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1a) PLAN

Role: Alex Larsen, the senior non-executive director of CC

Audience: board
Format: briefing paper
Skill: analysis skills in identifying information which is relevant to the decision
Marks: 18 + 4 (9 issues)
Timing: 44 min
Task: Analyses the financial and non-financial issues which will affect the final decision of whether to
accept the contract to build the road in Betal - recommendation is NOT required

FINANCIAL
1 liquidity / cash flows - payments from gov in delay, CC will have to finance the construction
working capital requirements upfront (loan repayment and covenant requirements will jeopardize
CC’s ability to win new contracts + loans due for repayment in the next three years to be
replaced by equivalent funding)
2 gearing / capital structure - CC will need to take further external finance on - CC aims to
maintain a capital structure which balances equity and debt
3 profitability - expected gross profit is 9.5% (target is 8%) - seems to meet however the buffer is too
thin …. all must go well for it to be really profitable
4 how well the budget has been prepared - given the losses in Alphia road construction and difficult
terrain in Betal (mountains) - how reliable our our estimates
5 dividends might be endangered - now there was first increase in dividends for three years, this
project may result in CC not being able to pay dividends at all if not run well

NON-FINANCIAL
6 difficult terrain in Betal (mountains and flooding) - could endanger key success factors such as
timing and profit
7 environmental issues
8 capacity - managerial, staff, machinery
9 size and complexity of the project - lack of experience

1 (a) ANSWER

From: Senior non-executive director of CC

To: Board of CC
Subject: Analysis of the financial and non-financial issues which will affect the
final decision of whether to accept the contract to build the road in Betal
seen

Hereby I attach the analysis of the potential issues related to the Construction project in
Betal for your consideration.

Briefing Paper:

ISSUES IMPLICATIONS for CC

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FINANCIALx

Liquidity / Cashflow Payments from the Betal government are

planned to come in delay at the end of the
fiscal year and will impact our cash flows
materially. 1 mark
… meaning we might struggle to finance the
project and our other operations without
significant additional external finance.

In addition in some years the milestone

payment is not covering all the cost
budgeted for the construction phase and
CC would need to fund it. 1 mark

CC has significant loan repayment coming

in three years and our inability to do so
might endanger our ability this should be
taken into consideration when entering into
new projects. 1 mark
and get loans, even though CC might be
able to cover the loans with equivalent
funding.

Gearing and Capital Structure CC will need a further loan to cover the
project, which will impact our debt vs equity
balance, which is CC’s aim. 1 mark

Worsening of gearing could lead to more

strict covenants and worsen the ease of
getting future loans. 1 mark

Profitability (expectation 8%) Current budget shows 9.5% gross profit on

this project, which is in line with CC’s
expectations, 1 mark however the buffer is
too thin for such a complex and unique
project for CC. 1 mark

All must go well with the project execution

and according to plan to keep it profitable,
which is a concern with such a complex
project, in the terrain we have limited
experience with. 1 mark

Budget Preparation Quality Given the experience with Alphia road

construction and its issues and budget
overruns we must scrutinize budget
preparation and estimates. 1 mark There is
no space for cost increases in the current
version of the budget. 1 mark

Additional complexity to the budget

preparation is the new mountainous terrain
for our company and inexperience with
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tunnels and hills. rep

Dividends Our CEO announced a payout of increase

in dividnect first time in three years. Such a
significant investment and project could
jeopardize future dividend the payout and
this further might negatively impact our
shareholders’ expectations. 2 marks

NON-FINANCIAL

Difficult terrain in Betal (mountains and flooding) This is a significant risk factor which might
impact the progress and success of the
project. 1 mark

Floods could stop construction works for

weeks and mountainous terrain usually
brings unexpected issues during the
construction of bridges and tunnels. 1 mark

Environmental issues

Capacity

Size and complexity of the project

14 tech
2 proft
16 / 22 marks

1b) PLAN

Role: Alex Larsen, the senior non-executive director of CC

Audience: board
Format: briefing paper
Skill: commercial acumen in identifying difficulties for CC arising from the criteria
Marks: 8 + 2 (4 criteria)
Timing: 20 min
Task: Discusses the difficulties CC may face in fulfilling the criteria stated by Desmond Otieno, the
transport minister of Betal

CRITERIA HOW difficult to fulfill

1 low price vs mitigating the environmental impact of the road when it opens & quick

2 timetable as short as possible poor roads through the Isnardi mountains - Flooding during
the wet season (traffic delays and sometimes the road is impassable - delays with supplies for
construction) plus difficult to operate in

3 limit its environmental footprint nature of the project is such that certain damage to the
habitats is inevitable

4 disruption to villages in the mountains inevitable

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5 transform the economy of Betal’s Eastern region / big boost to our country’s economy
not direct result of the project, CC might not be able to influence extent of economic growth and
transformation promised

2 PLAN

Role: Jo Issa, the project manager for the construction of the road in Betal
Audience: Oliver Wesonga, the junior member of the project team
Format: memo
Skill: scepticism skills - shortcomings and recommending improvements
Marks: 14 tech + 4 profi - 7 things to talk about
Timing: 36 min

Outline contents in PID - omissions

1 Purpose / goals
2 Objectives
3 Stakeholders
4 Project controls
5 Reporting - internal / external

Operational issues in PID

6 Resource constraints
7 Timing constraints
8 Cost constraints
9 Quality supervision and monitoring

2 ANSWER

MEMO

To: Oliver Wesonga, the junior member of the project team

From: Jo Issa, the project manager for the construction of the road in Betal
Subject: Project initiation document
Date: dd/mm/yyyy

Dear Oliver,

Thank you for preparing the draft project initiation document during the time when no-one was acting
as project manager. I appreciate this enormously.

I have just reviewed the outline contents of the project initiation document and a summary of the
section in it on the operational issues affecting the project.

Here are my suggestions of what I would like you to further include in this document:

Outline contents in PID - omissions

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1 Purpose / goals
2 Objectives
3 Stakeholders
4 Project controls
5 Reporting - internal / external

Operational issues in PID

6 Resource constraints
7 Timing constraints
8 Cost constraints
9 Quality supervision and monitoring

I would be grateful, if you could incorporate my suggestions into the document and send it for my final
review.

Thank you for all your efforts.

Have a nice day,

Jo Issa, the project manager

2 ANSWER

To: Oliver Wesonga

From Jo Issa
Subject: PID
Date: 6 May 2022

Dear Oliver,

Thank you for preparing the draft project initiation document during the time when no-one was acting
as project manager. I appreciate this enormously.

I have just reviewed the outline contents of the project initiation document and a summary of the
section in it on the operational issues affecting the project.

Here are my suggestions of what I would like you to further include in this document:

Purpose / goals

The PID should include the main purpose of the project, which is to build a road in Betal;s Eastern
region, cutting the average journey time by almost half. 1 mark

The PID should also included what Betal government hopes to achieve - enhance the Eastern
region’s economic development by investment into new roads to resolve traffic delays. 0 mark

Objectives
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The PID should include the financial and non-financial objectives for the project, which will be
evaluated in the end of the project to assess whether project was successfully completed: 1 mark
- The financial objectives will be focused mainly on achieving the profit margin (expected 9.5%,
min 8%) and comparison of actual vs budgeted costs. 1 mark
- Non-financial objectives, such as minimum environmental footprint and no health and safety
incidents. max

Stakeholders

The PID also need to state which the most important stakeholders in the project will be and what are
their interests and influences. - claims 1 mark

The key stakeholder will be Betal’s government and the other will be the people of Betal’s, employees,
and suppliers. 1 mark

Project controls

Project controls of the construction work will be a key for monitoring of progress of the work already
done. There is the risk that any delays or problems not resolved on time may caused that the project
will not be successfully completed. 1 mark

The PID should include the timetable for review of different project variables - quality, timetable,
environmental footprint, etc. 1 mark

There are also other section omitted from your PID such as reporting framework - internal / external,
PIS Sign off or Summary. 1 mark

Here are my suggestions on operational issues into PID:

Timing constraints

Your PID includes a summary of the project stages but is too vague. It must be more detailed and
splitted for different milestones and technological stages. 1 mark

There is also a rainy season in this area, so this information needs to be considered and during this
part of the year the construction works need to be carefully monitored and stopped in case of need.
This must be included in your timetable. 1 mark

Cost constraints

Cost constraints should include budgeted costs for each stage. This should be a more detailed
summary of all expected costs splitted into categories, such as material, salaries, subcontractors,
machinery rental, etc. 1 mark

This should also include project management costs which are not directly linked to the construction
work, but will be incurred, such as negotiation costs with suppliers. 1 mark

Risks

The risk ….
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I would be grateful, if you could incorporate my suggestions into the document and send it for my final
review.

Thank you for all your efforts.

Have a nice day,

Jo Issa, the project manager

12 technical
4 profi
16 / 18 marks

3(a) PLAN
Role: Pat Singh, a consultant employed by CC’s board
Audience: Imena Bhudia, chairman of CC
Format: confidential memo
Skill: scepticism skills by challenging the comments made at the emergency meeting
Marks: 12 marks (10 tech + 2 profi) - 5 concerns to talk about
Task discuss the ethical and reputational concerns raised at the meeting

ethical concerns
1 integrity and honesty, being moral, doing the right thing - ensure the site’s tidied up, lights fully on,
etc.
2 I’ll also speak to the staff there and make sure they’re all saying the same things. They’ll get a
hardship bonus - bribe
3 disclosure, transparency, accountability - not been able to meet with Burton Vadher, CC’s chief
executive / CC has made any comment about last night’s events, protesters who trespass on building
sites have only themselves to blame
4 due care, responsibility - providing safe working environment - lighting two months ago - going
to be fixed before internal audit’s visit planned for next month plus patch of oil, which hadn’t been
mopped up

reputational concerns
5 escalation of the recent protests against the new road, protesters who trespass on building
sites have only themselves to blame
6 if police and health and safety authorities medialize issues
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3(a) ANSWER

CONFIDENTIAL MEMO
To: Imena Bhudia, chairman of CC
From: Pat Singh, consultant
Subject: Ethical and reputational concerns raised at the meeting
Date: dd/mm/yyyy

Dear Mrs. Bhudia,

I am honored to be able to share my views with you on ethical and reputational concerns
raised at the meeting.

Hardship bonus
Mr. Burton suggested hardship bonus is to be paid to staff at the construction site because
of all the stress they had last night.
I would reconsider this payment as in the light of what Mr. Burton had said in respect of him
speaking to the staff there and making sure they would all be saying the same things, this
could be considered as a measure to silence the staff and cover up issues that they are on
the site. 1 mark
CC’s board has expressed in the annual report its stand against the bribery and
corruption, while ensuring a commitment to honesty. This action of paying the hardship
bonus might be not quite perceived as being in line with these high ethical principles. 1 mark

Tidying up the site

Furthermore, Mr. Burton said he was to ensure the site would be tidied up, lights fully on,
before police and health and safety authorities would be looking at the site.
This might be considered as tampering of evidence and may even end up being classified as
a criminal offense. 1 mark Once information about such an action leaks out to the public,
the reputation of CC as being ethical business, avoiding false claims and misleading
statements, would be totally damaged. 1 mark

Statement blaming protesters

Mr. Burton’s intention to issue a press saying that CC regrets the injuries, but protesters
who trespass on building sites have only themselves to blame might be considered to be
lacking ethical consideration in respect of the parties affected by the construction. 1 mark
As a result, such a statement would hurt CC’s image as socially responsible business. 1
mark

No meeting with the protesters

The protesters are unhappy that they have not been able to meet with Burton Vadher, CC’s
chief executive. This shows that CC disregards its stakeholders. 1 mark
This has a very negative impact on company’s reputation as it indicates the company
ignores the impact of its actions on less powerful stakeholders, i.e. local communities. 1
mark
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Also continuing ignorance of protesters might lead to more frequent protests in the future
and may significantly disrupt the construction work especially if protesters again enter the
construction area. Thus the reputation of the company can be damaged both due to
ignorance of local communities and not completing the road on time. 1 mark

Health and safety on site

Based of Mr. Burton’s statement the poor lighting on the site was reported but wasn’t
discussed on board meeting during the last 2 months as it was considered to be a minor
point.
This disregard of health and safety deficiencies represents lax approach to internal controls
and may be seen as unethical approach to CC’s employees’ safety. 1 mark Additionally,
negligence like this could result in legal issues. max

I hope these points will be beneficial to you and would like to kindly ask you to keep my
observations confidential.

Best regards,
Pat Singh, consultant
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3(b) PLAN
Role: Pat Singh, a consultant employed by CC’s board
Audience: CC’s board
Format: summary
Skill: evaluation skills - recommending appropriate improvements
Marks: 18 marks (14 tech + 4 profi)
Task: assess the control weaknesses discussed at the emergency meeting,

control weakness - consequence - recommendation for improvements

1
2
3
4
5

3(b) ANSWER

To: CC’s board

From: Pat Singh, consultant
Subject: Summary of the control weaknesses
Date: dd/mm/yyyy

Control weakness Consequence Recommendation

Failure to act on
recommendation to improve
lighting at the site
Lighting - there are not enough
lamps in the area which would
make the whole area more
visible.
As the area was not fully light
up the employees could not
see the protesters.
Make sure all areas are fully lit
up. The responsible person for
the lights needs to be
appointed with a deadline for
such action.

Inadequate security staffing Security issues like Agree on minimum number of

trespassing, theft, etc can security staff on site with
Not enough guards present occur, which can lead to security provider
damages and losses

Poor cleaning standards This increases the potential for Set a strict cleaning schedule
injuries - for example, the and make sure that it is
The floor was dirty and there protester slipped on the oil adhered to by regular
were oil spots spot, fell and was hurt inspections
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Poor stakeholders
identification and strategy
Inadequate security reporting
The security company failed to
communicate the previous
break-in at the site.
Inadequate contingency plan
on staffing
Protesters from pressure
groups were not identified as
important enough to keep
informed.
This led to escalation in
protests and eventual break-in.
CC was not able to take any
necessary corrective steps to
increase the security of the
site.
When an employee falls sick or
needs to be absent for any
other reason, there is no
stand-in to ensure the
continuity of the work which
can lead to issues in the
project performance such as
failure to replace the H&S
manager.
In short term setting up a
discussion with protesters will
help manage the current issue.
For the future a systematic
review of stakeholders is
advised as their interest and
power to impact the company
can change with time.
Request the security company
to report any site disruptions
immediately to …...
Make sure there is a stand-in
matrix in place, each staff
member should have a stand-in
who is able to step in and cover
the critical tasks in case of
absence
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3(c) PLAN
Role: Pat Singh, a consultant employed by CC’s board
Audience: CC’s board
Format: briefing paper
Skill: commercial acumen skills in identifying benefits that would be relevant to CC
Marks: 20 marks (8 tech + 2 profi)
Task advantages for CC of establishing a separate risk committee

benefits to CC of establishing a separate risk committee

1 board overload as evidenced by lack of time to discuss H&S issues

risk committee would focus separately on risk assessment and management including H&S problems
that are evident at CC ( CC was obliged to report the $300,000 fines it paid as a result of
injuries to employees arising from failures to remedy dangerous conditions on site)

2 audit committee has broad scope and currently meets every three months with backward
perspective
risk committee could meet in greater frequency to focus on risks prospectively as they arise and give
risks in CC appropriate attention and prominence, as currently risk management seems to be not
having prominent place in CC

3 composition of audit committee is entirely of NEDs plus it is assisted in its work by a risk
manager and a health and safety manager
risk committee may comprise also of EDs and risk manager and a health and safety manager
could be its regular members
risk committee would have deeper insight into CC’s risks and operation than currently audit committee
has

4 currently CC has been facing H&S issues, ethical and reputational issues
establishment risk committee could improve stakeholders and shareholders’ perception of CC and be
a measure to improve its reputation

3(c) ANSWER

Briefing paper

To: CC’s board

From: Pat Singh, consultant
Subject: Advantages for CC of establishing a separate risk committee
Date: dd/mm/yyyy

CC could benefit from introducing a separate risk committee in several aspects.

Focus on risk
Currently, CC’s Board formally reviews major risks, whereas the general responsibility for risk rests
with the audit committee that meets 4 times a year.
As it is apparent from several risks materialising at CC recently (incident with the protesters, H&S fine,
loss making construction project in Alphia), risk management should be given greater focus (tone at
the top). A dedicated risk committee would be an appropriate step in accomplishing this.
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Effective risk management

The risk committee may includes (besides the non-executive directors) also the risk manager and a
health and safety manager, who are well informed of CC’s operations and equipped to identify any
new risks arising (have greater insight and experience).
This mixed-up team should be much more effective in developing, communication and monitoring
CC’s risk management process.

Risk management embedded in operations

Risk management should be embedded in CC’s everyday operations and be a recurring activity.
Risk committee would be able to meet more regularly and as needed in order to devote appropriate
time and attention to risks CC is facing (timely reaction).

Broader scope
Whereas an audit committee might be more focused on just financial and audit risks, the risk
committee should be able to cover all the risks CC faces - business, strategic and operational risks,
such as the neglected H&S.

4 PLAN
Role: Pat Singh, a consultant employed by CC’s board.
Audience: board
Format: TWO presentation slides with accompanying notes, for the chief executive
Skill: communication skills - make the issues clear to the board
Marks: 10 marks (8 technical + 2 profi)
Task benefits and the costs to CC of investing in big data analytics
evaluate +/- the opportunity - long-term infrastructure management of roads

slide 1 - benefits and the costs to CC of investing in big data analytics

benefits
predictive analysis and forecast - traffic usage (time to do maintenance), weather conditions (snow),
traffic funnels and most exposed areas (will require more frequent maintenance),

cost
1 SiteSmart initiative compatibility and synergies
2 subject to winning the long-term infrastructure management of roads

slide 2 - evaluate +/- the opportunity - long-term infrastructure management of roads

pros
1 previous experience with road maintenance and these countries
2 long-term source of revenue, growth opportunity

cons
1 state to roads in these three countries might be worse than expected - costs might be higher than
expected
2 fee - how agreed - if conditional on traffic or if conditional on maintenance / services provided -
might influence profitability
3 additional investments needed to expand CC’s capacity - funding, working capital mng
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4 ANSWER

Slide 1 - benefits and the costs to CC of investing in big data analytics

Benefits

- strategic competitive advantage to CC, even in gaining road infrastructure management

contracts

Costs

- investment in the collection, analysis and safety of big data

- to be recovered once contracts are won and/or through efficiencies and cost savings

Notes to slide 1

BENEFITS

Having invested in our SiteSmart initiative to improve our project management, the next step CC
should take to enhance our competitiveness will be to start effectively using big data. We shall
be looking to upgrade our systems to take full advantage of it. 1 mark

Big data will bring CC a strategic competitive advantage in the area of infrastructure management
of roads as CC can use information available on traffic volumes and road conditions to run our
operations more efficiently and smartly than our competitors would. 1 mark

COSTS

Big data will require investment in their collection, analysis and safety, however I am confident that
the investment would be quickly recovered in case the new long-term infrastructure management
contracts available on the market are won. 1 mark

Slide 2 - Evaluation of long-term infrastructure management of roads in the three countries

Benefits

- Growth in service revenue (core business)

- Long-term

- Geographical presence

Considerations
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- Uncertainty over fees and costs

Conclusion - integrated package that none of our competitors can match

Notes to slide 2

Benefits - Suitability

CC’s core business has been to provide support services, such as road renewal and
maintenance so this seems to fit with our current strategy and core competence. 1 mark

Another step in our further growth is to apply for long-term infrastructure management of some of
the road network in Alhia, Betal and Omegalend. This would bring CC the desired long-term growth
in the service revenue segment in all 3 countries that we have been historically strong in. 1 mark

Considerations - Acceptability

Our income will be in the form of fees paid by government or toll charges on road users, or a
combination of both, which creates a risk of uncertainty in terms of projecting how much we will
actually earn. 1 mark

Also, as the contracts are to be long-term, the current estimate of the maintenance cost might be not
that reliable. 1 mark

Conclusion

We are well positioned to offer governments of Alhia, Betal and Omegalend an integrated package
of construction and support services that none of our competitors can match. We shall be the
partner of choice for all three governments. 1 mark