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Table of Figures

Figure 1- Gantt Chart for scope of work of Mechanical Engineering.............................................1


Figure 2- Gantt Chart for scope of work of Communication/IT.....................................................1
Figure 3- Figure 3 - Gantt Chart for scope of work of Electrical Engineering...............................2
Figure 4-AOA for EE scope of work...............................................................................................2
Figure 5- Gantt chart for Master Plan of the project....................................................................4
Figure 6: Cash flow diagram...........................................................................................................6

Introduction of the Project


The MAX Light Rail Project is planned to install a 21km light rail network within Perth to
provide high capacity service for the suburbs of the city. This document defines the overall scope
of the project through identifying the time management and financial management aspects of the
project. Time management is discussed through the AOA diagrams and Gantt charts. The ticket
price was determined in order to achieve the breakeven point in 50 years. The solvency,
profitability and liquidity of the project was determined through calculations which are
performed in the latter part of the report.
Executive summery
This report provides an analysis and evaluation of the current and prospective profitability,
liquidity and financial stability to reach the breakeven point of The MAX Light Rail Project.
Method of analysis include Gantt charts, AOA diagrams, and cash flow diagrams etc. All
calculation can be found in the appendices.

Task 1 Gantt Chart for Mechanical, IT and Electrical WBS

Figure 1- Gantt Chart for scope of work of Mechanical Engineering

Figure 2- Gantt Chart for scope of work of Communication/IT

Figure 3- Figure 3 - Gantt Chart for scope of work of Electrical Engineering

Task 2 AOA diagram for Engineering scope of works


13

14

0E,5
NE,6

12

ME,14
7

LE,5

11

KE,
9
10

EE, dummy

JE,6

GE,3
2

1
AE,2

5
DE,5

BE,1

FE,4

IE,4

6
EE,9

8
HE,7

CE,2
3

CE, dummy

Figure 4-AOA for EE scope of work

Possible path
ABDEHIJKLNO
ABDGMNO
ABDEE(dum)MNO
ABDEFKLNO
ACC(dum)DEFKLNO
ACC(dum)DEHIJKLNO
ACC(dum)DGMNO
ACC(dum)DEE(dum)MNO
Critical path
ACC(dum)DEHIJKLNO

Duration(weeks)
59
36
42
46
47
60
37
43

Slacks(weeks)
1
24
18
14
13
Critical path
23
17

a)

60 weeks

b)
The shortest path
ABDGMNO

36 weeks

c)
The relocation of all existing infrastructure couldnt be delayed as a result of, its in the critical
path.
d)
The upgrade of existing substations and installations of new transformers and switch gear could
be delayed 24 weeks.
e)
The termination of the primary incoming 66kV overhead feeders could be delayed by 14 weeks.
3

Task 3 Gantt chart for the Master Plan of the project


The total duration of activity J in the master plan was derived by the longest critical path from
Mechanical, IT and Electrical Gantt charts. The critical path with the highest duration was found
to be in the Electrical scope of work which is 60 weeks, thus the Activity J takes a maximum
of 60 weeks for completion.

Figure 5- Gantt chart for Master Plan of the project

Task 4- Deriving total revenue equation


The completed Master Plan scope of works

60

The total number of weeks to complete the Project


Therefore, the total number of weeks to build and commence Max Light Rail project is estimated
to be 208 weeks.
Time for project completion( years )=

208
=4 years
52

Deriving the total revenue equation


As the revenue gained by advertising per day is $4000. Advertising per year can be deduced by
multiplying it by 365 days which is shown in the below table;
Advertising per year

4000365

Ticket type
Distance >=14km
Distance >=7km and <14km
Distance <=7km

350,00060%3
350,00026%2
350,00014%1

=1460, 000

=630,000
=182,000
=49,000

=861,000 N
Total annual revenue

= Annual ticket sales + Annual on-board advertising


=861,000 N+ 1460,000
5

Task 5 Cash Flow of the Project


As derived in Task 4, after 4 years the project will be completed, commenced as well as handed
over thereby starting the revenue stream from the 5th year.
The following table shows the loan drawdown profile of the initially borrowed $100m.
Year of loan drawdown
By the end of year 1
By the end of year 2
By the end of year 3
By the end of year 4
By the end of year 5

Expected amount of loan drawdown


$18,000,000
$24,000,000
$36,000,000
$16,000,000
$6,000,000

Expenses and Revenues at the end of 5th year which recurs to the following years indefinitely.
The Revenue generated by on-board advertising is calculated as follows;
Revenue onboard advertising=$ 4000 per day No of days remaining

Revenue onboard advertising(RA ')=$ 4000 per day 365 days


Revenue onboard advertising(RA ')=$ 1,460,000

The Revenue generated by ticket sales is calculated as follows;


Revenue tickets( RT )=350,000 pa ( $ 3 N 60 +$ 2 N 2 6 +$ N 14 )
Revenue tickets ( RT ' )= $861,000N
The expected Operation and Maintenance cost is as follows;
Operationmaintance cost (O/ M ')=$ 150, 000

Figure 6: Cash flow diagram

Task 6 Calculating Ticket(N) Price


Assuming that the breakeven would happen after 50 years. (Interest rate 2.5%)
Total Cost of the Project in Present Value

+i
1

FV
PV =

25
1+0.0

Expences for year 1PV =

$ 18 m

Expences for year 1 PV =$ 17,560,976

25
1+0.0

Expences for year 2PV =

$ 24 m

Expences for year 2PV =$ 22,843,546

25
1+0.0

Expences for year 3PV =

$ 36 m

Expences for year 3PV =$ 33,429,579

25
1+0.0

Expences for year 4 PV =

$ 16 m

Expences for year 4 PV =$ 14,495,210

25
1+0.0

Expences for year 5PV =

$6m

Expences for year 5PV =$ 5,303,126

( 1+i )n1
Annuity PV =A
i ( 1+i )n

( 1+0.025 )461
O/T Expences year 550=$ 150 k
46
0.025 ( 1+0.025 )
5
1+0.02

O/T Expences year 550PV =

$ 4,073,125

O/T Expences year 550 PV =$ 3,690,050

Total Expenditure of the Project = $97,322,487

Total Revenue of the Project in Present Value

( 1+i )n1
Annuity PV =A
n
i ( 1+i )

Revenue year 550=( $ 1.46 m+$ 861kN )

Revenue year 550PV =

( 1+0.025 )461
46
0.025 ( 1+0.025 )

$ 39,645,088+ $ 23,379,740 N
4
(1+0.025)

Revenue year 550PV =$ 35,916,493+$ 21,180,891 N

Total Revenue of the Project = $ 35,916,493+ $ 21,180,891 N

Therefore, as the breakeven happens after 50 years,


Total Revenue of the Project = Total Expenditure of the Project
$35,916,493 + $21,180,891 N = $97,322,487
Ticket Price(N) = $2.899
The expected ticket price is found to be below the margin of $3 requirement of the government,
therefore the government allocated price per ticket constrain can be achieved with this project.

Task 7- Years to breakeven with the Alternative Scenario

Total cost of the project


+i
1

Present Value=

Future Value

The price of a one way ticket $N = $3


The interest rate = 3%.
3
1+ 0.0

1 st year Expences Present Value=

18 10

10

3
1+0.0

2 nd year Expences Present Value=

24 106

3
1+0.0

3 rd year Expences Present Value=

3
1+ 0.0

4 th year Expences Present Value=

36 10

16 106

3
1+0.0

6 10
5 th year Expences Present Value=

Total Expenditure=17,475,728.16+22,622,301.82+32,945,099.74+14,215,792.77+5,175,652.71
$ 92,434,576

Total revenue per year (N = $3) = 1460000 + (861000 x 3) = $ 4043000

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Then

total

3592153.1 x

revenue

for

until

break

even

n
4043000 ( 1+0.03 ) 1
x
n
1.034
0.03 ( 1+0.03 )

(1+ 0.03 )n1


n
0.03 ( 1+0.03 )

Total maintenance cost =

n
150000 ( 1+0.03 ) 1
x
1.034 0.03 (1+ 0.03 )n

( 1+ 0.03 )n1
133273.06 x
0.03 ( 1+0.03 )n

Number of Years to Breakeven


At the Break Even Quantity of output where Total revenue equals Total cost (zero profit)

Total Revenue (present value, profit for n numbers) = Total expenditure


3592153.1 x

(1+ 0.03 )n1


0.03 ( 1+0.03 )n

( 1+0.03 )n1
133273.06
x
=
0.03 (1+0.03 )n

+ 92434576

n = 54.74
It takes 52 years and 9 months to breakeven with the alternative scenario. The statement of
breakeven within 50 years is breached since time constraint is not achieved with the project.

Task 8 - Years to breakeven with the Alternative Scenario


Total cost of the project
+i
1

Present Value=

Future Value

The price of a one way ticket $N = $ 2.50


The interest rate = i %
12

1+i 1

1 st year Expences Present Value=

18 x 106

i
1+

24 x 106
2 nd year Expences Present Value=
i
1+

3 rd year Expences Present Value=

36 x 106

1+i

16 x 106
4 th year Expences Present Value=
5

1+i

5 th year Expences Present Value=

6 x 106

13

1+i

i
1+

i
1+

1+i 4

1+i 5

18 106
Total Expenditure(for five years )=

Total revenue per year (N = $ 2.50) = 1460000 + (861000 x 2.50) = $ 3612500

Total revenue for 50 years =

46
3612500 ( 1+i ) 1
x
(1+i)4
i (1+i )46

Total maintenance cost (after 5 years) =

46
150000 ( 1+i ) 1
x
(1+i)4
i (1+i )46

Then, at break even

46
46
3612500 ( 1+i ) 1 150000 ( 1+ i ) 1
18 x 10 6 24 x 106 36 x 106 16 x 10 6 6 x 106
x
=
x
+[
+
+
+
+
]
(1+i)4
i (1+i )46
( 1+i )4
i (1+i )46
( 1+ i )1
( 1+i )2
( 1+i )3
(1+i )4 ( 1+i )5

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i = 2.038359%
Interest rate for this scenario is found to be 2.038359%

Task 9- Contractor company selection


Liquidity

AAA

2014
Current Assets 2538
Current Ratio=

=0.8153
Current Liabilities3113

BBB
2015
4911

=1.22
4000

2014
3202

=0.94176
3400

2015
3505

=0.98872
3545

Working Capital=Current AssetsCurrent Liabilities


25383113=575
49114000=911 32023400=198 35053545=40

Quick Ratio=

Current AssetsInventories
2538127
4911139
3202131
3505142

=0.7745
=1.193
=0.903235

=0.94866
Current Liabilities3113
4000
3400
3545

The current ratio is a commonly used liquidity ratio that measures a companys ability to pay its
current liabilities with its current asserts. We calculate contractor AAAs current ratio as 0.8153$
in 2014.
As of the end of 2015 constructor AAA had $1.22 current ratio, which appears to be able to
easily service its short-term debt obligations. Furthermore in 2015 its current ratio stay between
1 and 2, according to the rule of thumb it show that the constructor AAA is in good shape.
Tracking the current ratio helps us to assess the health of the constructor. From2014 to 2015 it
shows a high current ratio which indicates that the company is able to meets its short term
obligations. The constructor BBB doesnt show a current ratio in between 1-2, generally that
kind of a low current ratio could suggest problems with inventory management, ineffective or lax
standards for collecting receivables, or an excessive cash burn late.
However both AAA and BBB constructors shows a slight incensement in the current ratio
overtime. It may indicate both constructors is growing into its capacity.
Working capital is a common measure of a companys liquidity, effectiveness so on. The
constructor AAA show a positive working capital in 2015, positive working capital generally
indicates that the constructor AAA is able to pay off its short-term liabilities almost immediately
which the constructor BBB cannot.
The quick ration can measure how well the constructor can meet its short term financial
liabilities.
The constructor BBB shows a huge decreasing quick ratio generally suggest that BBB
constructor os over-leveraged, struggling in maintain or grow sales. On the other hand
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constructor AAA shows a 1.193 quick ratio which is greater than 1 is sufficiently able to meet
shirt-term liabilities.
All things considered, the constructor AAA is the best recommendation.

Solvency
Debt Ratio=

Total Debt
Total Assets

AAA
2014

2015
4795

4102
5131
4400

=0.6149
=0.5627
=0.59986 7712
6671
9118
7335
0.62176

1323

EBIT
98
TimeInterestEarned Ratio=
Interest Expense
13.5
Equity Ratio=

Total Equity
Total Assets

BBB

2569
6671

2015

2014

2819
1905
=37.573
=42.33
75
45

3975
=0.4359
9118

1935
=49.61538
39

2935
2917
=0.40014
=0.37824
7335
7712

=0.3851

The debt ratio quantifies how leveraged the constructor is. Both AAA and BBB constructors
show a debt ratio of less than 1 which is a good standard. This low debt ratio may indicate that
the constructors has an opportunity to use leverages a means of responsibility growing business
that it is not taking advantage of.
From the above result it show that the AAA constructor have a huge incensement in the equity
ratio which is good standard. Higher quick ratios are a good sign for investors and creditors
because creditors want to know they will be paid back on time.

The times interest earned is a measure of how well the constructor can meet its interest-payment
obligation. Using the results above AAA constructor sows a huge incensement which indicates
that this can experience significant swings in their times interest earn.
All things considered, the constructor AAA is the best recommendation.

Profitability

AAA

BBB

16

2014
Net Profit Margin=

Net Income
Revenue

Gross Profit Margin=

2015

2014

2015

819
=0.0272
30107

2447
1435
=0.07077
=4.88
34575
29845

1039
=3.006
34564

Gross Margin
4316
=0.1410
Revenue
30601

6075
5307
=0.1757
=17.782
34575
29845

5459
=15.794
34564

Return on Assets=

Net Income
Total Assets

Returnon Equity=

Net Income
Total Equity

819
=0.122
6671

2447
=0.2683
9118

1435
=19.64
7335

1039
=13.47
7712

819
=0.3188
2569

2447
=0.6154
3976

1435
=48.893
2935

1039
=35.619
2917

Net profit margin is the percentage of revenue remaining after all operating expenses.
As it seems constructor BBBs net profit margin is declining over time, a myriad of problems
could be to blame. The constructor AAA show a increasing in net profit margin which is the one
converting into profits.
Gross profit margin is a profitability ratio that measures how much of every dollar of revenues is
left over after paying coast. The company shows a incensement in gross profit margin which is a
good state. However company BBB show a decreasing in GFM which was bad.
In conclusion, the company AAA show an increment in both return assets and return equity,
which means the amount of profit that the company AAA made was high. Also the company
AAA rising its ROE suggests the AAA is increasing its ability to generate profit without needing
as much capital.
All things considered, the constructor AAA is the best recommendation.

Task 10 Team formation and contribution


Our group leader Harin Liyanaracchi certainly concern about achieving the task, therefore he
wanted us to finish our given responsibilities accurately and fluently with reliable information.
As a result he positively influence us in changing ours behaviour to be success as a group. As I
recognized he had three main powerful tactics in his leadership. Inspiration is most often one
used by our leader in a downward fashion to influence high performance in a team. The leader
effectively links the desired activity or outcome to a set of values and ideals that is honoured by
the group. This appeals to emotions, a primary driver of motivation.

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Another tactics he used was consolation. Consultation works because he always remembered to
provides input, as a result all team members become more committed to the initiative. We always
feel like we involved and are more intrinsically motivated to take action that would ensure
success.
In addition we gained other team members commitment to complete certain tasks and in support,
everyone able to offer help others directly of provide resources. Collaboration can also be a
common partnership model that can see among our group which was a great tactic used by our
leader.
As result of these prodigious tactics we had an immediate task objective, such as influencing the
team person to carry out new task, provide assistance on the project, and provide necessary
resources which helps us to finish the task on date. Moreover tactics pushed to influence to
evaluate our skills and performances more favorably.
If I was the leader I could also use the same tactics that our team leader use for the reason that
they positively affect us to reach to the success of our project in gently way.

Conclusion
In conclusion by analyzing the Gantt chart, AOA diagrams, cash flow its easy to get a better
understanding the project scope and also the project breakdown structure. Furthermore by
calculating profit margins and ration able to select the pre-eminent constructor for the project.

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