Question

Pick a project with which you are familiar. Briefly describe the project. Once you have provided an overview of the project develop a bottom-up budget for the project. Justify the budget and describe how much confidence you have in the budget. Once you have a budget, develop an estimate of how long each of the major activities of the project will take. Defend your estimates. Finally, describe how long you estimate it will take to complete the project.

Answer 1

Name of the Profect :- Set up of liquid aluminum manufacturing plant.

The Overview of the project :-

There is a High-Pressure die casting (HPDC) company manufacturing automobile components for OEMs. HPDC is a process in which aluminum ingots are mixed with aluminum scrap in a 60: 40 ratio and melted in a tower melting furnace. After liquidizing the aluminum the material is transported to Die casting section where different auto components are manufactured. Liquid aluminum is injected into the die cavity with intensification pressure and after a minute of the cycle time, the die-cast component comes out of the die. Management of the company has a serious concern about profitability. Actually, the company is buying aluminum ingots from some of its vendors. And ingots are mixed with recycling aluminum scrap and converted into liquid aluminum. Vendors are selling at about 20 Rs per kg higher than the scrap price. The company has calculated the cost incurred in converting aluminum scrap into aluminum ingot as 8 Rs per kg. The company wants to buy aluminum scrap and convert it into liquid aluminum and directly use it for the manufacturing of components.

Toal loss of the company in buying ingots from vendor:-

1. Coversion charges of aluminium from scrap ( as charged by the vendors to the company )=20 Rs/ kg

2. cost of converting aluminum scrap to ingot ( as calculated by the company ) :- 8 Rs / Kg

3. Total yearly production of liquid metal = 18000 MT / Year

Therefore Total loss = (20-8)*18000000= 2,16,00,000 Rs / Year

The company wants to convert this loss in to profit by setting up a liquid aluminum manufacturing plant in its own premises .

Budget for the project :

This should be noted that the company does not require any land and building because the new project will be replacement of its own melting section .

Machinery	Unit Rate (Rs)	Requiremnt in Nos	Total Price(Rs)
Melting Furnace	1,25,00,000	1	1,25,00,000
Forklifts	10,00,000	2	20,00,000
Transfer laddle	3,50,000	3	10,50,000
Metal Treatment M/s	10,50,000	2	21,00,000
Total			1,76,50,000

    ROI ( Return on Investment ) :

Total investment on the project = 1,76,50,000 Rs

Yearly Saving with the project = 2,16,00,000 Rs

Threfore ROI = 1,76,50,000 / 2,16,00,000 = 0.81 YEARS ( 9.8 Months )

Conclusion :- Since ROI is less than a year it is a good project for the company to invest money.

Lead time to complete the project :-

Activity	Lead Time(Weeks)
Collection of Quotations from vendors	1
Negotiation and PO release	2
Receiving of all the machinery from vendors	8
Installation of Macines	6
Trail run of the plant	2
Total	19

Therefore Lead time for the Project will be Approx 19 weeks.