Midterm-1

Project Mgt.

1. Write the name of phases of project cycle:

Pre-investment phase:
Project identification
Project formulation/
preparation
Project appraisal
Project approval and
financing

Investment phase:
Detailed engineering/
design
Construction/
installation
Monitoring
Ongoing evaluation

Post-investment phase:
Project operation
Project evaluation
(summative)

2. Write the components of project management:

Core functions:
1. Scope management
2. Time management
3. Cost management
4. Quality management
Facilitating functions:
5. HR management
6. Communications management
7. Risk management
8. Procure management
Integrative functions:
9. Project integration management
3. Draw a skeleton of a Problem tree:

Effects

Core problems

Major problems

Causes or
contributing
factors

Midterm-1

Project Mgt.

4. Draw a skeleton of an Objective tree:

5. Draw a skeleton of logical frame analysis:

Narrative
Summary (NS)

Objective
Verifiable
Indicators (OVI)

Means of
Verifications (MV)

Important
Assumptions (IA)

Goal
Purpose
Inputs
Outputs

6. Three Activity time Estimate of a project are following:

Task
A
B
C
D
E
F
G
H
I

Immediate Predecessors
None
None
A
A
C
D
B
E,F
G,H

Optimistic
3
2
6
2
5
3
3
1
4

Most likely
6
4
12
5
11
6
9
4
13

Pessimistic
15
6
24
8
17
15
21
7
22

Midterm-1

Project Mgt.

a. Draw the activity network diagram of the project:

C

E
H

A
D

F
I

b. Draw a CPM network and show the critical path:

Task
A
B
C
D
E
F
G
H
I

Optimistic
Time (to)
3
2
6
2
5
3
3
1
4

Most likely
Time (tml)
6
4
12
5
11
6
9
4
13

Here, Expected time:

c. What is the projects duration?

7 + 13 + 11 + 4 + 13 = 48

Pessimistic
Time (tp)
15
6
24
8
17
15
21
7
22

Expected Time
(te)
7
4
13
5
11
7
10
4
13

Midterm-1

Project Mgt.

d. What is the probability of finishing this project within 52 weeks?

Activity

Variance: (

2p
z=

27
= 0.77, area 0.2794

+3

Probability: 0.5 + 0.2794 = 0.7794

e. What is the probability that the project duration exceeding 52 weeks?
Probability: 1 - 0.7794 = 0.2206
7. You have a project to be completed in 12 months and the total cost of the project is
BDT. 100,000. Six months have passed and the schedule says that 50% of the work
should be completed. What is the Planned Value (PV)?
Project Cost (BAC): BDT 100,000
Planned value is the value of the work that should have been completed so far as per the
schedule.

Midterm-1

Project Mgt.

Hence, Planned value:

= 50% of BAC
= 50% of 100,000
= 50,000
8. You have a project to be completed in 12 months and the total cost of the project is
BDT.100,000 . Six months have passed and BDT. 60,000 has been spent, but on
closer review you find that only 40% of the work is completed so far. What is the
Earned Value (EV)?
Earned Value is the value of the project that has been earned.
Hence, Earned value:
= 40% of BAC
= 40% of 100,000
= 40,000
9. You have a project to be completed in 12 months and the total cost of the project is
BDT. 100,000 . Six months have passed and BDT. 60,000 has been spent, but on
closer review you find that only 40% of the work is completed so far. What is the
Actual Cost (AC)?
Actual Cost is the amount of money that has been spent so far.
According to the question, BDT. 60,000 has been spent on the project so far.
10. Determine the Schedule variance, Cost variance and Schedule Performance Index
and Cost Performance index to follow the problems Nos.7-9.
Schedule variance= BCWP-BCWS
Here, BCWP (EV) = 40000
BCWS (PV) = 50000
Schedule variance= 40000-50000
= -10000
Cost Variance= BCWP-ACWP
Here, ACWP (AC) = 60000
Cost Variance= 40000-60000
= -20000
Cost Performance Index (CPI) =

= .6666

Schedule Performance Index =

=

= .8

Midterm-1

Project Mgt.

11. X Group of companies has 4 investment proposals in hand. The cash flows before tax
and depreciation is given below. The initial investment and the project life is same in all
the 4 projects. Tax rate is 40% discounting rate 12%.
Cash Flows in Taka
Project life
in years
0
1
2
3
4
5
6
(Salvage
value)

Project-A

Project-B

Project-C

Project-D

(60,000)
8,000
12,000
25,000
20,000
25,000
22,000

(60,000)
10,000
15,000
20,000
25,000
30,000
28,000

(60,000)
15,000
25,00
30,000
10,000
5,000
5,000

(60,000)
10,000
10,000
15,000
15,000
20,000
30,000

6,000

3,000

6,000

12,000

Calculate IRR and NPV.

Project Life
Cash flows before tax
and depreciation
- Depreciation:
(Initial-salvage)/life

Project A
3

-60,000

8,000

12,000

25,000

20,000

25,000

22,000

9,000

9,000

9,000

9,000

9,000

9,000

-1,000
-400

3,000
1200

16,000
6400

11,000
4400

16,000
6400

13,000
5200

-600
9,000

1,800
9,000

9,600
9,000

6,600
9,000

9,600
9,000

7,800
9,000
6,000

8,400

10,800

18,600

15,600

18,600

22,800

40%

- Tax
Net Income
+ Depreciation
+Salvage value
Cash flow

Year

Cash flows
(Tk.)

D.F

0
6
NPV
Discount rate

12.00%

Since the NPV is positive, the project should be accepted.

Linear interpolation method of computing IRR:
NPV of LDR
(HDR - LDR )
NPV of LDR - NPV of HDR
6.67
IRR L
(.20 - .15)
6.67 - (-3.7)
18.81%
IRR

Discounted
Cash Flows