QUESTION ONE (20 Marks) a) An Oil exploration Company is contemplating setting up an Oil refinery in the North Coast of Kenya. The Project will have the following cash flow features: Year 0 1 2 3 4 Cash Flow (Ksh 000) 18,500 0 6,500 11,500 15,500 Additional Information 5% Depreciation is on a straight line method over the period 12% is the applicable discount rate The Project attracts a Corporate tax of 20% Required: Advise the Management of the Oil firm whether or not to proceed with the project based on: i. Pay Back Period (3 Marks) ii. Net Present Value (5 Marks) Profitability Index. What is your understating for this measure (2 Marks) b) You intend to put up a Project with the following details : Predecessor Duration (Weeks) None 4 None 6 B 4 5 Activity Description A Project Site Selection B Organizational Plan Personnel Planning D Facility Design E Interior Designs F Moving In G Hiring new staff H Moving Records 1 Arranging Finance J Training Staff AC D 9 C 3 5 F 3 B 6 HEG 1 11 Draw a well labeled network diagram using details given above (5 Marks) Which technique would you use in the analysis of the network diagram in (1) above? Support your answer (1 Mark) Determine the critical Duration and show the Critical Path it in the diagram ( 2 Marks) What is the Probability of Completing this Project in 40 weeks ( 2 Marks) 111 V QUESTION TWO (20 Marks) a) The choice of a dedicated teams/ Projectized project organization is desirable for long term projects like the Vision 2030. Support this statement in reference to the model of this organization structure and any FOUR of its merits (5 Marks) b) A project has the following characteristic needs. Use the information to answer the questions that follow: Activity Normal Crash Normal Cost Crash Cost Preceding Activity Duration (Ksh, 000) (Ksh000) Duration (Weeks) (Weeks) A None 4 2 10 11 B 3 N 6 9 C A 2 1 4 6 D B 5 3 14 18 E B.C 1 1 9 9 O F 3 2 7 8 G 4 2 13 25 H E,F DE H.G 1 11 18 I 6 5 20 29 i. ii. Draw the network diagram, determine the Critical Path and the project duration (4 Marks). (Hint. use 4 dummy activities) To shorten the Project duration by three weeks, which activities should be shortened and by how many weeks (3 Marks) Determine the cost of the Crashed Project (3 Marks) iii. QUESTION THREE (10 Marks) a) As a Consulting Lead Person in Staple Foods International, you have been assigned the role of building the capacity of your staff on Project Feasibility Study and Project Proposal. In light of this, i. Demonstrate your understanding of the above tools as used in Project Management in respect to their definitions, functionality and development order (3 Marks) 11. In addition to the Project Identification, explain any FOUR elements of a Feasibility Study and TWO sections of a Project Proposal (3 Marks) b) Project Management is a Process involving inputs, Tools and Techniques and Outputs. Using Planning as one of the functions of Project Managers. Explain citing a relevant example your understanding of the THREE elements above. (4 Marks)
