ADVANCED PROJECT MANAGEMENT

PRACTICAL CASE SOLUTION

 Advanced Project Management – Practical Case Solution

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 Advanced Project Management – Practical Case Solution

TABLE OF CONTENTS

TABLE OF CONTENTS ................................................................................................................................................ 3

1. INSTRUCTIONS ........................................................................................................................................................ 4

2. SOLUTION ................................................................................................................................................................ 4

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 Advanced Project Management – Practical Case Solution

1. INSTRUCTIONS
The purpose of the case study presented here is to find out the degree of assimilation of the
material studied during the course.

The questions are designed to be answered concretely. None of the answers should be longer
than 100 words.

An Excel sheet with the last of the questions is attached.

The first column of the table indicates the weight of each correct answer in the final mark.

Good luck!

2. SOLUTION
The Spanish company MOCIONA, S.A. wishes to tender for a lump sum turnkey project for a
liquid soap production and packaging plant in Volgograd (Russia).

The delivery period for this project is 12 months.

The agitators for the mixing tanks have been purchased by the Customer and will be transferred
to the Contractor awarded the tender under a novation agreement.

(FACT: Novation: a contract whereby the Client transfers to the Contractor the subject matter
and obligations of an order it has placed with a third party for the Contractor to continue the
order as its own. The Contractor has a period of time to analyse this contract prior to its
novation).

1. According to your understanding, argue whether this case is a "product" or a "project"

from the point of view of the PMBook ® 15%.
It is a "project".
Reasons:
▪ The process is known.
▪ There is previous experience that provides the guidelines for its execution.
▪ It is possible to calculate when it will be completed under normal conditions and
how the result will deviate from the planned result by monitoring progress
variables.

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 Advanced Project Management – Practical Case Solution

2. Due to the speed of the operation, the Estimation team has only one day to calculate the
budget. To do so, it has the cost of the equipment, which amounts to 13 million euros.
What is the final value of the investment in a Class 4 estimate according to AACE
International® ?
What method did you use for your estimate? 20%.
62 million Euros (-20%, +30%)
Lang's Conceptual Method - factor 4.74

3. Define three factors that the Project Manager should confirm are adequately factored
into the budget and that are specific to the project being developed in Russia. Please
propose solutions 15%.
a. Extremely low temperatures: civil works in warmer seasons, insulation (winterisation)
of pipes and equipment with fluids susceptible to freezing;
b. Language: both spoken and written, hiring of translators and bilingual documents
(English - Russian).
c. Calculation code: confirm whether the calculation code is international or Russian.
Specific training to work teams in case it is Russian.

The project is assigned to MOCIONA, S.A. who starts the engineering works. The Client has 15
days for the approval of documents, but on average it is taking 23 days to return their
comments.

4. In your opinion, could the Customer's delay cause any damage to MOCIONA, S.A.? By
what method would you be able to calculate the adverse effect caused? 15%.

Yes, the productivity of MOCIONA, S.A. will be compromised, so if it does not want to fall
behind, it will have to either include more resources or require those available to work
longer hours.

There are several methods for calculating the impacts due to lost productivity. If it can be
demonstrated that the planned productivity has been met at some point in the project,
MOCIONA, S.A. should opt for the "measured mile", otherwise the "Earned Value
Method" will be the most appropriate.

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 Advanced Project Management – Practical Case Solution

During the development of the Engineering, MOCIONA, S.A. detects that the new agitators do
not have the power required for the process, and so a request is made to the Client for a
change order to change the motors.

5. Do you believe that MOCIONA, S.A. is entitled to the requested change order, and what
if the order had not been novated? 15%.
In both cases the answer is "No".
In the case of novation, the Contractor will have tacitly waived this right by the
acceptance of the obligations with the signing of the novation.
In the case of non-novation, the Contractor is obliged to design and execute a fit for
purpose plant, i.e. unless the Project conditions have changed (e.g. modification of the
fluid properties) the sizing of the equipment (including agitators) is the sole responsibility
of the Contractor.

The Project is in month 3 and the Project Manager has suspicions that his budget will not be
sufficient to complete it.

6. According to the progress table in Annex 1, confirm whether the Project Manager has
reason to be concerned. 20%
Progress:
CV = EV - AC = 12 - 15 = -3
CV = Variance in cost
EV = Earned Value
AC = Actual Cost
Since the value of the Cost Variance is negative, the Project Manager is correct and the
Project will need more cost than budgeted for its execution.
On the other hand, the Budget Progress Index CPI = EV / AC = 12/15 = 0.8, being less
than 1, also indicates that the cost management is not being ideal.

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