Notes for guidance
Past examination questions.
For the Degree of Master of Business Administration
Notes for Guidance
The written examination.
The written examination will cover all aspects of project management included in the
? The nature of project management - objectives, characteristics, problems.
? Project appraisal including financial viability, risk analysis and strategic
? Network analysis based techniques for activity scheduling, resource allocation,
time and cost control.
? Information and decision support systems for project planning and control.
? Project organisation, team work and leadership.
To pass the examination you should be able to demonstrate that you have at least
understand all the concepts and techniques described in the Study Guide and are able to
answer questions of the type given at the end of each chapter.
For a higher level of assessment, your answers should indicate that your reading has not
been confined to the Study Guide but has included relevant chapters of the prescribed
text book and other references.
For the highest grade you will need to be able to write generally about all aspect of
project management included in the syllabus and demonstrate that you have thought
critically about the scope and limitations for project management techniques - if possible
by reference to your own experience.
Project Management Tutorial Questions
1. Nature of Project Management
1. Define what is meant by a project and explain why there has been an explosion of
interest in project management techniques over the last decade.
2 a) Describe those management objectives and operational characteristics which are
common to all large scale projects.
b) Compare and contrast the management problems likely to arise in
(i) the development and launch of a new product or service
(ii) the completion of a large scale construction project
(iii) the design and implementation of a computer based management
2. Project Appraisal
3. A company needs to decide between two alternative capital projects. The
company could invest ?600,000 in Advanced Manufacturing Technology and increase
its annual net cash flows over the next five years as shown .
Year 1 2 3 4 5
Net Cash Flow ?000’s 100 300 300 300 100
Alternatively, the company could invest ?300,000 in a computer based
Management Information System which will increase the net cash flow over four years as
Year 1 2 3 4
Net Cash Flow ?000’s 100 200 200 100
The company cost of capital is estimated to be 10 per cent.
a) Superimpose graphs of NPV against cost of capital (10%, 20%, 40%) for each
b) Estimate the Net Present Value and Internal Rate of Return for each project.
c) Use the results as a basis for discussing the relative advantages and disadvantages
of NPV and IRR as investment criteria.
4 a) The development of a potential new service in the financial sector has cost $200,000. Market research costing a further $50,000 has indicated that to launch the new service would require an immediate investment of $100,000 in advertising. It is forecasted that the project would then generate an increase in company revenue of $150,000 and an increase in company expenditure of $100,000 in each of the next five years. The company’s average cost of capital is estimated to be 15 per cent per annum.
Explain which of the above costs are relevant to the decision as to whether or not to proceed with this project. Analyse and discuss the economic viability of the project.
b) Describe how sensitivity analysis and computer simulation could be used to assess the risks arising from forecasting errors.
5. MSS Enterprises produces and distributes natural gas. It owns the rights to develop a particular site but could sell the rights now to another company for ?6m. Based on what is already known about the site, company geologists estimate that there is a 50 per cent chance that gas is present.
A consultancy company would do a seismic survey to establish for certain whether or not gas is present for a fee of ?2m.
To drill the site would cost ?3m. If gas is present, it is estimated that the Net Present Value of revenues from sales would be ?20m based on past experience with similar sites.
a) Construct a decision tree model to determine whether the company should sell the rights, drill immediately or commission a survey first.
b) Explain the methodology and in particular the concepts of “expected value” and
c) Explain the circumstances under which the “rational” decision would not
necessarily be the correct decision for this company.
6. It has been estimated that the installation of advanced manufacturing technology costing $1m over the next year could save the company $400,000 in reduced manufacturing costs in each year of the subsequent five year life span of the technology. The estimated company cost of capital is 15% per annum.
However, some concerns have been expressed that the estimated cost reduction, life span and cost of capital may be optimistic.
On the other hand, it has been observed that the project could reduce manufacturing lead times and work in progress whilst improving manufacturing flexibility, product quality and company image.
a) Use this example to illustrate the basic techniques of capital project financial appraisal.
b) Describe how risk and strategic considerations might be taken into account.
7. Describe the scope and limitations for the use of discounted cash flow, decision
tree and simulation techniques when evaluating project proposals which are claimed to
be of strategic importance.
3. Planning and Control
8. An I.T. project has been broken down into the activities shown below. Durations
and manpower requirements have been estimated.
Activity Description Preceding Estimated Number
activity duration (wks) of staff
A Pilot survey - 2 1
B Analysis A 2 2
C Program development A 2 2
D Program testing C 1 2
E Data collection B 3 1
F Data collation E 1 3
G Run program D, F 1 2
H Results analysis G 2 1
I Draft report G 1 2
J Finish report H,I 1 2
a) Draw a network, determine the earliest completion time for the project, identify
the critical activities and estimate the total float on non-critical activities.
b) Draw a bar chart for the project in which each activity starts at its earliest
possible time. Re-schedule the start of activities so that the project can be completed on
time with a project team of no more than 3 staff (do not split activities or re-allocate staff
c) Describe how network analysis can be used to reduce the time and cost of
projects in general.
9. Assume that a Company decides to go ahead with the test launch of a new
product and that the activities involved are as follows :
Activity Normal Crash
Ref Prec Time Cost Time Cost
by wks $000 wks $000 Design product A - 8 10 6 14 Design packaging B - 4 4 3 6 Organise production C A 4 10 3 14
Obtain materials D A 2 2 2 2 Make trial batch E C,D 4 14 2 18 Obtain packaging F B 2 2 1 4 Select test area G - 2 2 2 2 Package trial batch H E,F 3 6 2 10 Distribute I H,G 3 4 2 6 Test market J I 12 2 12 2 Assess results K J 3 2 3 2
a) Construct a network model of the project and determine the least cost
schedule, total cost and duration assuming the net earnings from sales of the product are
likely to be $3000 per week,
b) After 12 weeks, it is reported that the product had been designed,
production organised, materials obtained and a trial batch produced but that no other
activity had started. Total recorded expenditure on the project is $55,000. Analyse
physical and financial progress.
c) Re-plan the project and write a short management report.
10. To what extent is successful large scale project management dependent on the use
of project management information and decision support systems ?
11. “Critics have described matrix organisation as being costly, cumbersome and
overburdening to manage, whilst proponents praise its efficiency and flexibility.”
Eric W Lawson, 1987 Discuss with particular reference to the effect that organisation structure has on project
12. Compare and contrast alternative forms of matrix management. Explain, with
examples, for what types of project or under what circumstances one form might be
preferable to another.
13. “Many of today’s projects require a degree of co-operation between individuals and a co-ordination of activities for which the traditional organisation
structures and management systems were not designed.”
Project Management, Meredith J., 1995
A Compare and contrast alternative ways in which multi-disciplinary projects of
minor importance might be accommodated in the traditional organisation structure.
B Explain the advantages of using Work Breakdown Structures as a basis for the
organisation, management and control of large scale projects of major importance.
5. Teamwork, Leadership
14. Describe the main reasons for project failure and the extent to which the personal
attributes of the project manager and team members could be factors.
15. Describe the role and essential attributes of a project manager.