THE COPPERBELT UNIVERSITY
SCHOOL OF BUILT ENVIRONMENT
2005 SESSIONAL EXAMINATIONS
PROJECT MANAGEMENT
(ESA/B 520)
DECEMBER 2005
TIME ALLOWED: THREE (03) HOURS
INSTRUCTIONS
SECTION A
ANSWER ANY TWO QUESTIONS
SECTION B
ANSWER QUESTION 4 AND ANY OTHER QUESTION
SECTION A
ANSWER ANY TWO QUESTION
QUESTION 1
1. Virgin Construction, a subsidiary of the Virgin Group of Companies incurred
monthly costs and received corresponding monthly payments as indicated in table 1
below. The client’s Retention sum is at 10% per month up to a maximum of 5% of
the contract sum. 95% of the retention money will be paid at practical completion
and 5% will be paid at the end of the 6 months Defects Liability Period. You are
required to
a. Define
i. working capital
ii. budget (2 marks)
b. Plot the budget curve indicating all the details mentioned above.
c. Calculate the maximum working capital required for the project.
d. Calculate the cost to Virgin Construction of borrowing the money if the
annual rate of interest is 10%. (23 marks)
Virgin Construction
End of Cost/Month Revenue/Month
Month (K’ 000) (K’ 000)
0 0 0
1 15 0
2 10 0
3 35 0
4 40 15
5 45 30
6 45 60
7 50 30
8 20 65
9 25 20
10 35 105
11 0 20
12 0 25
(Hint: Specific answers warrant good marks, don’t generalise!)
QUESTION 2
2. Shepherd Investments Ltd is an organisation that has been a supplier in a wide
variety of goods and services to the Ministry of Justice. Of late they have
discovered that they can diversify into construction. They feel they have acquired
enough finances to venture into construction. The Managing Director has
approached you for technical advice on certain ‘rituals’ in the construction industry.
a. Explain what Risks and Uncertainties in construction are. (6 marks)
b. Elaborate the use and application of the following in decision making
processes
i. Decision trees
ii. Sensitivity analysis
iii. Pareto Rule (9 marks)
c. Explain to the Financial Director
i. What a cost reporting system is.
ii. Justify the use of a Cost reporting system. (6 marks)
d. Briefly explain the principle behind the s-curve superimposed with the
cost/value reconciliation graph (EVA). (6 marks)
QUESTION 3
3. A contract is a bilateral executory agreement. When made, it binds each party to
performance or in default to a liability to pay damages in lieu. Viking line
Construction Management are up in Arms with Mopani Copper Mines over some
contractual clause in their latest contract, they say they don’t understand what all
this means.
a. Contracts in general contain provisions and allocate a balance of
responsibility, reward and risk. Explain in detail how these relate to a type
of contract (9 marks)
b. The latest brawl was over payments for the work done. Viking line
Construction has done the work but Mopani won’t pay because the quality is
poor. Adjudicate over the matter with the following key terms to consider.
i. Quality.
ii. Value.
iii. What are the dimensions of product quality and how do they relate to Value?
(10 marks)
c. Explain what Total Quality Management is in relation to Quality Assurance
and Quality Control? (6 marks)
SECTION B
ANSWER QUESTION 4 AND ANY OTHER QUESTION
QUESTION 4
The table below is for a pre-contract programme of activities for the construction of a
Motel submitted to the client by a Management Contractor.
Activity i-j No. Description Duration Package Contractor
Code (Weeks)
A 1-2 Substructure 5 Wade Adams
B 1-3 Wall structure 14 Minestone
C 2-4 Plumbing 5 Minestone
D 3-4 Electricals 10 Terotech
E 3-5 Aluminium works 12 Just Aluminium
F 4-6 Plastering & flooring 10 Minestone
G 5-6 Air conditioning 7 Eyaco Engineers
H 5-7 Interior decorations 10 E-deco
I 6-7 Landscaping 6 Xscapes
(a)
i. Using the CPM approach, determine the contract period for the above works.
(5 marks)
ii. Which package contractors, if any, can delay starting their work without
affecting the overall construction period and by how much time in each case?
(5 marks)
(b) After the award of contract the Management contractor synchronizes the
sequence of activities and notes that he needs to revise the program in order for it
to take care of a few factors as below;
Due to some constraints, a 15 weeks delay after the completion of activity C will
be required before the commencement of activity F.
Activity H will have a lead factor of 50% (6 weeks) after the start of activity E.
Activity G will have an 11 week lag after the completion of activity E.
i. Explain the meaning of Management Contractor (4 marks)
ii. Using the Precedence diagram format determine the new contract duration
(8 marks)
iii. Highlight the critical path (3 marks)
QUESTION 5
A dispute arose between KCM (the Employer) and Terotech (the contractor) as to the status of
Liquidated and Ascertained damages (LAD) while using the ZIA Form of Contract. An interim
certificate issued by the architect stated the total value of work done (whether done properly or
not) from which the agreed retention and earlier payments were deducted. It showed further
deductions on the face of the certificate for defective work and for liquidated damages.
Terotech protested that the certificate had not been properly calculated and challenged the
deduction of LAD and for defective work. KCM responded that it was entitled to deduct for
improper work and had the right to deduct LAD, and that in any case, Terotech was seven weeks
behind schedule so far as the contract programme he had submitted was concerned. It was
apparent that Terotech was not going to complete the project within the remaining one week. In
response Terotech withdrew its labour from site.
(a) Explain Liquidated and Ascertained Damages and why they are provided for in the ZIA
form of Contract. (5 marks)
(b) What is an Interim Certificate? (4 marks)
(c) The articles of agreement in the ZIA Building Contract provide for the
termination of Building Contracts. Outline four circumstances under which a
Building Contract may be terminated by the contractor. (4 marks)
(d) Concisely and precisely advise Terotech on the merits of its contention as to the
correctness of the interim certificate and of KCM’s response. (12 marks)
QUESTION 6
(a) What is project control and why is it necessary when running a project? (4 marks)
(b) Time, Quality and Cost are major factors to consider in project control. Explain in
detail how these factors can practically be controlled on a project. (6 marks)
(c) The engagement of Package Contractors under the Construction Management
Procurement System is the same as the engagement of Nominated sub-contractors
under the Traditional Procurement System. Analyse the statement. (6 marks)
(d) Mention and outline the meaning of three documents produced as final accounts
at the end of a company’s financial year. (9 marks)
