27 May 2023)

https://www.comparably.com/companies/linkedin/salaries/project-manager(Accessed the 27 may

2023)

https://www.machinerytrader.com/(Accessed the 27 may 2023)

https://ship.freightos.com/ (Accessed the 27 May 2023)

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https://www.thebalancemoney.com/profitability-ratio-analysis-393185(Accessed the 27 may 2023)

https://uk.talent.com/en/salary?job=assistant+(Accessed the 27 may 2023)

https://www.easymixconcrete.com/concrete-pumps/concrete-pump-hire/(Accessed the 27 may

2023)

https://www.researchgate.net/publication/
365347017_Investigating_Relationship_Between_Liquidity_and_Profitability_Ratios_in_Banks
(Accessed the 27 May 2023)

https://www.investopedia.com/search?q=gross+profit+margin+and+net+profit+margin(Accessed
the 27 may 2023)

4 Appendix 1:

Network diagram is done by MS Project software:

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‌

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