MBA643 Project Risk, Finance and Monitoring Report Sample

MBA643 Project Risk, Finance, and Monitoring Report Sample 2 

Your task

You are required to participate in a group activity and to write a 1200-words justification statement based on the analysis and calculation you have completed in your group.

Assessment Description

This assessment will allow students to organise financing for the projects and create comprehensive and reliable project reporting including analysis of the problems, feasibility, scenario modelling and project budgets.

Assessment Instructions

During week 7, you will participate in a scenario analysis that is closely related to your assessment. For this activity and for the assessment, your workshop facilitator will form the class into groups of four members (no more). Class attendance is mandatory to a) get acquainted with your group members and b) practice activities as a group. Your workshop facilitator will provide further guidance on the day of your scheduled class. During week 9, you and your group are required to participate in an in-class activity. Based on the information presented in the hypothetical problem, you and your group are required to collaboratively discuss the scenario and follow the instructions in it. You will have to keep notes of discussion and calculations as your submission will be based on that. Once your group finishes all the discussion and activities, you will then have time to prepare your individual submission.
By week 10, you are required to submit an individual 1200 – word individual justification statement based on the activity. This must be referenced in accordance with 

Kaplan Harvard

Referencing Style and presented in the form of in-text citations and a reference list at the end of your proposal. Workshop slides, Wikipedia and other ‘popular’ sites are not to be used.

Solution

Individual Justification Statement

Tilt Renewables can determine about project to be undertaken avoid by making sure the project is in line with the organizational strategy.

The free cash flow has been mentioned below:

The initial investment will cause the company to witness a cash outflow of 100 million dollars. However, considering the debt-to-equity ratio of the company it is better to raise a mix of equity and debt capital. Therefore, the indigenous outflow of cash from the company will be related with the payment of interest. The subsequent years will generate a free cash flow of over 15 million dollars. According to the MBA Assignment Expert, The amount of free cash flow that has been generated by the company will be able to generate sufficient outflow to support operations and maintain capital assets annually because the project that has been proposed will require a definite amount of expense to be incurred that has been considered before the net present value has been calculated. Also, the capital assets of the company are very high compared with the initial investment. The NPV of the project is $55895237 and it is positive implying that the project will be generating positive cash flow for the company.

The project selection needs to also include assigning project responsibilities to the right person. The NPV does not take the consideration the emissions of CO2 and the impact on the project. The NPV is an investment appraisal used to determine the present value of future cash flow. However, it should be stated that the company must take the CO2 emissions while calculating the NPV because it shows the cost of adopting the project and whether the project is sustainable. 
A project which is not in line with the strategy and does not help in organizational objectives and environmental goals cannot be taken by the organization. While selecting any type of project the organization will have to also analyse and understand the requirements of the project and whether they really serve the purpose and also check on the budget and also the possible returns from taking up the project if the outcome of the project after the analysis and calculation is not the satisfactory project will be rejected. 

The other important tools and measures used by the data analyst are network diagrams, and the critical path method used to monitor and assess the project in real-time. Work breaks down tool or measure shows break down of various activities.  Documentation also plays an important place in case of various projects. Renewable energy project analysts include various tasks like planning the installation and improvement of renewable energy. The project analyst needs to reorganized manage the time in a good way to plan effectively for various activities and operations (Celik and Celik, 2018).

Project cost management in renewable energy company Tilt renewables helps manage the project's planning and decide on the amount of budget and spending necessary for the project. In case any project cost management becomes very important a good cost management technique helps in better managing the cash without cost management organization may overspend the money cost management aims at helping the company incorrect planning of the resources. Cost management helps the Tilt renewables decide on the budget and utilization of the cash. The organization will know how much it needs to spend and divide the expenses correctly. It will help the organization make correct decisions, understand how the project is moving on and take the necessary actions. 

The main focus is reducing the unnecessary cost and increasing the quality of service to the people. Regulating the price of the energy sector is important to control the company's expenses. Renewable energy usually helps people in getting services at less rate. Renewable energy is the alternative to electric energy and cost management helps in more effectiveness of the Tilt renewables (Drury, 2018). A company like Tilt, which is in the energy (utility) sector, must require a huge amount of initial investment and periodic investment for the replacement of assets. (Egli, Steffen and Schmidt, 2018)
Since there is a reasonable amount of records of statements, investors can empirically find out whether the company would be a good investment or not. This widens the company's financing options and, therefore, can now issue shares that are of higher risk than debt. Since Tilt Renewables is not into its mature phase yet, there is always the possibility of facing financial distress due to one wrong decision, or the sources of financing demanding their funds back due to uncertain future profitability. 

The debt to equity of the company in 2019 is 1.50 (Au.finance.yahoo.com, 2022). The debt-to-equity ratio is high; hence, the solvency risk is also high. The industry average of debt-to-equity ratio is 0.53. Therefore, the company's solvency position is not good. The current share price of the company is $8.01 (Tilt Renewables, 2022). The investment will increase the profitability of the company therefore, the current share price of the company will increase in the future. These become the reasons for consideration when the company is considering commencing a new project. Certain issues like: how will the new project affect the existing projects, is there a chance of earnings deterioration due to the new project, how long will it take for the new project to generate positive cash flows, up to what extent will the company's daily operations be affected by it, will the new project degrade the credit rating of the company, and when will it be expected to recover from it, if the new project decreases the credit rating, does the company have the additional funds required to pay to the debtholders, how much weight does the new project carry, what if the project fails, how well would the company do if the project is not undertaken, and many more. 

There is always the possibility of earning negative cash flows in the initial years followed by sustainable long-term positive earnings. After the project's announcement, the confidence of the market in the project is displayed through the share price and a hike in it generally means that the project too might generate positive earnings and be beneficial to the company. 

Project completion is followed by regular verification of functioning and energy production. Additional stock or spare parts are stored in case a wind turbine lacks performance. A company has to gain the rights to construct and make sure that the impact of the surrounding habitat is minimized. One major environmental concern prompted by wind farms is the impact on birds. (Miller and Keith, 2018) It is considered normal to find an approximate number of bird corpses in a specific period. This approximation peaks in the migration season and is only approximated to predict the useful life of the wind turbines' parts (or blades). This impact or environmental loss is considered inevitable. The investment being made is in relation with solar panel set up and the generation of renewable energy that will not harm the ecosystem of area implying that the project is a very sustainable one. Unlike the infrastructural considerations become quite a big concern when the wind farm's location is prone to natural calamities like floods and hurricanes. These can result in major losses of the company and the wind farm's surroundings. The project that has been initiated will not be affecting the ecosystem has stated above and considering the fact that the company will be investing a solar panel project shows that the energy generated will be renewable as well thereby, contesting the wind mills in a better way.

References

Au.finance.yahoo.com. 2022. Yahoo is part of the Yahoo family of brands. [online] Available at: [Accessed 31 May 2022].

Celik, Y. and Celik, S.G., An Algorithm for Research Project and Reasons of Rejection Retrieved 30 May 2022, from https://ijbcs.com/images/stories/doc/2021/1.Celik%20Y.%20Medical%20Errors%20Third%20Cause%20of%20Death....pdf

Drury, C., 2018. Cost and management accounting. Cengage Learning, from https://www.academia.edu/download/61659347/StudentManual_-Drury_Q___A_Study_book_1_20200102-115374-1jy93px.pdf

Egli, F., Steffen, B. and Schmidt, T.S., 2018. A dynamic analysis of financing conditions for renewable energy technologies. Nature Energy, 3(12), pp.1084-1092. https://www.research-collection.ethz.ch/bitstream/handle/20.500.11850/309636/3/EgliSteffenSchmidt2018_Financingdynamics_green_publish.pdf

Miller, L.M. and Keith, D.W., 2018. Climatic impacts of wind power. Joule, 2(12), pp.2618-2632. https://www.sciencedirect.com/science/article/pii/S254243511830446X

Tilt Renewables. 2022. Snowtown North Solar Farm | Tilt Renewables. [online] Available at: [Accessed 31 May 2022].