APIC Project Report: Solar System Development and Optimization

This project report, developed for APIC Project Development & Optimization Pty Ltd, details the development and optimization of a 50 KWh solar system. The report is divided into two parts: Part A covers project costs, including a detailed work breakdown structure, and cash flow analysis. Part B focuses on stakeholder analysis, sensitivity analysis, and economic evaluation. The project aims to minimize greenhouse gas emissions and adheres to Australian government regulations. The report includes financial data, assumptions, and estimation techniques like parametric estimation. Economic analysis is performed using Present Worth (PW) and Internal Rate of Return (IRR) methods, with the IRR calculated at 25.58%. The report concludes that the solar project is a viable investment, offering both financial benefits and environmental advantages, with a recommendation for project implementation.

Project Development
and Optimization

Table of Contents
INTRODUCTION...........................................................................................................................................3
MAIN BODY..................................................................................................................................................3
Assessment 2: Project Report (Part A)....................................................................................................3
Assessment 2: Project Report (Part B)..................................................................................................12
REFERENCES..............................................................................................................................................19

INTRODUCTION
The term project management is defined as a type of process under which all activities
and tasks of a project are performed in a systematic manner. Development of projects is the
mechanism and facility for preparing, arranging, managing and regulating the tools to meet
particular objectives. The cycle requires transport from design through building to enhancement.
The report is based on a project which is related to installing a new solar system with capacity of
50 KWh. There are two segment for this project under which first part includes information
about cash flow analysis, cost of project. While in the second part, information about stakeholder
analysis, sensitivity analysis is included in a detailed manner.
MAIN BODY
Assessment 2: Project Report (Part A)
Overview of project- The project has been chosen by APIC Project Development &
Optimization Pty Ltd that is related to launching a new solar system so that impact of greenhouse
gases can be minimized. The reason due to which project is selected is that it is according to
rules and regulation of Australian government (Duclos and et.al., 2016).
1. Total cost of project and work breakdown structure.
Total project costs indicate projected project cost for operational and maintenance costs
as well as deployment expenses during the construction process, also for the reasons of
minimizing issues. With regard to the project of the above-mentioned group, costs are
calculated below in such a way as to be as follows:
Serial
numbe
r
Details Cost in $
million % of cost
1 Solar P.V.
module 14 17.50%
2 Solar invertor 20 25.00%
3 Transformer 6 7.50%
4 Proactive 2 2.50%

device
5 Wire and cable 2 2.50%
6 SCADA/RMS 8 10.00%
7 Project
execution 2 2.50%
8 Construction
expenses 6 7.50%
9 Grid
evacuation 12 15.00%
10 Other official
work 8 10.00%
Total cost 80 100%
Work breakdown structure- A work breakdown (WBS) process is a distributable-oriented
breakup in managing projects and instructional design of a process into manageable pieces. A
job breakdown structure is a critical operation that sets up the team 's task in handy sections.
"Hierarchical overview of the total project scope created by the project group to accomplish
mission objectives and maintaining the required outcomes" is defined in the Body of Knowledge
for managing projects (Gajera, Dugar and Dave, 2016). With regard to the project of the above
business, below was developed WBS which is as follows:
Name of activity Total time Starting date Finishing date
1.Designing and
purchasing
10 days 14/10/19 24/10/19
1.1 Designing of
component of solar panel
3 days 14/10/19 17/10/19
1.2 Layout of labor force
need
2 days 17/10/19 19/10/19
1.3 Process of selecting
labor force
4 days 19/10/19 23/10/19
1.4 Buying of component
of solar panel
1 day 23/10/19 24/10/19
2. Civil working 7 days 24/10/19 31/10/19
2.1 Erection of pole of
solar panel
7 days 24/10/19 31/10/19

3. Works for installing
panel
12 days 31/10/19 12/11/19
3.1 Installing the solar
panel
6 days 31/10/19 6/11/19
3.2 Installing the battery
inside panel
3 days 6/11/19 9/11/19
3.3 Installing the charge
control for panel
1 day 9/11/19 10/11/19
3.4 Installing the lamp 1 day 10/11/19 11/11/19
3.5 Installing the sensor 1 day 11/11/19 12/11/19
4. Evaluation &
Commissioning
2 days 12/11/19 14/11/19
4.1 Commissioning 1 day 12/11/19 13/11/19
4.2 Evaluation 1 day 13/11/19 14/11/19

2. Cash flow diagram
Cash flow analysis- The cash balance of a business at some moment of time is the
contrast in the funds generated at the start of the conclusion of the accounting cycle.
Liquid cash the funds of the lender, the revenue of the capital expenditure and the asset
sales, and is spent on operating costs, operating costs, the main debt interest, and the buy
of assets such as machinery. This can be defined as a type of analysis in which further
time period cash is estimated (Glauche and et.al., 2017). Cash Flow analysis is an
assessment of a companies' income outflows and inflows from revenues, financing
transactions, and spend transfers. In other words, it discusses how the company generates
the money, where it comes from, as well as what the corporation as a whole has to do
with it. In regards with above company’s project estimation of cash flow is done in such
manner:
Particulars Year 1 (Amount in
$ million)
Year 2
(Amount in $
million)
Year 3
(Amount in $
million)
Year 4
(Amount in $
million)
Cash payments
Cost of material 42 - - -
Cost of labor 4
Maintenance charges 10 12 14 16
Loan repayment 12 12 12 12
Total cash payment
(A)
68 24 26 28
Cash receipts
Sales of energy
produced via solar
panel
50 30 70 90
Loan (50% of total
cost)
10 10 10 10
Investment 30 30 30 30

Total of cash receipts
(B)
90 70 110 130
Net cash flow (B-A) 22 46 84 102
2. Assumption made in the project.
In this project most of the financial data are taken on the basis of assumption such as:
 Financial data- Under the project all financial data such as total cost of project and
total revenues have been taken on the basis of assumption.
 Time duration of activities- In addition, time duration of each activity is also
assumed as per nature of each activity.
3. Estimation techniques used
In order to make estimation of total cost of project, there are range of methods and
techniques. This depends on project manager and team that which method they
implement. Herein, below technique which has been used in above project for cost
estimation is mentioned in such manner:
 Parametric Estimation- This method uses an equation to measure the expense of the
operation using the past records and other project variables. A predictive analysis has to
be determined between the empirical evidence and other factors. The method is used in
the aspect of complete project. Under it, estimation cannot be done in accordance of a
particular activity (Heimonen and Takala, 2019). In the context of above company’s solar
project, this method has been applied in accordance of total project’s cost.
4. Economy analysis and evaluation of the project by Present Worth (PW), or Internal rate
of return (IRR).

Project economic research helps to insure that limited resources are utilized effectively
and that innovation supports a nation and increases the well-being of its people. This is a
mechanism used by ADB to insure that ADB 's activities conform with the Charter. In
regards with above project, this analysis has been done in such manner:
 Analysis of issue- The problem before starting of this project is related to emission of
harmful gases in the environment due to uses of different kinds of energy generating
equipment.
 Evaluation of alternatives- In order to solve this issue, there are range of options which
can be applied in order to solve the issue. Though main alternatives are two that are as
follows:
Installing a solar panel
Using electronic gadgets
 Installing a solar panel- From all the advantages of solar energy, the most significant
benefits of solar is a completely sustainable electricity source. This can be found in many
regions of the world and is accessible each day. Like certain other carbon sources, we
cannot run out of solar electricity (Kvilinskyi and Kravchenko, 2016). Sun radiation will
be around as often because we have the sky, and it will be available to humanity for at
least 5 billion times before, as per science, the sun will disappear. In accordance of above
done analysis this can be find out that cost of installing solar panel is of $80 million
which can be covered up in next five years. If above company will install the solar panel,
then it can be viable for users as well as cost is also affordable.

 Using electronic gadgets- In order to generate energy there are a range of electronic
gadgets which can be applied by companies. Such as using battery vehicles, lights etc.
can reduce impact of harmful gases. The issue in applying these gadgets is lack of
durability as well as higher cost. Due to which this can become difficult for users to adopt
this equipment.
 Selection of suitable alternative- From analysis of both alternatives, this can be concluded
that above company should go with installing solar panel. If they will do so then this can
be helpful for them as well as users too.
Internal rate of return method- The Inner Return Ratio (IRR) is a measure used in capital
budgeting to assess the productivity of future projects. The intrinsic cost of return is the discount
rate that compares the net present value (NPV) of any and all retained earnings from a given
project to nil. Computations of the IRR are centered on the same principle as the NPV. In the
context of above project of solar panel, this method has been applied in such manner:
Year Cash flow
1 22
2 46
3 84
4 102
Discounting rate- 10% (assumption)
Lower discounting rate- 8%
Higher discounting rate- 12%

NPV at lower discounting rate:
Year Cash
flow
PV
factor
Discounted cash
flow
1 22 0.926 20.372
2 46 0.857 39.422
3 84 0.794 66.696
4 102 0.735 74.97
201.46
NPV= 201.46 – 80 Million
= $ 130.46 million
NPV at higher discounting rate:
Year Cash
flow
PV
factor
Discounted cash
flow
1 22 0.892 19.624
2 46 0.797 36.662
3 84 0.711 59.724
4 102 0.635 64.77
180.78
NPV= 180.78 – 80 Million
= $ 100.78 million
IRR- 8 + 130.46/ 29.68*(12-8)

= 8 + 17.58
= 25.58%
So the value of IRR is of 25.58 % in regards to above mentioned project. This indicates that
above project will generate at a rate of 25.58% in future time period.
5. Conclusion, findings and reason of recommendation.
Conclusion
From the above project report this can be concluded that companies should
choose their project in accordance of proper analysis of each and every aspect. In order to
do so there are a range of methods and techniques. The report concludes that this will be
viable for above company if they will launch the solar panel project. The selection of this
project has been done in accordance of economic analysis. It is so because in further time
period, this project will generate higher revenue and it has been determined by help of
internal rate of return method (Mancuso, 2016). This method articulates that project will
produce return with a rate of 25.58%. Apart from it, there are some assumptions are also
made for estimation of cost under which Parametric Estimation method has been applied.
Findings:
On the basis of above analysis of project some key findings can be interpreted in
such manner that are as follows:
 The solar project is more effective as compared to using electronic gadgets for
energy preparation.
 Along with this project will generate higher revenue in future because internal
rate of return is of 25.58%.

 The estimated cost of project is of $ 80 million which can be covered in next four
years.
 Company has taken loan of 40 million dollars which is 50% of total cost of
project and remaining fund has been invested by owner of company.
Reason for recommendation:
The reason due to which this project is being suggested to above company is that
it is cost effectively as compared to other project. Along with this project is not only
beneficial for company but also for general public, it can be useful because they can get
power at lower cost. In terms of financial perspective, this can be find out that cost of
project is not so higher and this can be covered in within four years. As well as return on
this project will be received at the rate of 25.58 % that is higher and viable for above
company in further time period (Mohagheghi and et.al., 2017).
Assessment 2: Project Report (Part B)
1. Identification and Justifications of parameters used in the sensitivity analysis.
In the sensitivity analysis a range of parameters are used by users on the basis of nature
of project as well size. In the aspect of above company’s project, sensitivity analysis has been
done on the basis of interest rate aspect and economic basis. Herein below analysis of these
parameters has been done in such manner that is as follows:
 Interest rate- In the context of above company, this analysis is done in the aspect of
interest rate. The reason due to which these parameters used is that by help of interest
analysis, it may become easier for companies to pay the debt amount. Such as in the
above company’s project, they have taken loan of 50% of cost of project which they need
to pay back. In the case when interest rate fluctuates then this may lead to different kinds
of financial issues.