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ASSIGNMENT/COURSEWORK PROFORMA
Module code: Assessment title: Module leader:
EE5508 Project Management Dr. H Makatsoris

Main objectives of the assessment:

To enable students to exhibit their appreciation of the taught course material, especially to
understand how to apply techniques covered in the course and to enable them to show how
to extend these to examples.
Brief Description of the assessment:
12 quantitative and qualitative questions based largely around a case study example covering
most aspects of the taught module and inviting discussion and speculation to show
awareness. The questions are marked in varying amounts: 5 marks each (questions 8 and 9),
10 marks (question 3), 16 marks (question 4) and the remainder with 8 marks each. The
assignment paper comprises questions and case study descriptions and table of the normal
distribution. Other essential information may be found in the course notes and/or lecture
slides. A calculator will be necessary.
Learning outcomes for the assessment Assessment criteria:
(refer to the appropriate module learning The students will be required to:
outcomes)

A Knowledge and understanding Answer 12 questions covering module

1. Describe what is meant by project
management, and when to apply it.
2. Understand the strategic context and
importance of project management, and the
appropriateness of some management
techniques.
topics with reference to course notes and
other literature if desired. The questions
ask students to use taught techniques to
answer some factual questions but also, for
optimum results, to speculate using these
techniques and to discuss the presented
case study situation.

B Cognitive (thinking skills)

3. Recognise problems suited to project
management techniques, including team
building and resource planning and
management.

4. Analyse and decide appropriate means of

people and resource management for projects

C Other skills and attributes

(Practical/professional/transferable)
5. Be able to use some tools and techniques
for project management

6. Appraise the importance of teams and team

working in project management

Assessment method by which a student can demonstrate the Weighting:

learning outcomes:
Factual answers to questions and discussion and interpretation in a 100% of module
single report that is marked by module teacher. marks
Format of the assessment/coursework: (Guidelines on the expected format and length
of submission):
Format is logical sequence of answers to the set questions, including diagrams, calculations
and description. Typical length of report c15 pages including diagrams.
Assessment date/submission deadline:

Please submit no later than 16.00 on Monday, 27 April 2009, at the Taught Programmes
Office
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Indicative reading list:

1. Course notes and lecture notes for module
2. Recommended additional literature (if desired):
‘Project Management: A Managerial Approach’, Meredith J.R. and Mantel Jr. S.J. (John Wiley
& Sons, New York 1995)
Other information
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Assignment: Project Management Module

Capstick Limited is a medium sized company employing 300 people that was
established 30 years ago by the present Chairman, John Smith. The organisation and
key individuals are described in figure 1. John is an engineer and takes a great interest
in the technical challenges faced by his company, and who has built his business
based on a close relationship with his customers where he has endeavoured to support
his design creativity with the ability to control directly the manufacturing quality. The
company manufactures automotive components for major tier one suppliers to the car
manufacturers and is constantly under price and quality pressure. The components are
machined alloy castings, with pressed in bearings and shafts and perform a critical
function in a car engine. The company owns the technology inherent in the product,
although the customer specifies the design specification and mating dimensions. One
major customer has demanded that the products be reduced in price from £18 to £15
each, although he is prepared to negotiate a 5-year contract to take these products at a
rate of 100000 per year at this new price. If the company continues to charge more
than £15, the customer, depending on the price, is likely to take their business
elsewhere. There is therefore a risk that the 100000 units sold each year will cease to
be ordered. The company currently manufactures the products on a ‘semi-automatic’
production line, which, if the business were lost, would cost £85k to close down. In
addition the Company has recently specified and received a quote for a fully
automated line that will offer significant cost savings.

The product cost breakdown is as follows:

Cost of manufacture, current production methods: £16

Cost of manufacture, automatic operation: £13

The current production equipment is written off, so there are no depreciation costs,
however, there are maintenance costs of £10k per year, with an attendant risk,
estimated at 30% in 5 years, of a major breakdown costing £50k to rectify.

The proposed new automated equipment will cost £500k, paid after commissioning
and funded by money from the Company’s investment account where it receives 15%
per year growth. The company policy is to depreciate such equipment to zero over 5
years so that it would have no residual worth after 5 years. Any breakdowns will be
subject to warranty cover over the first three years and this is included in the price:
subsequent maintenance charges will be £20k and £30k in years 4 and 5 respectively.

The Company has estimated the risks of the customer taking their business elsewhere
as follows:

Unit price: £15 £16 £17 £18

Risk: 0 30% 70% 100%

The Company also came up with an alternative strategy: to close the present facility
and to sub-contract the manufacture of the products. It obtained a quotation for this at
£15.50 per unit for 100000 units per year for 5 years.
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1. (a)Without introducing the proposed automated production equipment and

using decision tree principles, recommend a unit price to quote the customer based on
greatest benefit to the Company and calculate the expected value of the decision.
(b)Compare the in-house manufacture and the sub-contracted routes.
(c)What other qualitative factors do you think that the company should consider when
making this decision?

2.(a)Calculate the discounted cash flow over 5 years for the proposed new automatic
equipment, were the Company to quote a unit price of £15 to the customer.
(b)Comment on the Net Present Value of the new proposal to the other possible
alternatives and recommend the preferred option.
(c)What different qualitative factors do you think that the new equipment introduces
that the Company should take into account in their decision?

The Company decided to go ahead with the new production line. The line would
automatically link into the design office CAD system for direct implementation of
design changes. It would also monitor production rate, material used and units
manufactured and relay this information to the financial and stock control systems,
and would enable batch progress information to be readily accessible by the sales
team. They are considering appointing a new Manager since they are aware that they
have a number of important project challenges ahead of them.

3.(a)Recommend the make up of the project team, and (b)suggest an appropriate

leader from those available. Include in your recommendation reasons for your
decisions bearing in mind the company structure and the Belbin personality types
described in the company organisational chart.
(c)Consider and describe the possible risks to the project generated by personality
and management issues.
(d)If the company recruited a new manager, what type of personality could he/she
have to lead this team effectively?
(e)Who should he/she report to?
(f)What suggestions can you make for the Company and individuals to maintain
objective control of the project?

The project team have defined the activities and other parameters of the project, as
shown in figure 2. It is not important what the activities are for this purpose.

4. Draw the network for the project and determine the critical path using both
CPM and PERT.

5. Construct a GANTT chart and identify scheduling flexibilities.

6. What specific rules could be adopted to decide how to schedule this project
and what constraints must be taken into account? Clearly explain your reasons.

7. (a)Find the probability of completion within the expected time found by

PERT.
(b)What is the probability of completion 5 weeks before the expected project
completion time?
(c)When using probability analysis like this, what care needs to be taken?
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8. Find the minimum cost increase to reduce the expected duration of the project
by 2 weeks.

9. Calculate and draw a chart of the Labour profile required to complete the
project for an early start schedule.

10. If you sub-contracted tasks G and I:

(a)what contractual terms might you insist on and,
(b)why could they be different in each case? Clearly explain your reasons.

The Company assessed the costs of the project at important milestones at the outset as
shown in Figure 3. After some weeks, the project manager asked the task supervisors
for progress reports and the feedback shown in Figure 3 was reported.

11. (a)What is the cost variance for the project so far?

(b)Compare this to a calculation of the schedule variance and,
(c)provide your clear comments on the progress of the project.

12. At the end of the project, the total cost of implementation was £560k and the
performance resulted in product unit cost being £13.30.
(a)Revise the DCF calculation and calculate the real net present value of the project.
(b)With hindsight, does this affect the strategic decision taken at the outset and why?
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Figure 1 Capstick Limited Organisational Chart

Personality Types, with reference to ‘Belbin’ team roles:

John Smith: Predominantly an ‘Innovator’, but with elements of ‘Entrepreneur’ too.

Peter Jones: A ‘Shaper’

Sarah Evans: An ‘Evaluator’ Fred Emery: An ‘Evaluator’

Martin Taylor: A ‘Shaper’ Ed Burrows: An ‘Evaluator’

Joe Johnson: An ‘Innovator’ Martin Field: A ‘Team Worker’

Susan Peters: An ‘Entrepreneur’

John Smith, Chairman

Peter Jones
Managing Director

Sarah Evans Martin Taylor Joe Johnson Susan Peters

Finance Director Production Director Technical Director Sales Director

Fred Emery Ed Burrows CAD Martin Field

Production Manager Manager Customer
Relations Manager
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Task Preceding Optimistic Most likely Pessimistic Normal cost Crash cost Crashed Crew size
activities time time time (per week) (per week) duration
estimates estimates estimates
A - 25 30 45 5000 12500 20 5
B - 10 15 20 5000 12500 8 3
C - 20 25 35 5000 7500 18 3
D A 3 3 5 4000 6000 2 5
E C 5 7 12 3750 5000 4 7
F B 1 1 1 10000 - - 5
G D,F 4 5 7 3750 5000 2 4
H D,F 2 2 3 5000 7500 1 4
I E,F 4 4 6 4000 5000 2 5
J H,I 8 10 14 4000 5000 6 6
K G,J 6 8 15 5000 6000 5 5

Note: Timings in WEEKS

Figure 2 Project data

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Task Budgeted Costs to % %

cost, £ date, £ Complete Planned
A 150000 140000 100 100
B 75000 87500 95 100
C 125000 120000 100 100
D 12000 6000 10 100
E 26250 27750 100 100
F 10000 9750 100 100
G 18750 750 5 20
H 10000 0 0 0
I 16000 3000 65 0
J 40000 0 0 0
K 40000 0 0 0

Figure 3 Cost summary to date

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