Referencing Styles : Harvard Assignment 2 Due : 9:00pm 8 /2/201 5 Worth : 20% There are two questions in this assignment. Like all other submissions, your work must be submitted on unit web site by the due date. Each question is worth 1 0 marks and the final score will convert to 2 0% of the final mark. Question 1 (10 marks) Your company is doing well and has a profit of about $ 4 0 ,000 that you need to invest . The money is currently in a savings account earning an interest of 5 .5 % per annum and is guaranteed for the next 6 years. You want to make your profit work harder so you have look ed at some investment opportunities avail- abl e. They are • To insulate the current company offices at a cost of $1 3 ,000 which will provide a fuel savings of $1, 4 00 per year over the next 10 years. • To pay the lump sum of $ 2 5 ,000 to the mortgage of $ 45 ,000 that has a loan term of 10 years at 6.5 % interes t per annum. • To invest $ 1 2 ,000 into a new business, which has been estimated to return double the amount in 5 years’ time . (a) Given the profit you have and assuming a discount rate of 6 %, perform and document appropriate NPV calculations for all possible investment options you identified. You can work out your calculations using Microsoft Excel. [8 marks] (b) From your calculations in (a), w hich investment would you take up and why ? [ 2 mark] Question 2 (10 marks) You are 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 build. As you are a project manager you have decided to monitor the progress of their build using Earned Value Managemen t (EVN) . Answer the following questions using the following information ID Task Name Cost ($) Start Date Duration 1 Lay foundations 2 0 ,000 April 1 2 weeks 2 Build frame 4 7 ,000 April 4 weeks 3 Install pipes and electrical 9 ,000 May 6 weeks 4 Make office water - tight 15 ,000 July 8 weeks 5 Install internal walls and bathroom 2 5 ,000 September 12 weeks 6 Install cabinetries 1 2 ,000 December 4 weeks 7 Paint office 6 ,000 January 2 weeks 8 Install light fixtures and appliances 4 ,000 January 2 weeks NOTE: Assume that no task is scheduled to run concurrently, e.g., Task 2 starts after Task 1 completes, 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 ent ire project? [1 mark] (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 proj ect? Briefly explain how you derive the actual cost. iii. What is the rate of performance (RP) for each task? Using the RPs obtained, calculate the earned value (EV), schedule variance (SV), Cost Performance Index (CPI), and Schedule Performance Index (SPI) of the project. [1 + 1 + 1 marks] (c) Unfortunately, two trades resigned after Task 5 was completed and this caused the remaining tasks to exceed its original cost and schedule by 2 0 %, 3 5 %, 4 0% respectively . At the end the project , i. What are the CPI and SPI? ii. How i s the performance with respect to cost and time? iii. Represent the Planned value (PV), Earned value (EV) and Actual value (AV) as a chart . **** Example only **** [ 1 + 1 + 4 marks] Note : SIT764 students will be marked independently of the SIT374 students based on a differ- ent assessment criteria. Ensure you detail your explanations and present your work as though you were reporting to management. Referencing Styles : Harvard AC1.1 Describe the Background and Principles of Project Management Guidance: In this question, you are required to provide a brief background and the principles of project management within the context of the project highlighted in the scenario. A detailed answer that clearly describes the Principles of project management will help you to get M3. AC1.2 Appraise the Viability of Projects, developing Success/Fail Criteria Guidance: Using relevant appraisal techniques such as NPV, identify the viability of the project and payback period in the scenario if £180,000 is earned in first 3 years and £250,000 is earned in the following 3 years when the discount rate is 4%. You will need to explain how you determine the project feasibility. A detailed discussion of the causes of project failures and success would help you to get D1. AC1.3 Explain the Principles behind Project Management Systems and Procedures Guidance: In this question, you need to define a project management system and explain the principles involved. A detailed explanation of the importance of a Project Management system and procedures in a project will help you to get M3. AC1.4 Explain the Key Elements involved in terminating projects and conducting Post Project Appraisals. Guidance: Your answer should clearly explain the key elements involved in project termination. The elements of post project appraisal should also be added to the discussion in your answer.