ASSIGNMENT 2: PROJECT EVALUATION - 20%

DUE: Week 7

Presentation  to  be  conducted  during  Week  7  Practical  based  on  self-selected  timesheet.  This assignment is to be completed in teams of 4.

Report Due: 11:55pm 10th Sep 2023

Each team is to submit a 3000-word Business Report (excluding references and appendix) and give a 7-minute class presentation.

Task:

Your company is considering investing in one of the two alternative projects. Details of each project are shown below. A team has been established to manage the entire project, reporting directly to the top management.

You are to evaluate both projects and recommend the option you consider to be the best to your top management, fully justifying your choice.

You are to detail the management of the project from start to finish. All aspects of Project Evaluation are to be  addressed.  This  should  include  financial,  time  management  and  external  evaluations. Financial evaluation should include calculations in capital budgeting (NPV, BCR, IRR and Payback period). Time management section should show team knowledge of scheduling and time planning (Network  diagrams,  Gantt  Charts).  External  considerations  should  include  a  wide  range  of considerations,  for  example  social,  technical,  economic,  political,  demographic,  custom  and tax factors.

Your team is expected to use a range of evaluation techniques and project management tools, as covered in lectures, practical, lecture notes and other relevant references. Research must be shown to justify the choice made by the team. Teams should have at least 12 references from a wide range of journals,  newspaper  articles,  council  websites  etc.  (no  Wikipedia  or  Lecture  Notes).  Accepted referencing style would be IEEE or APA style.

As it is impossible to introduce every eventuality to the data presented, it is necessary to make assumptions about certain aspects of the project. This is acceptable. However, details and justification of assumptions must be clearly stated.

Assessment:

•    A 3000 word professionally written group report, to be submitted in week 7. Late penalties of 50% of the overall marks is applicable for late submission.

•    Teams should analyze all factors for both projects.

•    A 7-minute, formal presentation, to be given in class during Week 7 as scheduled by your tutor/lecturer, using appropriate visual aids. All groups are to be ready to present promptly at the start of the presentation session.

Project Information:

Your company has been awarded a contract by the Federal Minister for Communications. You have been given the task of managing a project team which will oversee the installation of 200km of fiber optic cable in The City of Greater Geelong. This installation will replace the above ground cable link currently in operation and play a major role in increasing the capacity of the local telecommunication network by 400%.

There are two alternative ways of installing the cable. For the purposes of this assignment, one will be called Project A and the other Project B. Whichever project is chosen, the target for completion is 6 months (26 weeks) and commitments to this effect have been made to the Federal Government.

Many activities appear to be necessary as part of both projects. The following notes summarize the activities likely to be encountered as well as the expected duration of each activity. Financial details are also given to assist in the selection of the most appropriate option. In both cases, a discount rate of 6% has been selected. The company's required rate of return is 7%.

PROJECT A:

This alternative involves laying the cable underground. It is estimated that the cable would have a useful life of 14 years.

Summary of activities involved:

.    Design a building to house the electronic equipment, including preparation of submission  for  Government  approval  of  Environmental  Effects  Statement (EES) with planning permit. – 5 weeks.

.    Design high-efficiency Australian solar panels to power the project - 4 weeks

.    Order and delivery of electronics to control equipment (from South Korea)- 4 weeks

.    Order and delivery of optical fiber cable– 4 weeks

.    Local Government approval for EES- 4 weeks

.    Local planning permit approval - 5 weeks

.    Dig trenches and lay optical fiber - 4 weeks

.    Construct building to house all equipment - 2 weeks

.    Connect all equipment and optical fibers, with on-site installation - 4 weeks

.    Final commissioning test for all installed equipment - 2 weeks

.    Switch over operation from coaxial to optical fiber link - 2 week

.    Manufacture and delivery of solar panels from local supplier - 2 weeks

Additional notes:

.    Time for EES approval can increase to 7 weeks.

.    The trench digging/cable laying machine is quite old, and may have breakdown problems, which could delay the process by another 3    weeks.

.    Local industrial action may threaten the supplier of the solar panels.

.    Electronics to control equipment from South Korea may have customs clearance problems, and import tax, which may delay the delivery, thus increasing the cost.

Summary of available financial information:

Initial costs (assuming all paid within project development period):

•    Legal and administrative costs - $150,000

•    Design costs - $380,000

•    Solar panels - $300,000

•    Cost of building - $450,000

•    Electronic equipment - $310,000

•    Fiber-optic cable - $6 million

•    Cost of digging and laying cable - $990,000

Ongoing maintenance costs:

•    $28,000 p.a. years 1-6 inclusive

•    $30,000 p.a. years 7- 14 inclusive.

Government subsidy:

•    At the start of the project - $3.5 million

•    At Year 5 - $2.5 million

•    At Year 10 - $3.5 million

Estimated fees from independent carriers using cable - $1,000,000 pa.