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It will provide the 'missing link' in the Perth Urban Transport Corridor, through a dedicated, East-West
freight connection between Perth's heartland industrial areas, such as Kewdale and Welshpool, and
Fremantle Port. Current stop-start traffic would be replaced with free-flowing vehicle movements
yielding environmental, safety and productivity benefits for the Western Australian community. The
freight link will also have a rail track built to be used for cargo trains for ship loading at Fremantle port.
Imagine that you are employed with the Mainroads Department and you have been assigned to work
with the engineering planning team on the proposed new Freight Link Project.
The estimated total cost of the Freight Link Project is estimated to be $1 billion in today’s dollars.
It is expected that a total of 25,000 vehicles per day will use the new freight link.
You have been told that 45% of the total number of vehicles that will use the Freight Link will fall
under the Heavy Vehicle category thus attracting the toll charge.
Revenue will be generated via toll charges and from the bill board advertising along the route.
Table 1a
*Note this is a one way flat rate applicable to all vehicles independent of distance
travelled and category type.
Funding for the project is expected to come from the State Government using a mix of existing and
borrowed funds. The government has $550m in cash already allocated for this project, thus the $550m is
not to be considered as part of this analysis.
The state government intends to make up the shortfall by borrowing the $450m with an annual interest
rate of 2.5% to finance the project. The borrowed funds will help cover the cost of the preparation of all
the documentation, contracts, public consultation, the tendering process, the actual construction and
commissioning. It is envisaged that some of the borrowed funds will also in part cover, staff wages and the
ongoing operation and maintenance costs.
The proposed financing arrangement for the loan is to be financed over a 45 year period.
The government has stipulated that if the project was to go ahead, the initial project scoping must start
on the 1st of Jan 2018 and has stated that the project is to break even at the end of the 45 year period.
This goal is to be achieved from revenue generated via toll charges along the 14km route and from
roadside billboard advertising while also taking into account expected annual ongoing maintenance and
operational and costs.
The Government requires that the toll charge has to set at a reasonable value and has stipulated a
constraint that a one way toll charge must be set to less than or equal to $2 per road segment as defined
in Table 1b. A second constraint stipulates that the project must break even in less than or equal to 45
years.
Note that the loan drawdown profile of the borrowed $450m total, follows the typical project lifecycle “S
curve” expenditure distribution as given in Table 2 below.
Note that the revenue stream can only start once the road link is built, commissioned and handed over.
*Note that this is a flat rate applicable to all vehicles for each time any segment of the Freight Link is used
independent of distance travelled and category type.
Appendix Information
In the appendix you have been given tables of the work breakdown structures covering the expected
Electrical, Mechanical and the Communications / IT engineering scope of works.
You have also been given a table of the Master Plan for the project.
Task List
Your team has been asked to determine what a one way toll charge needs to be set to, in order to be
able to break even at the end of a 45 year time frame.
To help you to provide a response to this request you are required to present the following in your formal
report to the government:
Task 1. Draw the Gantt charts pertaining to each of the Work Breakdown Structures for the Mechanical,
Communication / IT and Electrical scope of work components as per Tables 5, 6 and 7 respectively.
(Note: The Gantt charts can be hand drawn but no free hand drawings are acceptable as this is a
formal report. All charts are to be clearly labelled showing total time duration in weeks. )
[24 Marks]
Task 2. Draw an AOA diagram for the of the Electrical Engineering scope of works, starting from and
including activity “AE” up to and including activity “QE”. Refer to Table 7. [10 Marks]
a. Find and state the critical path and determine its duration. [2 Marks]
b. State by how many weeks the termination of the primary incoming 66kV overhead
feeders could be delayed by, without affecting the completion time of the overall
Electrical Engineering component of the project. [2 Marks]
c. State by how many weeks the installation of the lightning and surge protection could be
delayed by, without affecting the completion time of the overall Electrical Engineering
component of the project. [2 Marks]
d. State by how many weeks the installation of the substation protection equipment could
be delayed by, without affecting the completion time of the overall Electrical
Engineering component of the project. [2 Marks]
e. State by how many weeks the testing of the boom gates primary and secondary power
supply could be delayed by, without affecting the completion time of the overall
Electrical Engineering component of the project. [2 Marks]
Task 3. Using the data given in Table 4 of the Appendix and incorporating information attained from
question 1, draw the complete Gantt chart of the “Master Plan” for this project. [8 Marks]
Task 4. Using the now completed Table 4 determine the overall expected project completion time from
the initial tender, “Activity A” to the commissioning and handover of the complete project,
“Activity K ”. Clearly state how many weeks in total it will take to build and commission the
Freight Link project. This is a critical number as it will determine when the project can commence
earning revenue. Derive also the total revenue equation. [8 Marks]
Task 5. Draw and clearly label the pre-tax cash flow diagram for the total project taking into account all
relevant cash inflows and outflows. [10 Marks]
Task 6. Given that the project is to break even at the end of 45 years, determine the value of a one way
toll charge, $N if the government can negotiate an interest rate of 2.5%. (Show your working) Is
this in breach of a government constraint for the project? [20 Marks]
Task 7. Alternative Scenario: Assume the government at short notice, can at best negotiate to borrow the
funds at an interest rate of 3%. By setting the price of a one way toll charge to $N = $2, calculate
how many years it would take to break even. (Show your working) Is this in breach of a
government constraint for the project? [20 Marks]
Task 8. You are asked to look at a further scenario, where the government wants to set the price of a one
way toll charge to $N = $1.80 Given that the project must break even at the end of 45 years,
calculate what interest rate must be negotiated, to achieve this. Give your answer to an accuracy
of seven significant figures. (Show your working) [20 Marks]
Task 9. Part of your role is to select the engineering contracting company to carry out the build of the
Electrical, Mechanical and Comms IT construction work. The list of accredited tenderers has been
narrowed down to two companies. Both companies have provided their respective financial
statements for the past two fiscal years. Refer to Appendix 2. Calculate the solvency, liquidity and
profitability ratios for each company (for both financial years) and display your workings. Based
on your calculations in about 500 words make your recommendation as to which company would
be better placed to undertake this project. In your own words clearly explain your reasoning.
[35 Marks]
• If you are a team member: In your own words write a short paragraph (about 100 words) on the
power tactics that your team leader used to motivate and influence the group’s behaviour.
Comment on the tactic’s effectiveness. Also comment on if you had been the team leader, if you
would have used the same or a different tactic to motivate the team.
Assignment Requirements
1. The Assignment is due COB 4:00pm Friday the 22rd of September 2017.
2. The Assignment is worth 20% of the total MGMT 3000 unit mark.
3. It is to be handed in to the assignment office and later collected from the assignment office.
4. Your report must have a signed cover sheet from the assignment office.
5. Each team member is to hand in a complete report in his/her own name with its own cover page.
Each report will be marked individually. It is quite OK to have your own independent views. You
don’t have to agree with your team member’s view(s).
6. As this is a professional report for the government, nothing in the report is to be drawn free hand.
All diagrams must be either printed of ruled up and/or stencilled. Only ink pen is to be used.
All charts and diagrams are to be clearly labelled.
7. All text must be typed and in you own words. No paragraphs of text can be the same as a team
member’s.
8. Calculations can be typed or hand written (neatly) and must be shown.
9. Label which task you are answering.
10. A total of 13 marks will be allocated for the overall presentation of the assignment.
11. Late assignments – will incur a daily 10% penalty deduction off the total mark.
AM Confirm order all materials from the design bill of quantities I (Master Plan) 2
BM Catalogue and deliver all materials to appropriate sites AM 1
CM Mobilise personnel to site office(s) BM 2
DM Install the rail tracks to specifications CM 13
EM Install rail sidings and all fire hydrant infrastructure CM 6
FM Install track interchange infrastructure DM 7
GM Install all control and signalling equipment along the rail line DM,EM,FM 11
HM Install all the boom gates as per the design DM 8
IM Install the required control and signalling software for HM 12
the master control room
JM Test the rail tracks under load with actual carriage GM 4
KM Confirm max carriage speed allowable along the rail route JM 6
LM Test fire hydrant infrastructure ensuring water comes out at KM 4
the required pressure.
NM Final testing commissioning and formal handover LM 5
Table 5
AT Confirm order all materials from the design bill of quantities I (Master Plan) 2
BT Catalogue and deliver all materials to appropriate sites AT 1
CT Mobilise personnel to site office(s) BT 2
DT Relocate all existing telecommunications infrastructure along CT 14
the proposed rail route as required by the design
ET Install optic fibre along the route and connect to the Telstra DT 6
network
FT Install the router system enabling wireless internet access ET 9
and the toll sensors along the route
GT Installation of mobile towers and antennas as required ET 10
HT Install GSM4 mobile equipment racks as existing Telstra GT,ET 4
exchanges and the mobile towers
IT Setup the backup comms network for the train drivers to talk to HT 2
the main control room
JT Install the security microphone and speaker system at the ET 7
stopping stations
KT Install the remotely controlled security cameras with live feed IT 3
back to the control room.
LT Final testing commissioning and formal handover KT 4
Table 6
Engineering Management 3000 - Semester 2 2017 Assignment Page 7
WBS Electrical Engineering Scope of Works
AE Confirm order all materials from the design bill of quantities I (Master Plan) 2
and deliver all materials to site
BE Prepare final Design drawings and documentation AE 8
CE Mobilise personnel to site office(s) AE 2
DE Relocate all existing electrical infrastructure along the proposed AE 5
route as required by the design
EE Build a 66kV substation along the route as per the design CE,DE 9
FE Terminate the primary incoming 66kV overhead feeders from EE 4
Western Power to the new substation
GE Terminate the second 66kV cable for from Western Power for DE 3
power robustness. This diverse cable is for power reliability in
the event of a fault on the primary cable
HE Equip the switch room with the main switchboard and GE 7
protection fuses and circuit breakers at the sub stations
IE Install all sub switchboards HE 4
JE Install the uninterruptable power supply equipment in the main FE,IE 6
switch room
KE Install all the wiring reticulation along the route for supply to FE,IE 9
the boom gates and signalling controls
LE Install the protection equipment at the sub station JE,KE 5
ME Install all lighting poles and globes along the highway and rail LE 10
line including security lighting
NE Install lightning and surge protection LE 6
OE Test primary and secondary power supply for the boom gates DE 5
PE Test that all road lighting and security lighting meets the BE,ME,NE,OE 4
Australian Standards
QE Final testing commissioning and formal handover PE 5
Table 7
*Assume 52 weeks per year (i.e. no holiday gaps due to shift work arrangements). Also one work
week is equal to seven days i.e. no week ends. Also assume one year is equal to 365 days exactly.
Also for simplicity assume all expenditures land at the end of each year. For example, assume all
maintenance costs are incurred at the end of each year (even though in practice maintenance costs are
incurred throughout a given year).
Other Income
Investment A 31 25
Investment B 64 52
Investment C 58 19
Operating Expenses
Special Charges 7 45
Interest 75 98
Marketable Securities
Purchases -4,006 -4,736
Sales 3,642 2,956
Capital Expenditure -154 -152
Current Assets
Cash (at end of period) 2,409 469
Short Term Investments 205 154
Accounts Receivable 1208 987
Inventories 139 127
Other 950 801
Current Liabilities
Equity
Other Income
Investment A 31 20
Investment B 64 41
Investment C 23 16
Operating Expenses
Special Charges 7 3
Interest 39 45
Marketable Securities
Purchases -4,006 -4,736
Sales 3,642 2,956
Capital Expenditure -154 -152
Current Assets
Cash (at end of period) 1,950 1,330
Short Term Investments 205 154
Accounts Receivable 1208 987
Inventories 142 131
Other 0 600
Current Liabilities
Equity