56901 Project Management May 2019 Question Paper and Answer Keys.pdf

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1. 56901 Project Management May 2019 Question Paper and
Answer Keys
Project Management (University of Mumbai)
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56901 Project Management May 2019 Question Paper and
Answer Keys
Project Management (University of Mumbai)
Scan to open on Studocu
Studocu is not sponsored or endorsed by any college or university
Downloaded by Drishti Desai ([email protected])
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2. EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
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67654 Page 1 of 5

Time: 3 Hours Max. Marks: 60

N.B.: 1. Q 1 is Compulsory and carries 20 marks.
2. Attempt any four questions from the remaining six questions. All questions carry
equal marks (10 marks each).
3. Calculators are allowed to be used.
4. Specify the question number and the sub-question number clearly that you attempt.
5. Figures to the right indicate marks.

PVs of Re. 1 at various discount rates are as follows:
Year 1 2 3 4 5 6 7 8 9 10
PVF @ 5% 0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.645 0.614
PVF @ 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386
PVF @ 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322
PVF @ 13% 0.885 0.783 0.693 0.613 0.543 0.480 0.425 0.376 0.333 0.295
PVF @15% .870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.294 0.247
PVF @ 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162

Q 1. Attempt ALL sub-questions from the following
a) The time & cost estimates and precedence relationship of various activities
constituting a project are given in the table below:
Activity
Immediate
Predecessor
Time (Months) Normal
Cost (Rs. ‘00) Normal Crash
A --- 4 3 600
B --- 6 4 1,500
C --- 2 1 380
D A 5 3 1,500
E C 2 2 1,000
F A 7 5 1,150
G D , E , B 4 2 1,000
The increments in the cost after crashing various activities are as shown in table
below:

Activity A B C D E F G
Increment in cost (Rs. ‘00) 300 1,000 220 1,000 0 600 1,400
Indirect cost varies as follows:

Months 15 14 13 12 11 10 9 8 7 6
Cost
(Rs.‘00)
6,000 5,000 4,000 2,500 1,750 1,000 750 500 350 250

i. Draw an arrow diagram for the given project and find critical path &
critical Time
ii. Determine the project duration which will result in minimum total
project cost.

10
Paper / Subject Code: 56901 / Project Management
EF73D3686A12B3777A2C06F08DF45468Downloaded by Drishti Desai ([email protected])
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67654 Page 2 of 5

b) An organization is considering 3 options for a project with the expected cash
flows for each option as follows:
Year Option-1 Option-2 Option-3
0 (5,00,000) (5,00,000) (5,00,000)
1 2,50,000 50,000 50,000
2 2,50,000 50,000 2,50,000
3 50,000 2,50,000 2,00,000
4 50,000 1,50,000 3,50,000
5 50,000 5,00,000 50,000
i. Rank the options based on pay-back period.
ii. Assuming the organization’s cost of capital as 10%, rank the options by NPV
method.

5
c) With a neat diagram Explain S-Curve in project management. 5



Q 2. Attempt any TWO sub-questions from the following
a) Write a short note on ‘Debt Service Coverage Ratio’ (DSCR). 5

b) Your company is considering two mutually exclusive projects A and B. Project A
involves an outlay of Rs. 100 million and will generate an expected cash inflow of
Rs. 25 million per year for 6 years. Project B calls for an outlay of Rs. 50 million
which will produce an expected cash inflow of Rs.13 million per year for 6 years.
The company’s cost of capital is 12%. Suggest with appropriate reasons your
choice of the project.
5

c) What is work schedule? What purpose does it serve? 5

Q 3. Attempt any TWO sub-question from the following
a) Following table represents data related to a project where the investment is Rs.
40,000.
Year 1 2 3 4 5
PBDIT 10,000 13,000 18,000 20,000 20,000
Depreciation 2,000 2,000 2,000 2,000 2,000
Interest 3,000 3,000 3,000 2,000 1,000
Principal Repayment ---- ---- ---- 10,000 10,000
Find out Debt Service Cover Ratio for each year, if the applicable tax rate is 30%.
5









b) Following table shows the actual demand of refrigerators of over a period of past
7 weeks:
Week 1 2 3 4 5 6 7
Demand 39 44 40 45 38 43 39
Using Exponential Smoothing Method (α=0.2), determine forecasted demand for
8
th
week. Also find MAD, MSE & MAPE. Assume Ft = At for first week.
5
c) With reference to exponential smoothing method of forecasting, discuss
“Smoothing Constant” & its significance in detail.
5




Paper / Subject Code: 56901 / Project Management
EF73D3686A12B3777A2C06F08DF45468Downloaded by Drishti Desai ([email protected])
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EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
67654 Page 3 of 5

Q 4. Attempt either (a) or [(b) and (c)] from the following:
a) Compare projects A and B using the given data. Use NPV method of evaluation.
Project – A
Investment on the project : Rs. 10,00,000/-
Life of project : 5 years
Period of implementation : 1 year
Cost of Capital : 15%.
Year 1 2 3 4 5
Cash inflow 2,00,000 3,00,000 4,00,000 3,00,000 1,00,000

Project – B
Investment on the project : Rs. 10,00,000/-
Life of project : 5 years
Period of implementation : 1 year
Cost of Capital : 13%
Year 1 2 3 4 5
Cash inflow 3,00,000 4,00,000 4,00,000 3,00,000 2,00,000

10
















b) The demand of a product for past 12 months was observed as follows.

Month 1 2 3 4 5 6 7 8 9 10 11 12
Demand 280 288 266 295 302 310 303 328 309 315 320 332

Using 3 years moving average method, find out forecasted demand for 13
th
month.
Also find MAD, MSE & MAPE.
5





c) Explain in detail the significant difference between moving average method and
weighted average method.
5

Q 5. Attempt any ONE sub-question from the following
a) Initial investment in a project is Rs. 10,00,000. Its cost of capital is 10%. The cash
inflows generated by this project for next 5 years are as follows.

Year 1 2 3 4 5
Cash Inflows (Rs.) 6,00,000 3,00,000 2,00,000 5,00,000 5,00,000

Determine:
i. Payback period
ii. Post payback profitability
iii. Net present value
iv. Discounted payback period
v. Profitability index

10





b) The utility data for a network are given below:
Activity 1-2 1-3 2-3 2-4 3-4 3-5 4-5 4-8 5-6 5-7 6-7 6-8 7-8
Duration
(Months)
8 10 4 0 5 6 4 8 5 7 3 5 3

i. Draw network diagram and find Critical Path & Critical Time.
ii. Find EST, EFT, LST & LFT for each activity.
iii. Find Total Float, Free Float, Independent Float & Interference Float for all
activities.
10





Paper / Subject Code: 56901 / Project Management
EF73D3686A12B3777A2C06F08DF45468Downloaded by Drishti Desai ([email protected])
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5. EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
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EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
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EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
67654 Page 4 of 5


Q 6. Attempt any ONE sub-question from the following
a) The following data details are known about a project when the project review was
conducted.
Activity
% Completion Cost in Rs. Lakhs
Scheduled Actual Budgeted Actual
1 100 100 10.0 12.0
2 100 100 12.0 12.5
3 70 60 18.0 12.0
4 55 50 25.0 13.0
5 30 25 20.0 6.0
6 10 0 15.0 0
7 0 0 10.0 0
8 0 0 8.5 0
9 0 0 6.5 0
10 0 0 5.0 0
The project is expected to be completed in 35 days. Find
i. BCWS i.e., Budgeted cost for work scheduled
ii. BCWP i.e., Budgeted cost for work performed
iii. Cost Variance
iv. CPI
v. SPI
10
b) The details of various activities of a project are given below.
Activity Predecessor
O
t
m
t
p
t
A ---- 1 3 7
B ---- 1 2 4
C A 2 4 8
D A 2 5 11
E B 3 6 12
F C , D 3 7 15
G D , E 1 4 10
H F , G 2 6 14
i. Draw network diagram and find critical path & critical time.
ii. What will be the probability of completing the project in 20 days?
iii. Find Total Float, Free Float, Independent Float & Interference Float for all
activities.

10















Q 7. Write short notes on any TWO from the following
a) GANTT Chart 5
b) Project Life Cycle 5
c) Detailed Project Report 5









Paper / Subject Code: 56901 / Project Management
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6. EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468EF73D3686A12B3777A2C06F08DF45468
67654 Page 5 of 5

Areas under the Standard Normal Curve


Paper / Subject Code: 56901 / Project Management
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7. MMS (Choice Based) SEM-IV / Subject : Project Management (Answer-Key) / QP Code: 67654 (May 2019)
Page 1 of 16


MMS (Choice Based) – SEM IV (May 2019)
Subject : Project Management (Answer-Key) QP Code: 67654
Question - 1
1 a)
i) Network Diagram: (2 Marks)

Paths and durations:
A – F : 11 Months
A – D – G : 13 Months
B – G : 10 Months
C – E – G : 8 Months

Hence, Critical path : A – D – G (1 Mark)
Critical time = 4+5+4
= 13 Months

ii)
Normal project duration = 13 Months ( Path A – D – G)
Total Normal cost = (60,000+1,50,000+38,000+1,50,000+1,00,000+1,15,000+1,00,000) +
(4,00,000)
= Rs. 11,13,000
Cost Slope & Rank Table: (2 Marks)
Crash costs for various activities can be calculated as follows:
Crash Cost = Normal Cost + Increment in cost after crashing
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8. MMS (Choice Based) SEM-IV / Subject : Project Management (Answer-Key) / QP Code: 67654 (May 2019)
Page 2 of 16


Activity
A B C D E F G
Crash Cost
(Rs. ‘00)
900 2,500 600 2,500 1,000 1,750 2,400

Cost Slope = (Crash cost – Normal cost) / (Normal time – Crash time)
Maximum Crashable Limit= Normal time – Crash time
Activity
Maximum
crashable limit
(Months)
Cost Slope
(Rs.’00/Month)
Rank
A 1 300 2
B 2 500 3
C 1 220 1
D 2 500 3
E 0 --- ---
F 2 300 2
G 2 700 4

Crashing table (5 Marks)
Activity
Crashing
Paths & Months Cost (Rs. '00)
A - F A - D - G B – G C - E - G Direct Indirect Total
Before
crashing
11 13 10 8 7,130 4,000 1,113
1st Crashing
(Crashing A
by 1 day)
11-1=10 13-1=12 10 8
7,130+(300*1)=
7,430
2,500 9,930
2nd Crashing
(Crashing D
by 1 day)
10 12-1=11 10 8
7,430+(050*1)=
7,930
1,750 9,680
3rd Crashing
(Crashing D
by 1 day)
10 11-1=10 10 8
7,930+(500*1)=
8,430
1,000 9,430
4th Crashing
(Crashing G
by 1 day & F
by 1 day)
10-1=9 10-1=9 10-1 =9 8-1=7
8,430+(700*1)+
(300*1)=9,430
750 10,180
5th Crashing
(Crashing G
by 1 day & F
by 1 day)
9-1=8 9-1=8 9-1 =8 7-1=6
9,430+(700*1)+
(300*1)=10,430
500 10,930
The optimum project duration will be 10 Months with a minimum total project cost of
Rs. 9,43,000
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9. MMS (Choice Based) SEM-IV / Subject : Project Management (Answer-Key) / QP Code: 67654 (May 2019)
Page 3 of 16


1 b)
i) Ranking of options based on Payback Period (2 Marks)
Cumulative returns for the 3 options are as shown in table below:
Year Option-1 Cumulative Option-2 Cumulative Option-3 Cumulative
0 (5,00,000) --- (5,00,000) --- (5,00,000) ---
1 2,50,000 2,50,000 50,000 50,000 50,000 50,000
2 2,50,000 5,00,000 50,000 1,00,000 2,50,000 3,00,000
3 50,000 5,50,000 2,50,000 3,50,000 2,00,000 5,00,000
4 50,000 6,00,000 1,50,000 5,00,000 3,50,000 8,50,000
5 50,000 6,50,000 5,00,000 10,00,000 50,000 9,00,000

From above table, ranking of options will be – 1) Option-1, 2) Option-3, 3) Option-2

i) Ranking of options based on NPV (3 Marks)
NPV calculations for 10% discount rate are as follows:
Year Option-1 Option-2 Option-3
PV
Factor
Present
Value
(Option-1)
Present
Value
(Option-1)
Present
Value
(Option-1)
0 (5,00,000) (5,00,000) (5,00,000) -5,00,000 -5,00,000 -5,00,000
1 2,50,000 50,000 50,000 0.909 2,27,250 45,450 45,450
2 2,50,000 50,000 2,50,000 0.826 2,06,500 41,300 2,06,500
3 50,000 2,50,000 2,00,000 0.751 37,550 1,87,750 1,50,200
4 50,000 1,50,000 3,50,000 0.683 34,150 1,02,450 2,39,050
5 50,000 5,00,000 50,000 0.621 31,050 3,10,500 31,050

NPV
= 36,500 1,87,450 1,72,250

From above table, ranking of options will be – 1) Option-2, 2) Option-3, 3) Option-1

1 c) ‘S’ Curve: (5 Marks)
 „S‟ curve is graphical representation of “Cumulative project cost” (y-axis) against “Time
schedule‟ (x-axis)
 It is also plotted “Cumulative man hours” (y-axis) against “Time schedule” (x-axis)
 This plot takes shape of English alphabet „S‟, so it is known as „S‟ curve.
 It is plotted over the phases of project life cycle.
 Shape is always travelling in upward direction, as cost is cumulative.
 Application in project management to asses / estimate: time, baseline, cost, time etc.

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10. MMS (Choice Based) SEM-IV / Subject : Project Management (Answer-Key) / QP Code: 67654 (May 2019)
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Question - 2
2 a) Debt Service Coverage Ratio (DSCR) (5 Marks)
 Ability to service debt from project cash inflows is an important criteria for deciding the
project viability
 The ratio which indicates this viability is known DSCR
 DSCR is the primary measure to determine if the project will be able to sustain its debt
based on cash flow
 DSCR greater than 1 indicates that a project / an organization generates sufficient cash
flows to pay its debt obligations
 DSCR less than 1 indicates that there is not enough cash flow to cover loan repayments
 DSCR = (NPAT + Depreciation + Interest) / (Principal repayment + Interest)
2 b) Project choice based on NPV (4 Marks)
Period
PV
Factor
@ 12%
Cash Flow Rs.
Million (Project
A)
Cash Flow Rs.
Million (Project
B)
Present Value
for Cash Flow
(Project A)
Present Value
for Cash Flow
(Project b)
0 -100 -50 -100 -50
1 0.893 25 13 22.325 11.609
2 0.797 25 13 19.925 10.361
3 0.712 25 13 17.8 9.256
4 0.636 25 13 15.9 8.268
5 0.567 25 13 14.175 7.371
6 0.507 25 13 12.675 6.591


NPV (Rs. Million) =
2.8 3.456

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Based on above NPV calculations, Project-B can be selected, as its NPV is (1 Mark)
higher than Project-A.


2 c) Work Schedule (5 Marks)
 Work schedule in project management refers to listing of project‟s activities based on a
time-line
 A schedule is commonly used in project planning
 Various activities are scheduled in a logical order keeping in mind the estimated duration
of those activities
 GANTT charts and network diagrams are widely used in work scheduling to graphically
represent various activities along with their durations
 The project schedule is the tool that communicates what work needs to be performed,
which resources of the organization will perform the work and the timeframes in which
that work needs to be performed
 Purpose:
 Work schedule provides the project team with a tool to evaluate
alternative execution strategies to meet business objectives (e.g., reduce
duration or costs) by adjusting resources and logic.
 The schedule can also be a cost control tool for the project team.


Question - 3
3 a) (2.5 Marks)
Particulars Year-1 Year-2 Year-3 Year-4 Year-5
NPBDIT 10,000 13,000 18,000 20,000 20,000
Less : Depreciation 2,000 2,000 2,000 2,000 2,000
NPBIT 8,000 11,000 16,000 18,000 18,000
Less : Interest 3,000 3,000 3,000 2,000 1,000
NPBT 5,000 8,000 13,000 16,000 17,000
Less: Tax (@ 30%) 1,500 2,400 3,900 4,800 5,100
NPAT 3,500 5,600 9,100 11,200 11,900

DSCR = (NPAT + Depreciation + Interest) / (Principal repayment + Interest)
DSCRYear-1 = (3,500 + 2,000 + 3,000) / (0 + 3,000) = 2.83 (0.5 Mark)
DSCRYear-2 = (5,600 + 2,000 + 3,000) / (0 + 3,000) = 3.53 (0.5 Mark)
DSCRYear-3 = (9,100 + 2,000 + 3,000) / (0 + 3,000) = 4.7 (0.5 Mark)
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DSCRYear-4 = (11,200 + 2,000 + 2,000) / (10,000 + 2,000) = 1.27 (0.5 Mark)
DSCRYear-5 = (11,900 + 2,000 + 1,000) / (10,000 + 1,000) = 1.35 (0.5 Mark)

3 b)

F t+1 = α At + (1 - α) Ft

Given : α=0.2 and At = Ft for first month (i.e. Ft for first week = 39)

Week
Sales
(At)
Ft Error
Absolute
Error
(Error)
2
% Error
1 39 39
2 44 39 5 5 25 11.36
3 40 40 0 0 0 0.00
4 45 40 5 5 25 11.11
5 38 41 -3 3 9 7.89
6 43 40.4 2.6 2.6 6.76 6.05
7 39 40.92 -1.92 1.92 3.69 4.92
8 40.54

(2 Marks) Total 17.52 69.45 41.34



MAD =
17.52/6
MSE =
69.45/6
MAPE =
41.34/6



2.92 11.57 6.90
(1 Mark) (1 Mark) (1 Mark)
From above table,
Forecasted demand for 8
th
week is 40.54 Units
MAD = 2.92 MSE = 11.57 MAPE = 6.90

3 c) Smoothing Constant (5 Marks)
 A smoothing constant is a variable used in time series analysis based on exponential
smoothing
 This constant determines how the historical time series values are weighted
 The higher the smoothing constant, the greater weight assigned to the values from the
latest period and as a consequence, the greater possibility for quick reaction to systematic
changes in the time series
 The smoothing constant must have a value between 0 and 1
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 When using forecast methods where the base forecast is calculated using exponential
smoothing method, a new smoothing constant is automatically calculated for each period
 Entities like sales, demand etc. can be forecasted using smoothing constant in exponential
smoothing method by following formula –
F t+1 = α At + (1 - α) Ft

Where, α is smoothing constant
At is actual observed values
Ft is forecasted values


Question - 4
4 a)
(Note: Please note that students can solve this sum by two different methods)
METHOD-1
PV of cash inflows for Project-A (4 Marks)
= 2,00,000 + 3,00,000 + 4,00,000 + 3,00,000 + 1,00,000
(1+0.15)
1
(1+0.15)
2
(1+0.15)
3
(1+0.15)
4
(1+0.15)
5

= 2,00,000 + 3,00,000 + 4,00,000 + 3,00,000 + 1,00,000
1.15

1.32

1.52

1.75

2.01


= 8,85,523.5

Therefore, NPV of Project-A = 8,85,523.5 – 10,00,000
= Rs. – 1,14,476.5

PV of cash inflows for Project-B (4 Marks)
= 3,00,000 + 4,00,000 + 4,00,000 + 3,00,000 + 2,00,000
(1+0.13)
1
(1+0.13)
2
(1+0.13)
3
(1+0.13)
4
(1+0.13)
5

= 2,00,000 + 3,00,000 + 4,00,000 + 3,00,000 + 1,00,000
1.13

1.28

1.44

1.63

1.84


= 1,48,509.24

Therefore, NPV of Project-A = 1,48,509.24 – 10,00,000
= Rs. 1,48,509.24

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Since life of the project (i.e. 5 years) & period of implementation (i.e. 1 year), both the projects
can be compared using NPV. Based on above NPV calculations, Project-A can be selected by the
organization, as its NPV is higher than Project-B. The organization should not go for Project-A,
as its NPV is negative. (2 Marks)


METHOD-2
(8 Marks)
Period
PV
Factor
@ 15%
Cash Flow
Rs. (Project
A)
Present
Value of
Cash Flow
(Project A)
PV Factor
@ 13%
Cash Flow
Rs. (Project
B)
Present
Value of
Cash Flow
(Project B)
0 -10,00,000 -10,00,000 -10,00,000 -10,00,000
1 0.87 2,00,000 1,74,000 0.885 3,00,000 2,65,500
2 0.756 3,00,000 2,26,800 0.783 4,00,000 3,13,200
3 0.658 4,00,000 2,63,200 0.693 4,00,000 2,77,200
4 0.572 3,00,000 1,71,600 0.613 3,00,000 1,83,900
5 0.497 1,00,000 49,700 0.543 2,00,000 1,08,600

NPV (Rs.) = -1,14,700

NPV (Rs.) = 1,48,400

Since life of the project (i.e. 5 years) & period of implementation (i.e. 1 year), both the projects
can be compared using NPV. Based on above NPV calculations, Project-A can be selected by the
organization, as its NPV is higher than Project-B. The organization should not go for Project-A,
as its NPV is negative. (2 Marks)

4 b)
Month Demand
3 Years
MA
Error
Absolute
Error
(Error)
2
% Error
1 280
2 288
3 266
4 295 278.00 17.00 17.00 289.00 5.76
5 302 283.00 19.00 19.00 361.00 6.29
6 310 287.67 22.33 22.33 498.78 7.20
7 303 302.33 0.67 0.67 0.44 0.22
8 328 305.00 23.00 23.00 529.00 7.01
9 309 313.67 -4.67 4.67 21.78 1.51
10 315 313.33 1.67 1.67 2.78 0.53
11 320 317.33 2.67 2.67 7.11 0.83
12 332 314.67 17.33 17.33 300.44 5.22
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15. MMS (Choice Based) SEM-IV / Subject : Project Management (Answer-Key) / QP Code: 67654 (May 2019)
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13 322.33 108.33 2010.33 34.58

(2 Marks)

MAD =
108.33 / 9
MSE =
2010.33 / 9
MAPE =
34.58 / 9

12.04 223.37 3.84

(1 Mark) (1 Mark) (1 Mark)

From above table,
Forecasted demand for 13
th
month is 322.33 Units
MAD = 12.04 MSE = 223.37 MAPE = 3.84

4 c) Difference between ‘Moving Average’ & ‘Weighted Moving Average’ method
(5 Marks)
 Moving average or weighted average are the methods use in forecasting using past trend
 Simple moving average method gives equal weighs to past performance values
 Whereas weighted moving average method gives more weight to immediate past
performance, then reduces the weightage for subsequent past observations
 For example: 3 years moving average method gives equal weightage i.e. 0.33 or 33.33%
to all past 3 observations. Whereas, weighted moving average gives, say 0.5 or 50%
weight to t-1 period, 0.3 or 30% to t-2 and 0.2 or 20% weightage to t-2 period
 This gives more realistic forecast based on past performance
 So forecasting using weighted moving average is more realistic as compared to simple
moving average method

Question - 5
5 a)
i. (2 Marks)
Year
Cash inflows
(Rs.)
Cumulative cash
inflows (Rs.)
1 6,00,000 6,00,000
2 3,00,000 9,00,000
3 2,00,000 11,00,000
4 5,00,000 16,00,000
5 5,00,000 21,00,000

From above table, payback is after 2
nd
year (i.e. between 2
nd
& 3
rd
year)

Payback Period =
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= 2 + (Initial investment – Cumulative cash inflow for 2
nd
year) / (Cash inflow for 3
rd
year)
= 2 + (10,00,000 – 9,00,000) / (2,00,000)
= 2 + 0.5
= 2.5 Years

ii. (2 Marks)
Post payback profitability = Total cash inflows – Initial investment
= 21,00,000 – 10,00,000
= Rs. 11,00,000

iii. NPV (2 Marks)
Year
PV
factor @
10%
Cash flows
(Rs.)
Presnt Value of cash
flows (Rs.)
0 -10,00,000 -10,00,000
1 0.909 6,00,000 5,45,400
2 0.826 3,00,000 2,47,800
3 0.751 2,00,000 1,50,200
4 0.683 5,00,000 3,41,500
5 0.621 5,00,000 3,10,500

NPV = 5,95,400

iv. Discounted payback period (2 Marks)
Year
PV
factor @
10%
Cash flows
(Rs.)
Presnt Value of cash
flows (Rs.)
Cumulative PV of cash
inflows (Rs.)
1 0.909 6,00,000 5,45,400 5,45,400
2 0.826 3,00,000 2,47,800 7,93,200
3 0.751 2,00,000 1,50,200 9,43,400
4 0.683 5,00,000 3,41,500 12,84,900
5 0.621 5,00,000 3,10,500 15,95,400

From above table, payback is after 3
rd
year (i.e. between 3
rd
& 4
th
year)

Discounted Payback Period =
3 + (Initial investment – Cumulative PV of cash inflow for 3
rd
year) / (PV of cash inflow for 4
th

year)
= 3 + (10,00,000 – 9,43,400) / (3,41,500)
= 3 + 0.166
= 3.166 Years
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v. (2 Marks)
Profitability Index = (Total PV of cash inflows) / (PV of cash outflows)
= (15,95,400) / (10,00,000)
= 1.595

5 b)
i. Network diagram (2 Marks)





Critical path : 1-2-3-4-5-6-7-8 (1 Mark)
Critical time = 8+4+5+4+5+3+3
= 32 Months (1 Mark)
ii. EST, EFT, LST & LFT (3 Marks)
iii. Total float, Free float, Independent float & Interference float (3 Marks)

Activity
Duration
(Months)
E
S
E
F
L
S
L
F
Head
Slack
Tail
Slack
Total
Float
Free
Float
Independent
Float
Interference
Float
1--2 8 0 8 0 8 0 0 0 0 0 0
1--3 10 0 10 2 12 0 0 2 2 2 0
2--3 4 8 12 8 12 0 0 0 0 0 0
2--4 0 8 8 17 17 0 0 9 9 9 0
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3--4 5 12 17 12 17 0 0 0 0 0 0
3--5 6 12 18 15 21 0 0 3 3 3 0
4--5 4 17 21 17 21 0 0 0 0 0 0
4--8 8 17 25 24 32 0 0 7 7 7 0
5--6 5 21 26 21 26 0 0 0 0 0 0
5--7 7 21 28 22 29 0 0 1 1 1 0
6--7 3 26 29 26 29 0 0 0 0 0 0
6--8 5 26 31 27 32 0 0 1 1 1 0
7--8 3 29 32 29 32 0 0 0 0 0 0


Question - 6
6 a)
Activity
% Completion Cost (Rs. Lakhs)
BCWS BCWP
Cost
Variance Scheduled Actual Budgeted Actual
(1) (2) (3) (4) (1X3) / 100 (2X3) / 100 BCWP-(4)
1 100 100 10 12 10 10 -2
2 100 100 12 12.5 12 12 -0.5
3 70 60 18 12 12.6 10.8 -1.2
4 55 50 25 13 13.75 12.5 -0.5
5 30 25 20 6 6 5 -1
6 10 0 15 0 1.5 0 0
7 0 0 10 0 0 0 0
8 0 0 8.5 0 0 0 0
9 0 0 6.5 0 0 0 0
10 0 0 5 0 0 0 0
TOTAL = 130 55.5 55.85 50.3 -5.2

From above table,
i. BCWS = Rs. 55.85 Lakhs (2 Marks)

ii. BCWP = Rs. 50.3 Lakhs (2 marks)

iii. Cost Variance = BCWP - ACWP
= 50.3 - 55.5
= Rs. – 5.2 (2 Marks)

iv. CPI = BCWP / ACWP
= 50.3 / 55.5
= 0.91 (2 Marks)
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v. SPI = BCWP / BCWS
= 50.3 / 55.85
= 0.9 (2 Marks)

6 b)
i. Network diagram (2 Marks)



Critical path : A-D-Du-F-H
Critical time = 3.33+5.5+0+7.676.67
= 23.17 Days (2 Mark)

ii. Probability calculaions (2 Marks)
Z = (Expected completion time – Critical time) / σCritical path
σCritical path = √ = 3.354
So, Z = (20-23.17) / 3.354
= -0.95
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20. MMS (Choice Based) SEM-IV / Subject : Project Management (Answer-Key) / QP Code: 67654 (May 2019)
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P(Z=0.95) = 0.3289 (Table value)


So, P(20 weeks) = 0.5 - 0.3289
= 0.1711
= 17.11 %

iii. Calculations of Floats (4 Marks)




Question - 7
7 a) GANTT Chart (5 Marks)
Activity Jan-18 Feb-18 Mar-18 Apr-18 May-18
A
B
C
D
E
Activity
Teq
(Days)
σ2ES EF LS LF
Head
Slack
Tail
Slack
Total
Float
Free
Float
Independ
ent Float
Interfere
nce Float
A 3.33 1.00 0 3.33 0.00 3.33 0 0 0.00 0.00 0.00 0.00
B 2.17 0.25 0 2.17 0.16 2.33
0.160 0.16 0.00 0.00 0.00
C 4.33 1.00 3.33 7.66 4.50 8.83 0 0 1.17 1.17 1.17 0.00
D 5.50 2.25 3.33 8.83 3.33 8.83 0 0 0.00 0.00 0.00 0.00
E 6.50 2.25 2.17 8.67 2.33 8.83 0
0.160.16 0.16 0.00 0.00
F7.67 4.00 8.83 16.50 8.83 16.50 0 0 0.00 0.00 0.00 0.00
G 4.50 2.25 8.83 13.33 12.00 16.50 0 0 3.17 3.17 3.17 0.00
H 6.67 4.00 16.5 23.17 16.50 23.17 0 0 0.00 0.00 0.00 0.00
Dummy 0 0.00 8.83 8.83 8.83 8.83 0 0 0.00 0.00 0.00 0.00
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21. MMS (Choice Based) SEM-IV / Subject : Project Management (Answer-Key) / QP Code: 67654 (May 2019)
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 Pioneer – Henry L Gantt
 Widely used to represent activities of a project over a period of time in a graphical way
 GANTT Charts allows you to see at a glance:
 What are the various activities of a project
 Beginning & End of each activity
 Duration of an activity
 Overlapping of activities and their duration of overlapping
 Start and finish point / dates of entire project



7 b) Project Life Cycle: Initiation Phase (Inception) (5 Marks)
Planning Phase (Elaboration)
Implementation Phase (Execution / Construction)
Closing Phase (Transition)

7 c) Detailed Project Report: (5 Marks)
 General information about the project
 Project promoters & their previous experience
 Details of the projects which should comprise:
 Product Information
 Raw material details
 Plant capacity
 Manufacturing technology
 Management team and consultant
 Details of land, environmental clearances, buildings, plant etc
 Details of utilities like – water, power etc
 Details of infrastructure – like roads, connectivity etc
 Effluent treatment arrangements
 Project implementation schedule
 Project financials & calculations of returns, profitability, estimated cash flows etc
 Means of financing
 Working capital requirement & its arrangement
 Commercial details relating to marketing, distribution etc
 Mode and terms of loan repayment
 Government approvals
 Details of securities that can be offered to the financial institutions

***End of Answer-Key***
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