1
Seat No.: Enrolment
GUJARAT TECHNOLOGICAL UNIVERSITY
B.PLAN- SEMESTER- VI EXAMINATION WINTER 2018
Subject Code:1065503 Date:27/11/2018
Subject Name:Project Formulation, Appraisal and Management
Time:02:30 PM TO 04:30 PM Total Marks: 70
Instructions:
1. Make suitable assumptions wherever necessary.
2. Figures to the right indicate full marks.
Notes:
1. Section A has six questions out of which only five are to be answered. All the questions are descriptive type. Each question in this section is of 7 marks.
2. Section B has two questions out of which only one is to be answered. The question is descriptive type. The question in this section is of 15 marks.
Section A x 7 35 marks]
Q1. Write short note on categories of project.
Q2. Why do we need a Project manager for any project
Q3. Describe various kinds of estimates that can be prepared for bridge project.
Q4. A project that needs investment of Rs2 Cr gives return of Rs50 Lacs every year for four years. Find NPV (Net present value) and BCR (Benefit cost ratio) for the project.
Q5. Differentiate between pre-project activities and advance actions with help of examples.
Q6. Why is acceptance of a project by local bodies is critical for success of the project
Section B x 15 15 marks]
Q1 The duration of each is given in actual work-days. The project commences on Wednesday, November 15, with five work days a week. Draw the bar chart with horizontal scale denoting calendar dates.
Activity 1 8 days
Activity 2 4 days
Activity 3 7 days
Activity 4 9 days
Activity 5 3 days
Activity 6 3 days
Activity 7 14 days
2
Activity 8 17 days
Activities 1 and 2 can occur concurrently. Activity 3 can take place after Activity 2 is completed. Activities 6 and 3 can occur concurrently. Activity 8 can start 4 days after commencement of activity 6. Activity 7 should follow activity 5. Activity 5 can begin concurrently with activity 8. On what calendar date can we expect the project to be completed
OR
ABC Co had been doing excellent business in agricultural commodities since early 1950s. Company's balance sheet was growing and it felt need to deploy surplus funds being generated by the commodities business. Commodities market was not expanding and therefore company decided to launch product in fast moving consumer goods segment. In 1966 ABC Co made its first diversification in instant coffee business in pursuance of its perception that demand for a product in a given market was neither constant nor inherent. It was the availability of the product in the market place which stimulated demand. The company put its belief to test in the instant coffee market for which market survey had revealed that the national demand at that time was 200 tonnes per year. A limited sample testing of the product in market confirmed their views regarding the market. In the hindsight their belief turned out to be true as by the year 1982 the company's production for instant coffee-chicory blend was 2600 tonnes per year and the demand for the product was higher than the total supply in the market.
The company appointed Mr Vaidyanathan Director Finance at ABC as in-charge of the coffee project in the year 1964. As per the available data the main coffee producing states in India were Karnataka, Tamilnadu and Kerala. Karnataka was producing almost 65% of the total production of coffee beans. Further, the consumption of coffee was also higher in southern states of India. Local farmer cooperatives were also active in Karnataka. Mr Vaidyanathan suggested putting up of the manufacturing Unit at Hosur, a border district of Tamilnadu, touching Karnataka and about 35Km from Bangalore. The tentative land requirement for the project was 20 acres. Information gathered from market inferred that private land could be easily acquired at Hosur.
Mr Vaidyanathan appointed XYZ Co from Denmark as EPC contractor for the project. XYZ had a good track record of putting up similar plants in South Africa. Their scope of work included engineering design, construction of plant, procurement of all equipments, installation and commissioning of the plant. ABC also entered into an agreement with an Irish company for the transfer of technology.
The project outlay as per the feasibility report was Rs150 million. The project proposal was submitted to the Tamilnadu state Government industries department and local Government
3
at Hosur. Mr Vaidyanathan proposed to raise the funds through a mix of equity and debt. The equity was contributed through internal reserves and the debt was funded by banks at very attractive rates. The construction work for the plant was started in 1965 and the production date was decided as 1st of June 1966. However due to delay in shipment of the machinery from Denmark, the production finally started on 1st October 1966. ABC issue a legal notice to XYZ for the delay in commissioning of plant and also to compensate for the loss of revenue due to delay in start of production. However, in absence of enabling tender conditions, the claim could not be sustained. As per the terms of contract Danish engineers stayed back for training of staff for a period of six months after the commissioning of plant. They also handed over all drawings and manuals on commissioning of the plant. The language used in all documents was Danish.
The company claimed that its sales in instant coffee had overtaken the sales of the market leader by third year of the operations in 1969. In phase-2 of the project ABC expanded its production capacity from 500 tonnes to 1500 tonnes by the year 1974.
Q1. What is the category of the project? Justify with help of data given above.
Q2. Describe various phases of the project from the description above. Logical assumptions may be made regarding finer details of the phases.
Q3. A major work in the project was outsourced to XYZ. List out the problems that may arise due to this and what special care needs to be taken by the Project Manager to ensure achievement of project objectives