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Master of Business Administration - MBA Semester 3
PM0012-Project Finance and Budgeting
(Book ID: B1938)
Assignment (60 Marks)
Note: Answers for 10 marks questions should be approximately of 400
words. Each question is followed by evaluation scheme. Each Question
carries 10 marks 6 X 10=60.
Q1. Write short notes on:
Key project resources
Three main requirements of funding a project through project
finance
Medium term financing for projects
Bottom up estimation for creating project budget.
Answer. Key Projects resources:
Manpower: It refers to a set of individuals (employees) having specified skills,
knowledge, and expertise to carry out different project activities. Manpower is
one of the most precious assets of any organisation without which not a single
project can be carried out.

Q2. What is off take contract? Explain the various types of off take
contracts.
Answer. 'Off take Agreement'
An agreement between a producer of a resource and a buyer of a resource to
purchase/sell portions of the producer's future production. An off take
agreement is normally negotiated prior to the construction of a facility such as
a mine in order to secure a market for the future output of the facility. If
lenders can see the company will have a purchaser of its production, it makes
it easier to obtain financing to construct a facility.

Q3. Explain the different key project documents.

Answer. Project management can create a lot of paperwork, and its not
always the stuff you want or need. Lets talk about the essentials. Here are
nine documents that no self-respecting project should be without.
1. The business case
This is the document that kicks off the whole project. Its written to explain why
the project should happen and it summarizes the problem that the project is
going to solve. It should be comprehensive and persuasive with enough detail
to justify the investment required for the project.

Q4. Write short notes on:

Project parties in a construction project

Types of working capital
Project cash flows
Payback period method used to evaluate an investment on a
project

Answer. Project parties in a construction project

Project parties refer to individuals or entities that are directly or indirectly
involved in a project. Turner (1931), author of The handbook of Project- Based
Management, identified and underlined certain characteristics of people or
organisations that can act as project parties. These

Q5. What are the problems associated with BOOT projects.

Answer. Build, Own, Operate, Transfer (BOOT)
A BOOT funding model involves a single organisation, or consortium (BOOT
provider) designing, building, funding, owning and operating the scheme for a
defined period of time and then transferring this ownership across to an agreed
party.
Customers enter into long term supply contracts with the BOOT operator and
are charged accordingly for the service delivered. The service charge includes
capital and operating cost recovery and project profit.

Q6. Explain the different types of management contracts (a type of

PPP).
Answer. PPPs broadly refer to long term, contractual partnerships between
the public and private sector agencies, specially targeted towards financing,
designing, implementing, and operating infrastructure facilities and services
that were traditionally provided by the Government and/or its agencies. These
collaborative ventures are built around the expertise and capacity of the
project partners and are based on a contractual agreement, which ensures
appropriate and mutually agreed allocation of resources, risks, and returns.
This approach of developing and operating public utilities and infrastructure by
the private sector under terms and conditions agreeable to both the
government and the private sector is called PPP.
Types of PPP:

Winter-2015
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