PM0012 – PROJECT FINANCE AND BUDGETING

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ASSIGNMENT

DRIVE WINTER	2013
PROGRAM/SEMESTER	MBADS (SEM 3/SEM 5) MBAFLEX/ MBAN2 (SEM 3) PGDPMN (SEM 1)
SUBJECT CODE & NAME	PM0012 –  PROJECT FINANCE AND BUDGETING
BOOK ID	B1238
CREDITS	4
MARKS	60

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

1 Write short notes on:

Ø  Role of project sponsors

Answer : Role

·         The Project Sponsor is the individual (often a manager or executive) with overall accountability for the project.

·         The Project Sponsor is primarily concerned with ensuring that the project delivers the agreed business benefits.

·         The Project Sponsor acts as the representative of the organisation, and plays a vital leadership role through:

·         providing 'championship' for the project, selling and marketing the project throughout the organisation

·         providing business expertise and guidance to the Project Manager

·         acting as the link between the project, the business community and perhaps most importantly, management decision making groups

·         acting as an arbitrator and making decisions that may be beyond the authority of the Project Manager

·         acting as chairperson of the Steering Committee.

·         Project Sponsors Responsibilities

Typically the Project Sponsor will be responsible for:

·         ensuring that the business need is valid and correctly prioritised

·         ensuring that the project is properly launched

·         ensuring that the project remains a viable business proposition

·         ensuring changes to the project are properly managed

·         ensuring risks are managed

·         establishing the project organisation, roles and reporting structure

·         ensuring the project is under control

·         approving key project deliverables

·         initiating project reviews and supporting the process of review

·         resolving issues (typically competition for resources and priority clashes) that are beyond the control of the Project Manager

·         resolving conflict and removing obstacles to progress

·         overall quality of the project, both the methods used to develop it and the end product.

Ø  Importance of project budget

Answer : Cost Control

The foremost benefit to budgeting project tasks is the increased control and detail that the manager obtains when creating the budget. When managing the budget on an overall project level, the manager is unable to account for differences in resources needed between very different tasks.

Ø  Debt financing

Answer : Debt financing includes both secured and unsecured loans. Security involves a form of collateral as an assurance the loan will be repaid. If the debtor defaults on the loan, that collateral is forfeited to satisfy payment of the debt. Most lenders will ask for some sort of security on a loan. Few, if any, will lend you money based on your name or idea alone.

Here are some types of security you can offer a lender:

Ø  Financial feasibility of a project

Answer : Financial feasibility refers to a study conducted with regards to a project in order to determine if it is viable after careful assessment of its total costs and revenues. For a project to be considered feasible, if the revenue is more than the cost. Companies often conduct a financial feasibility before starting a project to determine if it is a good investment.

A financial feasibility study is

2 Describe the Engineering , Procurement Construction (EPC) contract.

Answer : Brief description of Engineering, Procurement and Construction

3 Explain the different risk assessment techniques in detail.

Answer : Risk-Analysis Techniques

It is important to keep in mind that when a company analyzes a potential project, it is forecasting potential not actual cash flows for a

4 Write short notes on:

Ø  Risk audit

Answer : Audit risk (also referred to as residual risk) refers to the risk that an auditor may issue unqualified report due to the auditor's failure to detect material misstatement either due to error or fraud. This risk is composed of inherent risk (IR), control risk (CR) and

Ø  Types of working capital

Answer : Working capital is broadly classified into two-permanent working capital nd variable working capital.

1.      Permanent Working Capital

There is always a minimum amount of working capital which is continuously required by the enterprise to carry

Ø  Types of BOOT projects

Answer : BOOT (build, own, operate, transfer) is a public-private partnership (PPP) project model in which a private organization conducts a large development project under contract to a public-sector partner, such as a government agency. A BOOT project is often seen as a way to develop a large public infrastructure project with private funding.

Here's how the BOOT model works: The public-sector partner contracts with a private developer - typically a large corporation or consortium of businesses with specific expertise - to design and implement a large project. The public-sector partner may provide limited funding or some other benefit (such as tax exempt status) but the private-sector partner assumes the risks associated with planning, constructing, operating and maintaining the project for a specified time period. During that time, the developer charges customers who use the infrastructure that's been built to realize a profit. At the end of the specified period, the private-sector partner transfers ownership to the funding organization, either freely or for an amount stipulated in the original contract. Such contracts are typically long-term and may extend to 40 or more years.

BOOT is sometimes known as BOT (build, own, transfer). Variations on the BOOT model include BOO (build, own, operate), BLT (build, lease, transfer) and BLOT (build, lease, operate, transfer).

Ø  issues in project insurance

 Answer : Project management is supposed to be about risk management. Identify the risks. Monitor them. Mitigate them. Insurance is a time-tested mitigation strategy. So why can’t I insure my projects?

Consider film production. It’s a creative

5 Explain the role played by engineering advisors in project finance.

Answer : It is increasingly important for lenders and borrowers alike to fully understand the risks to which they are exposing themselves in pipeline project financing. This article explores the role of the Independent Engineer (IE) in identifying and mitigating these risks and suggests how prospective investors are able to maximize the value of this role during all stages of the pipeline project financing process.

The role of the IE is one of risk identification

6 Explain the different types of management contracts.

Answer : A contract is an exchange of promises between two or more parties to do, or refrain from doing an act, which resulting contract is enforceable in a court of law.

 In the project or program context, contracts typically involve the exchange of money in return for goods or services.

Types of Contracts

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Send your semester & Specialization name to our mail id :

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Call us at : 08263069601

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