QUESTION 1

(a) You are the project manager of a leading textile engineering company. The company opened its door in year 2000. Today, after 13 years of existence, it is being challenged with a loss in profitability approximating a 65% loss in net revenue. The management of the company is at the moment willing to create a new product which shall overwhelm the local market. The product shall be destined towards women wears. Conversely new equipment shall have to be purchased and the cost shall incur 20% from the remaining 35% of profit (when loss in revenue has been subtracted). Spare parts to the equipment shall be at all times stored and shall cost 5% of the final profit of 15%. Use the Iron Triangle, which includes the cost, scope and time of a project to explain how these three elements interact amongst themselves in the present situation. You may us a case study to explain this interaction.

(b) What do you understand by the following terms?

(i) Net Present Value (NPV)

(ii) Internal Rate of Return (IRR)

QUESTION 2

(a) Produce the Risk Management Model

(b) Briefly explain each of the 5 steps through which risks are modelled

(c) List down the 5 types of risk