PROJECT COST AND FINANCE MANAGEMENT

PLEASE ANSWER CORRECTLY!

Your company has been appointed to perform a forensic analysis on the upgrade project of Lesothos Maseru airport. The consulting firm that was appointed to perform the cost control function was recently liquidated and you are tasked to identify any mis representation in their cost reporting. The consulting firm has supplied you with the following cost report and project information described hereunder.

The cost report is in US$ which control a dual currency estimate. The control base reflects Rands and US$ separately. The project exchange rate is R15.95/US$ according to the estimate.

The cost report includes the original estimate in multiple currencies, Original Control base in US$, commitments, expenditures, change management process (Approved Compensation Events (CE) and potential CEs), risks, trends, Revised Control Base, and remaining budget (all in $(m)).

The project has seven work packages as follows; Work Package A=$10m; Work Package B=R200m; Work Package C=R50m; Work Package D=$12m, Work Package E=R82m, Work Package F=$25m and Work Package G=R25m. Contingency of 10% is allocated to the dollar subtotal of all Contracts combined. Only 4 Contractors has been appointed to date.

The cost report in figure 1 has been submitted to your company

Figure 1: Cost Report for Maseru International Airport upgrade.

Question 5d [2]

Contractor E invoiced to-date a total of $2m. You note that in the document there was a new invoice of $5.48m. Will you advice to process and pay this invoice? Explain your answer.

PLEASE ANSWER CORRECTLY AND IN DETAIL!

Question 5 Work Packages A B C D E F G Contractor A Contractor B Contractor E Contractor G Subtotal Contingency Grand total ($m) Project Exchangerate R/$ Budget (m) Multi currency $ R $ $ R $ R 10.0% $ Budget ($m) Approved CE {$m) 10.00 $ 200.00 $ 45.00 $ 12.00 $ 82.00 $ 25.00 25.00 $ $ 14.95 11.25 $ 10.00 13.38 $ 45.00 12.00 5.48 $ 25.00 1.67 112.54 11.25 $ $ 123.79 Revised CCB Potential {$m) CE's ($m) $ 1.47 $ $ $ $ $ $ -1.4716 $ 10.00 $ 14.85 45.00 12.00 5.48 25.00 1.67 9.45 9.78 $ 9.4500 trends Risks ($m) ($m) Indicated Total cost($m) {$m) $ 19.45 $ 14.85 $ 45.00 $ 12.00 $ $ 25.00 $ 1.67 $ Expenditures Remaining Budget {$m) 5.48 $ 0.33 2.00 $ 3.48 Question 5 Work Packages A B C D E F G Contractor A Contractor B Contractor E Contractor G Subtotal Contingency Grand total ($m) Project Exchangerate R/$ Budget (m) Multi currency $ R $ $ R $ R 10.0% $ Budget ($m) Approved CE {$m) 10.00 $ 200.00 $ 45.00 $ 12.00 $ 82.00 $ 25.00 25.00 $ $ 14.95 11.25 $ 10.00 13.38 $ 45.00 12.00 5.48 $ 25.00 1.67 112.54 11.25 $ $ 123.79 Revised CCB Potential {$m) CE's ($m) $ 1.47 $ $ $ $ $ $ -1.4716 $ 10.00 $ 14.85 45.00 12.00 5.48 25.00 1.67 9.45 9.78 $ 9.4500 trends Risks ($m) ($m) Indicated Total cost($m) {$m) $ 19.45 $ 14.85 $ 45.00 $ 12.00 $ $ 25.00 $ 1.67 $ Expenditures Remaining Budget {$m) 5.48 $ 0.33 2.00 $ 3.48