Critical Path Method Dates
Forward Pass
Equipment
Backward Pass
30
Site Prep &
Foundation
Structure
Finishing
Start
1
10
90
TF =
90
30
Finish)
1
Utilities
TF =
TF =
TF =
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TF =/nHome / My Home
/ Professional Development
/ Project Management / POPMC002
/ Module 6: Capstone & Course Completio
/ Capstone
POPMC002: Estimation &
Cost Benefit Analysis
Capstone
To do: Make a submission
The purpose of the Capstone project is to integrate all of
the knowledge that you accumulate throughout the
course and apply it to a "real-life" business context.
Through this assignment, you will be able to demonstrate
skills, such as estimation, risk management, and financial
forecasting.
Scenario
You have decided that there are not enough beer varieties
in the world, and that you are only who can fix this
problem. Against the urging of your spouse and friends,
you decide to open up a brewery. You have two options:
build your own brewery from the ground up or buy an
existing one from a fellow dreamer like yourself who has
become disillusioned with the business. The existing
brewery will need some new equipment and repairs
before it can be returned to operation. You must decide
whether it is a better investment to build or buy.
Instructions
This assignment has six parts and an abbreviated list is
included here. For full instructions, download the
"Capstone Instructions" file.
• Part 1: Using the information in the attached
instructions file, calculate the estimated cost to
purchase and upgrade the existing brewery. Make
sure to show your work.
• Part 2: Use three-point estimation to determine the
cost to build the brewery. Once you have the PERT
estimate, calculate the Project Level standard
deviation. Make sure to show your work.
• Part 3: Use the attached Critical Path Template to
estimate the build schedule. In your submission,
calculate the estimated duration and identify the
activities on the Critical Path.
• Part 4: Identify five risks and their components for
the Risk Register. What Risk Parameters would you
use to qualify the probability and impact? What is
your budget and contingency reserve?
• Part 5: Calculate the Net Present Value (NPV) for
both the build and buy options. Make sure to show
your work.
• Part 6: Choose whether building or buying the
brewery is the better investment and support your
answer with your calculations and findings.
Submission Guidelines
Upload one document that includes all of the parts. For
Part 3, you can use the fillable template for estimating the
build schedule and critical path. You do not need to
include the graphic in your final submissions; you only
need to answer the questions.
Save your file as Microsoft Word file (.doc or .docx format)
or a PDF. Save your file as "lastname_POPMC" and upload
it in the submission area.
You must receive a passing score of 70% in order to
receive your certificate for this course. To submit your
assignment, click "Add submission" at the bottom of this
page and use the submission section to upload your file.
If you score less than 70%, you may revise and re-upload
your submission. When you receive your grade and
instructor's feedback, revise your project and then click
"Edit submission." You may repeat this process until you
score the required points.
Grading Table
Assignment
Criteria
Part 1:
Estimate
Buy Costs
Definition
Student correctly estimates the
Maximum
Points
cost to purchase and upgrade
existing brewery. Student shows
10
their work for the calculations
Part 2:
Estimate
Build Costs
Part 3:
Estimate
Build
Schedule
Part 4:
Identify
Risks and
Calculate
Contingency
Reserves
Part 5:
Analyze
NPV
Part 6:
Choose
Build or
Buy
Student correctly uses three-
point estimation to determine the
cost estimate to build a brewery.
Student correctly calculates the
Project Level standard deviation
and shows all their work for the
calculations.
Student correctly estimates the
duration of the project and
identifies the activities on the
critical path.
Student lists five risk parameters
to qualify the probability and
impact on the project. The
student correctly identifies the
budget and contingency reserve.
Student correctly calculates the
NPV for the build and buy
options. Student shows their
work for how the NPV was
calculated.
Student chooses to build or buy
the brewery and support their
choice based on their
calculations and findings.
Capstone Instructions.pdf A
10
10
20
20
20
20
10
10
December 2 2023, 3:09 PM
Fillable Critical Path Template.docx A
November 8 2023, 1:11 PM
Add submission
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Development
Capstone Instructions
Purpose & Overview
Estimation & Cost Benefit Analysis
The purpose of the Capstone project is to integrate all of the knowledge that you accumulate
throughout the course and apply it to a "real-life" business context. By the end of the course, you
will be expected to submit a business solution given a scenario.
There are 100 points available for the project and you must pass with at least 70%. If you do not
earn 70%, your instructor will provide feedback and you will have the opportunity to resubmit
until you pass. To help you along the way, you can work on sections of the project beginning in
Module 2. In addition, in Module 3, you will submit the first part of your project. While this
assignment will not affect your overall grade, it is an opportunity for the instructor to provide
feedback if you are struggling.
Scenario
You have decided that there are not enough beer varieties in the world, and that you are only
who can fix this problem. Against the urging of your spouse and friends, you decide to open up a
brewery. You have two options: build your own brewery from the ground up or buy an existing
one from a fellow dreamer like yourself who has become disillusioned with the business. The
existing brewery will need some new equipment and repairs before it can be returned to
operation. You must decide whether it is a better investment to build or buy.
Part 1: Estimate Buy Costs – 10 points
You need to estimate the total cost to purchase the existing brewery and get it up and running.
The owner is asking for $1,000,000 for the brewery. You want to increase the production
capacity of the brewery by 500 barrels/month which will require another five fermentation tanks.
The fermentation tanks cost $10,000 each. In addition to the cost of the fermentation tanks, the
company that installs them says they only work on a time and materials contract basis. The last
job that this company performed was half the size of what you are proposing and cost $150,000.
Since the last job, their costs have increased by 20%.
What is the best estimate of how much it will cost to purchase and upgrade the existing brewery?
In your submission, be sure to include your work in your answer.
Part 2: Estimate Build Costs - 20 points
The land you are planning to buy for the brewery is for sale for $100,000. You are planning on
contracting out the parts of the job yourself. From the various specialties, you receive the
following cost ranges: LSU Professional
Development
Specialty
Site Preparation & Foundation
Structure
Utilities
Equipment Install
Finishing
Estimation & Cost Benefit Analysis
Optimistic Cost Most Likely Cost Pessimistic Cost
$15000
$400000
$30000
$150000
$50000
$22500
$525000
$37000
$200000
$70000
$31000
$600000
$40000
$275000
$100000
Using three-point estimation, determine the cost estimate to build the brewery. After determining
the PERT estimate, calculate the Project Level standard deviation. In your submission, include
your work for your calculations.
Part 3: Estimate Build Schedule - 20 points
Now that you have the build costs, you need to estimate the build schedule. The activities in the
build schedule will occur in the following sequence:
Equipment
Forward Pass
Backward Pass
Site Prep &
Foundation
50
30
Finishing
Structure
Start 1
TF =
Finish
90
30
10
1
Utilities
TF =
TF =
TF =
45
Activity
ES
EF
D
TF =
LS
LF
In the provided graphic, "Site Prep" would be the first activity in the sequence with a 10-day
duration. Next, the progression of work would move into the "Structure,” which has a duration of
90 days.
Following "Structure" activity, the "Equipment" and "Utilities" activities could both begin. Both
would have the same early start date. The "Equipment" activity has a duration of 30 days, and the
"Utilities" activity has a duration of 45 days. "Finishing" cannot be scheduled to start until both
of its predecessor activities are complete. The “Finishing” activity has a duration of 30 days.
For this part of the Capstone, you must calculate the estimated duration and identify the activities
on the Critical Path. Use the Fillable Critical Path Template (attached in the assignment in LSU Professional
Development
Estimation & Cost Benefit Analysis
Moodle) for your calculations. You do not need to include the graphic in your response; you only
need to include the estimated duration and the activities on the critical path.
Part 4: Identify Risks and Calculate Contingency Reserves – 20 points
You are conducting the first Risk Management meeting with the major stakeholders. What are
five risks you could identify with this project and their components for inclusion on the Risk
Register? Create a table similar to the one below to document your risks.
Risk Statement
1.
2.
3.
Probability of Occurrence
Risk Impact
4.
5.
What Risk Parameters would you use to qualify the probability and impact?
Next, you conduct a Risk-Ranging session and run a Monte Carlo analysis on the results. Given
the following distribution from the Monte Carlo analysis, what will your budget and contingency
reserve be? Use the data and graph below to guide your response.
Probability
0.04
0.00
Base
Mean
500
800
1000 1200
+
1500
1800
Cost ($x1000) LSU Professional
Development
Part 5: Analyze using Net Present Value (NPV) – 20 points
Estimation & Cost Benefit Analysis
Assume that building a new brewery will cost $1.4 million in upfront investment and cost
$100,000 per year to operate. The estimated annual income will be $400,000 per year. The
hurdle rate is based on the balance you are currently earning on your investment account, 5%.
What is the NPV of the first five years of the build option?
Assume that buying the brewery will cost $1.1 million in upfront investment and cost $100,000
per year to operate. The estimated annual income will be $400,000 per year. The hurdle rate is
based on the balance you are currently earning on your investment account, 5%.
What is the NPV of the first five years of the buy option?
In your submission, make sure you show your work.
Part 6: Choose to Build or Buy - 10 points
Which option is the better investment? Support your answer with your calculations and findings.
