MGMT3000/5039 The Drone Parcel Delivery Project-Assignment-Curtin University.

Scenario Details
The “Automated Parcel Delivery” company is examining a proposal to provide a drone parcel delivery service for supermarkets across the Perth Metropolitan area. It will operate the drones from 14 supermarkets and 1 warehouse location across Perth. To do this, the 14 supermarkets and 1 warehouse need to have customised loading, take-off and landing zones built. These will be built by the “Automated Parcel Delivery” company.
The company will use 25 drones spread across the 15 locations to carry out the deliveries. A network of solar panels will be installed at the 15 locations for charging the drones. This will minimise the use of the main electricity grid powering the systems. A solar rebate will be offered by the WA government to the “Automated Parcel Delivery”company to encourage the use of renewable energy.
MGMT3000/5039 The Drone Parcel Delivery Project-Assignment-Curtin University.

MGMT3000/5039 The Drone Parcel Delivery Project-Assignment-Curtin University.

The delivery drones can carry up to 5 deliveries. The normal delivery window, using trucks, is a 2-hour time frame. With using the drones, the delivery window will be reduced to a 15-minute window.

For Western Australia, and to start with, Perth, this will be a significant infrastructure project. If the trial is successful, the “Automated Parcel Delivery” company would be looking to expand their service network to other capital cities in Australia with an outlook to expand globally.

It is proposed that the delivery drones’ trail would be run as a fully costed, stand-alone project and a self-sustaining business venture. The project assumes that all approvals have been given by the Civil Aviation Safety Authority (CASA) to allow the delivery drones to operate.

Congratulations, the “Automated Parcel Delivery” company has employed you as an engineering consultant and assigned you the task to work with the “Automated Parcel Delivery” company planning design team on the proposed new loading, take-off, and landing zones.

The total construction cost of the project is estimated to be $22.5 million in today’s dollars. In addition to the construction costs, 25 new delivery drones will be purchased at a cost of $23,500 each. The drones will be purchased on the same day as the completion of construction so that they can immediately start earning revenue.

Use these figures to determine the total amount you will be required to borrow to finance the project. These figures include the complete construction costs associated with the customised loading, take-off, and landing zones.

MGMT3000/5039 The Drone Parcel Delivery Project-Assignment-Curtin University.

Revenue will be generated via delivery fees and the solar panel rebate and from the electronic advertising to be placed at the customised loading, take-off, and landing platforms.

The total expected revenue from advertising is estimated to be $150k per year.

The order delivery charge will be calculated using the figure of $N per delivery, depending on the order value, as shown in Table 1.

Table 1 Order values, delivery charge and expected number of orders per week.

Financing Structure of the Project
To finance the project the “Automated Parcel Delivery” company intends borrowing the total amount of money with an annual interest rate of 2.02%. The borrowed funds will help cover the cost of the preparation of all the documentation, contracts, public consultation, the tendering process, the actual construction, and commissioning. It is possible that during the early stages of the completed project some of the borrowed funds will in part cover, staff wages and the ongoing operation and maintenance costs.

The proposed financing arrangement for the loan is to be financed over a 15-year period. The “Automated Parcel Delivery” company has stipulated that if the project was to go ahead, the initial project scoping must start on the 1st of Jul 2022 and has stated that the project is to break even at the end of the 15th financial year. This goal is to be achieved from revenue generated via delivery charges, solar power rebates and from the advertising while also considering the expected annual ongoing power supply tariff,maintenance, and operational costs.

The “Automated Parcel Delivery” company requires that the delivery charge ($N) must be set at a competitive value. This is deemed that the for the lowest order value of $N, it must be no greater than $20. A second constraint stipulates that the project must break even in less than or equal to 15 years.

The loan draw-down profile of the $22.5m borrowed funds follows the typical project life cycle “S curve” expenditure distribution is given in Table 2 below. Note also that the additional cost of the 25 delivery drones is to be treated as a separate loan in addition to the $22.5 m and will begin at project handover.

Table 2 Expected loan draw down amounts for each year.

  • Note that all the three revenue streams can only start once ALL customised loading, take-off, and landing zones are commissioned and handed over.
  • For simplicity assume all costs and revenues land at the end of each Australian financial year (June 30).
  • When calculating the NPV, the same interest rate is to be used as your discount rate for all inflows and outflows.

Operations and Maintenance (O&M) Costs
The expected costs associated with the ongoing maintenance and operational cost (in today’s dollars) is estimated to be $3.6 m per year. These costs include the annual CASA licensing fee. Note that the annual Operational and Maintenance costs commence only once all the construction of the 15 customised loading, take-off, and landing zones are
built, commissioned, and handed over. Also assume that the operation and maintenance costs remain the same each year and that all costs land at the end of each financial year.

MGMT3000/5039 The Drone Parcel Delivery Project-Assignment-Curtin University.

Power Supply and Usage costs.
It is estimated that $2.4m will be the annual power cost tariff that the “Automated Parcel Delivery” company will have to pay. The “Automated Parcel Delivery” company intends to recover $350k /year of the total $2.4m/year power cost tariff via the proposed solar panel array network which will be installed as part of this project and forms part of the $22.5 m construction cost mentioned above. Note: The annual $350 k solar rebate only comes into effect exactly 2 years after the construction of the project
has been completed and handed over.

Appendix Information
In the appendices you have been given tables of the work breakdown structures covering the expected Electrical, Mechanical and the Communications / IT engineering scope of works. You have also been given a table of the Master Plan for the project. Refer to Table 4.

Task List
Your team has been asked to determine what the delivery cost, in terms of $N, needs to be set to, to be able to break even at the end of the 15-year time frame while also being competitive.

MGMT3000/5039 The Drone Parcel Delivery Project-Assignment-Curtin University.

MGMT3000/5039 The Drone Parcel Delivery Project-Assignment-Curtin University.

To help you to provide a response to this request you are required to present the following in your formal report to the “Automated Parcel Delivery” company planning design team who will then submit your document at the board meeting.

1.Draw the Gantt charts pertaining to each of the Work Breakdown Structures for the Mechanical, Communication/IT and Electrical scope of work components as per Tables 5, 6 and 7 respectively. (Note: No Gantt charts can be hand drawn as this is a formal report. All charts are to be clearly labelled including total time duration in weeks). Each Gantt chart drawn is to fit to the size of an A4 sheet of paper

2.Draw an AOA diagram for the of the Electrical Engineering scope of works,starting from and including activity “AE” up to and including activity “UE”. Refer to Table 7
a. Find and state the critical path and determine its duration in weeks
b. State by how many weeks equipping the switch room with the main
switchboard and protection fuses and circuit breakers at the docking
stations can be delayed by, without affecting the completion time of the
Electrical Engineering component of the project
c.State by how many weeks can the Installation of the interruptible power
supply equipment in the main switch room(s) can be delayed by, without
affecting the completion time of the Electrical Engineering component of
the project
d.State by how many weeks the Termination of the diverse 66k V cable from
Western Power for power robustness and reliability at the Kewdale docking
station can be delayed by, without affecting the completion time of the
Electrical Engineering component of the project
e.Similarly, by how many weeks could the installation of the lightning and
surge protection at all docking stations be delayed by, without affecting
the completion time of the Electrical Engineering component of the project

3.On one A4 sheet of paper using the data given in Table 4 of the Appendix and incorporating information attained from question 1, draw the complete Gantt chart of the “Master Plan” for this project. Note the total duration time is to be given in weeks

4.Using the now completed Table 4 determine the overall expected project
completion time from the initial tender, “Activity A” to the commissioning and handover of the complete project, “Activity K”.
a. Clearly state how many weeks in total it will take to build and commission the five docking stations. This is a critical number as it will determine when the project can commence earning revenue
b. Show the derivation of the total annual revenue equation in terms of $N
that is expected during the 8th year of operation

5.Draw on one A4 sheet of paper and clearly label the pre-tax cash flow diagram for the total project showing all relevant contributing cash inflows and outflows

6.The project is to break even at the end of 15 years (this includes all feasibility and construction times). By calculating the value of $N, determine the delivery charges fin dollar terms for each order value given that “Automated Parcel Delivery” company can negotiate an interest rate of 2.02% and 25 delivery drones are purchased. Also comment on the competitiveness of the calculated $N value (show your working and equations used*)

7.Alternative Scenario: How many additional delivery drones can be purchased if the negotiated interest rate in this alternative scenario is 1.89% and the delivery price of $N is fixed at $20, given that you are still required to break even at the end of the 8-year time frame. (Show your working and equations used*)

8.You are asked to look at a further scenario, where the “Automated Parcel
Delivery” wants to set the delivery prices of $N at $15 and that the project must break even at the end of 12 years using a total of 30 delivery drones. Calculate the required interest rate value to be negotiated to achieve this. Give your answer as a %, to an accuracy of seven significant figures. (Show your working and equations used to calculate this*). Comment on the calculated interest rate.

9.Part of your role is to select the engineering contracting company to carry out the build of the Electrical, Mechanical and Comms IT construction work. The list of accredited tenderers has been narrowed down to two companies. Both companies have provided their respective financial statements for the past two fiscal years. Refer to Appendix 2. Calculate the solvency, liquidity, and profitability ratios for each company (for both financial years) and display your calculations. Based on your calculations in about 500 words make your recommendation as to which company would be better placed to undertake this project. In your own words clearly explain your reasoning.

Assignment Requirements
1.The Assignment is due on Sunday 9 May 2021 @ 23:59 (AWST) via Turnitin within Blackboard.
2.The Assignment is worth 25% of the total MGMT3000/5039 unit mark.
3.The completed front page is a declaration of originality of your work.
4.Your report must have a signed cover page detailing your name and student ID number.
5.You are required to hand in a complete individual report, and it will be marked individually.
6.As this is a professional report for the customer to present to their executives at the next board meeting. All charts and diagrams are to be clearly labelled and no hand drawing is allowed.
7.All text must be in your own words.
8.Calculations and equations used are to be typed and shown.
9.Label clearly which task you are answering.
10.A total of 15 marks will be allocated for the overall presentation of the assignment.
11.Late assignments – will incur a penalty as stated in the unit outline.

NOTE: For the Tasks 6, 7 and 8 you are required to only use and show the Economic Equivalence and Annuity formulas in your calculations.

MGMT3000/5039 The Drone Parcel Delivery Project-Assignment-Curtin University.

MGMT3000/5039 The Drone Parcel Delivery Project-Assignment-Curtin University.

Report Format and Mark Breakdown
1.A signed cover page containing your Name and student ID number. The cover page is to also contain the names and student ID numbers of the other team members in your group. Clearly indicate who the author is of each document.(Note you design your own cover page. It is not the standard cover page from the assignment office).
2.Executive summary paragraph (in your own words) outlining what this report addresses and its findings (about 250 words)
3.Your answers to each of the nine tasks. Include all charts and calculations. Each task you are answering must be numbered. 165 Marks – For tasks 1 to 9. Refer to task list for the mark breakdown.
4.Concluding paragraph (in your own words) summarising your results (about 100 words)
5.Assignment Presentation and layout (Remember this is a formal report)
6.Total possible assignment marks

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