UNIVERSITY OF BOLTON SCHOOL OF ENGINEERING. MSc CONSTRUCTION PROJECT MANAGEMENT SEMESTER ONE EXAMINATION 2015/2016 PROJECT MANAGEMENT
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1 TW74 UNIVERSITY OF BOLTON SCHOOL OF ENGINEERING MSc CONSTRUCTION PROJECT MANAGEMENT SEMESTER ONE EXAMINATION 2015/2016 PROJECT MANAGEMENT MODULE NO: CPM7002 Date: Monday 11 th January 2016 Time: 14:00 17:00 INSTRUCTIONS TO CANDIDATES: There are SIX questions. Answer ANY FOUR questions. All questions carry equal marks. Useful formulae and annuity tables are attached All working must be shown. A numerical solution to a question obtained by programming an electronic calculator will not be accepted.
2 School of Engineering MSc Construction Project Management Semester 1 Examination 2015/2016 Project Management Module No: CPM7002 Question One Page 2 of 5 The project manager has single point responsibility and is the individual responsible for delivering the project. Discuss this statement in light of the roles and responsibilities of the project manager, and the skills and attributes required to be an effective project manager. Total 25 marks Question Two Critically discuss the steps involved in building high performance project teams. Question Three Total 25 marks (a) Define the term value management and discuss the reasons for its implementation in projects and its main benefits (10 marks) (b) Discuss the six main steps of value engineering, and the main tasks and outcomes of each stage. (15 marks) Question Four Total 25 Marks (a) Explain the process of Project Risk Management and how each stage of risk analysis and risk response could be conducted including the techniques/tools used in each stage. (15 marks) (b) Define the term contingency planning and explain its importance in the project risk management process. Give examples of contingency planning for risk in project cost. (10 marks) Total 25 Marks Please turn the page
3 School of Engineering MSc Construction Project Management Semester 1 Examination 2015/2016 Project Management Module No: CPM7002 Question Five Page 3 of 5 A construction company decided to diversify its construction activities to improve prospect of winning works in drainage and earthwork areas. It considers investing heavily in new equipment and machinery to meet the expected work. The board of directors considers three types of plants (A, B and C) for investment: Each of plant A, B and C requires an initial investment of 110,000, 100,000, and 210,000, respectively. In return, the company is expected to receive annual payments from operation of each item of plant as detailed in Table Q5. There is no scrap value for all plant items at the end of the investment period and the cost of capital finance is 16%. Appraise the three investments using the following methods: (i) (ii) (iii) The Payback Period (PBP) The Accounting Rate of Return (ARR) The Net Present Value (NPV) Explain how you would advise the company. Year Table Q5 Investment Plant A B C 0-110, , , ,000 70, ,000 30,000 70, ,000 30,000 70, ,000 30,000 70, ,000 30,000 35, ,000 30,000 35,000 Total 25 marks Please turn the page
4 School of Engineering MSc Construction Project Management Semester 1 Examination 2015/2016 Project Management Module No: CPM7002 Page 4 of 5 Question Six (a) Discuss the importance of investment appraisal for projects and explain the main difference between the conventional and discounted cashflow methods used. (10 marks) (b) Critically discuss the challenges which could be faced when applying value management processes in the construction industry. (15 marks) Total 25 marks END OF QUESTIONS
5 School of Engineering MSc Construction Project Management Semester 1 Examination 2015/2016 Project Management Module No: CPM7002 Page 5 of 5 Useful Formulae: n (1) NPV = i CF i xdcf i where, NPV = Net present value CF i = Cashflow at end of year i DCF i = Discount cashflow factor for year i and interest rate, r, given as = n = Number of years (2) ARR = where, Average Annual Profit Initial Investment ARR = Accounting Rate of Return Average Annual Profit = n i CF i x100 Total Depreciation as number of years Initial Investment = Initial cost of the project at year zero. n 1 (1+r) i, with CF i as cashflow in year i and n
6 Table A-1 Future Value Interest Factors for One Pound Compounded at k Percent for n Years: FVIF k,n = (1 + k) n Year 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 20% 24% 25% 30% * * * * * * * * * * * * * * * * *
7 Table A-2 Future Value Interest Factors for a One Pound Annuity Compounded at k Percent for n Years: FVIFA k,n = [(1 + k) n - 1 ] / k Year 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 20% 24% 25% 30% * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
8 Table A-3 Present Value Interest Factors for One Pound Discounted at k Percent for n Years: PVIF k,n = 1 / (1 + k) n Year 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 20% 24% 25% 30% * * * * * * * * * * * * *
9 Table A-4 Present Value Interest Factors for a One Pound Annuity Discounted at k Percent for n Years: PVIFA = [1-1/(1 + k) n ] / k Year 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 20% 24% 25% 30%
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