Absolute Free L6M5 Exam Practice for Comprehensive Preparation 

Golden Rainbow Ltd has invested £4m in a new research project which was started three years ago. The CFO has calculated that the average rate of return on the project is -6%. Is this possible?

KCJ Ltd is a public sector organisation which is looking to run 5 projects over the next financial year. Below are details of each project:

Project 1: The budget estimate of this project is calculated using an algorithm. The project lead is the founder of the organisation.

Project 2: The project lead is the Head of Research and Development, who has a PHD in Data Science. He has taken costing and budget information from similar projects conducted previously to decide on a budget for Project 2.

Project 3: The project is being led by a key stakeholder and involves creating a Bill of Materials. Costs will be worked out for each item required to complete the project and totalled together.

Project 4: The Project Leader has worked out the base cost, most likely cost and worst-case scenario for the project. His power comes from his ability to pull the plug on this project at any time.

Project 5: This project is being led by a well-liked member of the Board of Directors. He has selected a team who he gets on well with and has decided the budget based on his own research.

For each project, select the cost estimation method used and the source of power of the Project Leader. Complete the table below, some answers may be used twice: bottom up, 3-point estimate, parametric, analogous, expert judgement, top-down, positional (x2), personal (x2), expert, negative

Which of the following will you put into box 4?

Dave is the Head of Human Resources at a large company. The company has decided to introduce a new process known as the Person-Organisation Fit. What will this help achieve?

Which of the following processes for managing change is the most passive?

Glitter Kitten Ltd is a leading manufacturer of cat food and is currently looking into expanding its operations into new markets. The CEO has committed to providing the funds for expansion and he has commissioned a financial appraisal of two different options. The Senior Leadership team are currently reviewing the Net Present Values of each option.

The CEO is getting frustrated with the length of time the Senior Leadership are taking in their appraisals so has done a quick analysis using the payback method. The second option, to expand into making dog food, produced the best results, which are based on an estimated total outflow of £50m and annual inflows of £10m.

The CEO is also looking into methods for improving current products. He has assembled a Project Team of researchers who is looking into their current range of cat food, taking particular notice of customer opinions and reviews. The goal is to, based on this research, investigate opportunities within the supply chain to enhance the quality of the product, as well as potentially reducing the costs of manufacturing.

Raw materials for Glitter Kitten’s most popular cat food will soon be provided by Paw Ltd who is a new supplier. The contract is still under negotiation and is expected to last for the next 3 years. The CEO is keen to have visibility over Paw Ltd’s costs and profit margin.

5. Which of the following pricing mechanisms is most suitable for use with Paw Ltd?