Grantchester Arena Project: A Comprehensive Cost and Investment Report

This report provides a comprehensive analysis of the Grantchester Arena Project, focusing on cost planning, investment appraisal, and resource management. It includes a Gantt chart to identify the critical path, a detailed cost plan with contingency provisions, and an investment appraisal using payback period, return on capital, and net present value (NPV) techniques. The report evaluates resource allocation, comparing the costs of hiring assistant project managers versus administration assistants, and assesses the probability of project completion using PERT analysis. Furthermore, it calculates the estimated cost at completion and total project duration, offering a traffic light progress report to summarize the project's status. Ultimately, the report recommends against investing in the project based on the negative NPV and extended payback period. This document is available on Desklib, a platform offering a range of study tools and solved assignments for students.

GRANCESTER
ARENA PROJECT

EXECUTIVE SUMMARY
This report shall consist of cost plan and investment appraisal technique method which
mainly focusses on the evaluation of the project which is carried out by the Arena Development
or not.
Under the project task 1, it has been identified that longest path taken by the project is 76 weeks
whereas the shortest path is 56 weeks so critical path will be longest path. The Task 2 and Task 3
has been completed in the statement given below along with the recommendation therein. On
carrying out resource management task, it has been identified that hiring assistant project
manager over administration assistant is cheaper. Further, the limitations imposed on recruiting
assistant project manager was found to be budget savvy by £5150. Also, by using PERT
technique it has been evaluated that the chances of completion of project is 0.00% and that is
why, there is a need to make effective steps in order to meet the deadline. Under task 6 of
project, it has been identified that the estimated cost at completion will be £ 76,270,000 which is
higher than planned cost and estimated total duration is 93.8 weeks which is lower than planned
schedule.

Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................5
TASK 1............................................................................................................................................5
1.a Preparing a gantt chart......................................................................................................5
1.b) gantt chart........................................................................................................................7
1.c Critical path......................................................................................................................7
TASK 2 Budgets and Cost Planning:...............................................................................................8
a.) Preparation of Fully Itemised Cost Plan including provision for contingencies:..............8
b.) Determination of Basis for provision of contingency within the cost plan along with
recommendation stating the reasoning:..................................................................................9
TASK 3 Projects Appraisal Technique:.........................................................................................10
a.) Cash flow statement for the Period between 2022 to 2029 along with reason for stating the
figures that are considered in preparation:...........................................................................10
b.) Project Appraisal Technique:..........................................................................................11
c.) Recommendation on acceptance and rejection of the project on the basis of application of
above techniques:.................................................................................................................12
Task 4 – Resource Management....................................................................................................12
4a. Preparation of resource budget for the assistant project managers and administration
assistant.................................................................................................................................12
4b. Week by week resource histogram showing number of assistant project manager required
..............................................................................................................................................14
4c. Limiting the peak assistant project manager to the maximum of three..........................14
TASK 6..........................................................................................................................................18
6 a. Calculation of estimated cost of the arena construction at completion.........................18
6 b. Calculation of estimated total duration of the arena construction and identification of
estimated completion date....................................................................................................22
6 c. Comment upon the result...............................................................................................25
TASK 7..........................................................................................................................................26
7a. Traffic light progress report............................................................................................26
CONCLUSION..............................................................................................................................27

REFERENCES..............................................................................................................................28

INTRODUCTION
This statement is the project management report relating to Grantchester Arena Project which
belongs to the Arena Development which is the new firm operating in the United Kingdom
market. They are intending to purchase and develop an inner city brownfield site as a
multipurpose leisure venue. This statement shows the estimated cost the entity will undertake
along with revenue has been showcase in different phase.
TASK 1
1.a Preparing a gantt chart
Task
Mode Task Name Duration Start Finish Predecessors
1 Selection of a cite 3 wks Mon 1/10/22 Fri 1/28/22
2 draft a layout of a site 15 wks Mon 1/31/22 Fri 5/13/22 1
3 Provide approval 20 wks Mon 5/16/22 Fri 9/30/22 2
4 permission from a
government 10 wks Mon 10/3/22 Fri 12/9/22 3
5 finalizing the budget 3 wks Mon 12/12/22 Fri 12/30/22 4
6 Hire a team 5 wks Mon 1/2/23 Fri 2/3/23 1,5
7 consult with stakeholders 3 wks Mon 10/3/22 Fri 10/21/22 3,1
8
delegate the roles and
responsibilities to the
team
4 wks Mon 2/6/23 Fri 3/3/23 6,7
9 Site work 20 wks Mon 3/6/23 Fri 7/21/23 8
10 Finalizing the equipment
for training and gym 12 wks Mon 7/24/23 Fri 10/13/23 9
11 Security installation 13 wks Mon 10/16/23 Fri 1/12/24 9,10
12 installing electrical
equipment 9 wks Mon 1/15/24 Fri 3/15/24 11
13 furnishing the building 11 wks Mon 3/18/24 Fri 5/31/24 12
14 Soft launch trial events 5 wks Mon 6/3/24 Fri 7/5/24 13
15 take reviews from
stakeholder 3 wks Mon 7/8/24 Fri 7/26/24 13,14
16 monitoring 4 wks Mon 7/29/24 Fri 8/23/24 15
17 Launching 2 wks Mon 8/26/24 Fri 9/6/24 16

1.b) gantt chart
1.c Critical path
In accordance with the above gantt chart, there are 4 critical path identified which are as
mentioned below:
Critical path 1:
1 + 2 + 3 + 4 + 6 + 7 + 8 + 10 + 11
= 2 + 4 + 8 + 6 +15 + 4 + 20 + 5 + 4 (weeks)
= 68 weeks

Critical path 2:
1 + 2 + 3 + 4 + 6 + 7 +8 + 9 + 10 + 11
= 2 + 4 + 8 + 6 +15 + 4 + 20 + 8 + 5 + 4 (weeks)
= 76 weeks
Critical path 3:
1 + 2 + 3 + 4 + 6 + 7 + 9 + 10 + 11
= 2 + 4 + 8 + 6 +15 + 4 + 8 + 5 + 4 (weeks)
= 56 weeks
Critical path 4:
1 + 2 + 3 + 4 + 6 + 7 + 8 + 11
= 2 + 4 + 8 + 6 +15 + 4 + 20 + 4 (weeks)
= 63 weeks
By using the above calculations, it has been identified that shortest time taken by the
project manager in order to complete the project is 56 weeks whereas the largest path for the
project is 76 weeks.
TASK 2 Budgets and Cost Planning:
a.) Preparation of Fully Itemised Cost Plan including provision for contingencies:
Estimated Cost Plan for completed the project will be highlighted as under: -
Item Name Calculation Total Estimated Cost
Cost of Purchasing the Site Nil £17500000
Core Consultancy Fees ( 63375 * 33 Months) £ 2091375
Phase 2: Salary
Remediation Engineer ( 550 * 5 * 24 Weeks) £ 52800

Remediation Assistant ( 350 * 5 * 24 Weeks) £ 42000
Administration Assistant ( 35 * 40 * 24 Weeks) £ 33600
Phase 3 and 4: Salary
Construction Manager (450 * 5 * 84 Weeks) £ 189000
Safety Manager (400 * 5 * 84 Weeks) £ 168000
Administration Assistant (35 * 40* 84 Weeks) £ 117600
Staff Expenses (150 * 24 ) * 2 + (50 * 24) £ 8400
Utilities and other Expenses ( 650 * 4 * 27 ) £ 70200
Remediation Cost £ 18500000
Arena Construction Cost £ 76000000
The total Estimated Cost of
the Project
£ 1147,72,975
The provision of 10% has been taken as increase in the cost that has been calculated above for
the project. The rate of 10% has been taken assuring that there is the rise in the prices of material
and labour over the period of time and accordingly the cost will be revised.
b.) Determination of Basis for provision of contingency within the cost plan along with
recommendation stating the reasoning:
The provision for contingency has considered in the books after taking into account the increase
in the cost involved in the project. In the above Cost plan, it is assumed that the cost has been
increased over the period of 1 years by 10% and it has been mentioned in the escalation cost as
well. The recommendation that has been made to the arena development is to ensure that their
project must be completed within the phases as if such project is not started on due course then
they have to incur extra cost for the project as well. That will make them difficult for Arena

Developments to recover cost as they are generating the revenue form 2024 onwards and before
that they are at Par
TASK 3 Projects Appraisal Technique:
a.) Cash flow statement for the Period between 2022 to 2029 along with reason for stating the
figures that are considered in preparation:
Assumption: In preparation of Cash flows statements it is assumed that the 10% increase has
been conspired in operating cost.
Cash Flow Statement has been mentioned below:
Cash flow Statement of Arena Development ( Figures in £ )
Particular 2025 2026 2027 2028 2029
A. Cash flow from operating activities:-
Sales/Revenue 6200000 6400000 6500000 6800000 7000000
Consultancy Fees Paid -2091375
-
2300513
-
2530564
-
2783620
-
3061982
Salary to Engineer -52800 -58080 -63888
-
70276.8
-
77304.5
Salary to Remediation Assistant -42000 -46200 -50820 -55902
-
61492.2
Salary to Administration Assistant -33600 -36960 -40656
-
44721.6
-
49193.8
Construction Manager Payment -189000 -207900 -228690 -251559 -276715
Safety Manager Salary -168000 -184800 -203280 -223608 -245969
Payment to administration Assistant -117600 -129360 -142296 -156526 -172178
Staff Expenses -8400 -9240 -10164
-
11180.4
-
12298.4
Utilities and other operating Expenses -70200 -77220 -84942
-
93436.2 -102780
Net cash flow from operating activities:- 3427025 3349728 3144700 3109170 2940087
B. Cash flow from financing activities:-
Repayment of Loan -6875000
-
6875000
-
6875000
-
6875000 Nil
Net Cash flow from financing activities:- -6875000
-
6875000
-
6875000
-
6875000 0
C. Cash flow from Investing activities:-
Cost of Purchasing the site - Nil Nil Nil Nil

17500000
Net cash flow from investing activities:-
-
17500000 0 0 0 0
Total cash inflow/outflows(A+B+C)
-
20947975
-
3525273
-
3730300
-
3765830 2940087
b.) Project Appraisal Technique:
 Payback Period: The payback period shows the period that has been required by the
business to cover their investment that has been made by them initially relating to the
proposed project.
The payback period for the given project has been mentioned in the table below:
Period Cash Flows Cumulative Cash Flows
2024 - 175,00,000 - 175,00,000
2025 + 34,27,025 -14072975
2026 + 33,49,728 -10723247
2027 + 31,44,700 -7578547
2028 + 31,09,170 -4469377
2029 + 29,40,087 -1529290
The Payback period for the given project has been more than 6 years as the initial cost
that has been incurrent by the entity will take more than 6 years to recover the cost they
have incurred.
 Return on Capital:
The return on capital shows the net income earned by the organisation relative to its debt
and equity value. It simply means the return an organisation generates against the capital
they have invested in the business. The formula for calculating return on income will be
as under:
= Net Income / (Debt + Equity)
 Net Present Value:
This is the one of the best method for evaluation of the project that has been undertaken
by the organisation. Under this method the cash inflows are discounted at the

predetermined rate termed as discount rate and the total of such cash inflows are reduced
by cash outflows to arrive at Net Present Value. The decision or judgement has been
made on the basis of such NPV. If such NPV is positive, then project should be accepted
otherwise not.
The statement showing NPV of the projects carried out by the Arena Development are
being mentioned below: -
Period Cash Flows Discount factor @
5%
Net Present
Value
2024 - 175,00,000 1 -175,00,000
2025 + 34,27,025 .952 +32,62,528
2026 + 33,49,728 .907 +30,38,203
2027 + 31,44,700 .864 +27,17,021
2028 + 31,09,170 .823 +25,58,847
2029 + 29,40,087 .784 +23,05,028
NPV of the Project -36,18,373
Since NPV is negative in the given project therefore it is advisable to the Arena to not to invest
in the above project.
c.) Recommendation on acceptance and rejection of the project on the basis of application of
above techniques:
On the basis of the above investment appraisal technique and their results thereon, the conclusion
can be drawn that investment in not advisable to Arena as the cash flows are being in negative
and NPV method and Payback period does not provide positive results to the organisation.
Task 4 – Resource Management
4a. Preparation of resource budget for the assistant project managers and administration assistant
After looking at the projected breakdown structure and resource need for Grantchester Arena
Project, it has been identified that there is a need to recruit 4 assistant project managers and 1
administration assistant for the smooth completion of phase 4 of the project.
Particulars:
Working hours = 5 days or 40 hours a week