Project Assessment

BSBPMG533: Manage Project Cost

Appendix - Simulation Pack

Specific task instructions

This Simulation pack contains information required to complete the Project Assessment.

Case Study – Gelos Enterprises

You are a Project Officer at Gelos Enterprises (Gelos), an innovation and professional services firm. As part of its professional services capability, Gelos provides consultancy services to clients across a wide range of industries.

Gelos Enterprises has recently entered into an agreement to provide consultancy services for a new client, Bounce Fitness. Go to Bounce Fitness' website to review further information on the organisation.

Please review relevant

financial and budget

 

policies and procedures

.

As part of the agreement with Bounce CEO, Margaret House, Gelos will be providing project management services to Bounce fitness for the following two projects:

Gym renovation

Annual c

onference

for clients

.

You have been tasked by Margaret to manage both projects. Margaret will assume the role of Project Sponsor.

Below is the information you will need for the projects. Ensure you progress through the assessment in the order it is presented, as each section will provide additional information required to complete the activity.   

Project 1: Gym renovation

Task 2 – 4

Note: The following contains information required to complete Task 2 – 4 of BSBPMG533_AE_Pro2of2

Bounce would like to refresh its existing Sydney gym through undergoing a large-scale renovation.

Project outcomes

It is hoped that the renovation will:

help grow Bounce’s member base through offering cutting-edge fitness and wellness technologies and equipment.

Your role and project team

The CEO, Margaret House, has appointed you as the Project Officer, including managing the project costs and making sure the budget is met and adhered to. Your project team will include:

Donna Chisholm, who is the Project Co-ordinator, will help with contacting and liaising with the vendors.

Ben Streep, the Administration Assistant will help

with paperwork required for the renovation.

Proposed budget and timeline

It is projected that the gym renovation will incur costs and timeframes similar to a recent Bounce Fitness gym renovation in Cairns, Queensland. See Table 1 for Cairns renovation budget, with an additional 5% maximum on the Cairns budget allowed. Margaret House has requested that the gym renovation is complete in six months’ time.

However, there are risks associated with the Sydney location that may bring up issues that did not occur during the Cairns build. These include construction delays due to contractor shortages, as well as issue with access and on-street parking for contractors.

There are also concerns about the fitness equipment, with Bounce’s usual supplier facing equipment shortages. This may mean that Bounce needs to go negotiate with a new equipment supplier and potentially pay up to 10% more for the same equipment purchased in Cairns.

Table 1 – Conference budget from previous year

Expenses
Fitness equipment	$30,000
Office equipment (desks, computers, printers, membership scanners, etc)	$10,000
Flooring (bathroom tiles, wooden floor, gym flooring)	$30,000
Other gym supplies (towels, TVs, water, etc)	$10,000
Bathroom (showers, lockers, basins and taps)	$20,000
Construction costs	$70,000
Building plans	$5,000
Total	$175,000

Bounce generates income from its tiered membership structure. Members pay an annual fee upfront for tiered benefits based on their membership type.

Bounce is an exclusive gym, with a loyal membership base. Many members commit to a gym before it physically opens.

For one month’s time, Margaret anticipates the forecasted members in Table 2.

Table 2 – Expected membership numbers

Membership type	Membership cost	Expected new members in first four weeks
Gold membership	$1,066 per year	110
Silver membership	$936 per year	95
Bronze membership	$832.00 per year	90

Margaret anticipates a net profit target in new memberships of approximately $100,000 in four weeks.

Budget variances of up to 5% can be accommodated but must be reported.

All expenses should be accounted for at the end of the project.

To help get you started, Table 3 details the Work Breakdown Structure (WBS) for the renovation.

Table 3 – Gym renovation Work Breakdown Structure

Task	When	Who
Building approvals Design plans Submit plans to Sydney City council Receive approval	Six months prior to renovation completion	Project Officer
Construction incl. bathroom Get quotes from vendors Decide on preferred contractor Commence construction Finalise construction	Five months prior to renovation completion	Project Officer
New fitness equipment, office equipment, and supplies Get quotes from potential vendors Decide on preferred vendor Order new equipment Remove old equipment Install new equipment	Two months prior to renovation completion	Project Officer
Flooring Get quotes from potential vendors Decide on preferred vendor Order new flooring Remove old flooring Install new flooring	Two months prior to renovation completion	Project Officer

Complete Tasks 2 – 4 BEFORE moving to the next Tasks.

Task 5 – 6

Note: The following contains information required to complete Task 5 – 6 of BSBPMG533_AE_Pro2of2

The renovations commenced one month ago. At a recent team meeting, you received the following information:

building plans have been paid for in full (quoted amount $5,

1

00)

as expected, the team needed to negotiate with a new equipment supplier. This supplier is requesting payment up front,

with the total costing $

31

,000

you have paid office equipment upfront, with the total costing $1

 

,000

construction has commenced, and you have paid an initial payment to the construction company

for the construction and bathroom

of $25,000 (quoted amount $

94

,000)

you have not get paid for

, or received a quotation for

any other gym supplies

you have paid a 5% deposit on the flooring (quoted amount $30,000)

There has been unprecedented demand from members. See Table 4 for the membership commitments realised in the first four weeks of renovations.

Table 4 – Actual membership numbers

Membership type	Membership cost	Actual new members
Gold membership	$1,066 per year	130
Silver membership	$936 per year	92
Bronze membership	$832.00 per year	87

Complete Tasks 5 – 6 BEFORE moving to Task 7.

Task 7

Note: The following contains information required to complete Task 7 of BSBPMG533_AE_Pro2of2

Renovations are now complete, and the gym has been open for one month! You can’t believe how amazing the gym is!

Towards the end of the project, you received an email from the construction company letting you know that your final invoice will increase in price, to account for an additional $5,000 incurred due to contractor parking and access issues. As you needed to get the job finished, you agree to this increase.

Complete Task 7 BEFORE to moving to Project 2.

 

Project 2: Annual Conference

Task 2 – 4

Note: The following contains information required to complete Task 2 – 4 of BSBPMG533_AE_Pro2of2

Bounce would like to host an industry-sponsored conference that brings together Bounce’s clients, corporate partners, sponsors and investors.

Project outcomes

It is hoped that the conference will:

provide information on cutting-edge fitness and health topics, focussing on technologies, trends, wellbeing, and knowledge

promote bounce fitness.

Your role and project team

The CEO, Margaret House, has appointed you as the Project Officer, including managing the project costs and making sure the budget is met and adhered to. Your project team will include:

Donna Chisholm, who is the

Project

 

C

o-ordinator, will help with contacting and lining up the speakers.

Ben Streep, the Administration Assistant who has had experience with the ground level work required for a conference, and he will help to determine and prepare the venue.

Aditi Gupta, the Marketing Manager, will co-ordinate the marketing material, registration and

send out invites to attendees.

Proposed budget and timeline

Projected numbers will be 150 people. Margaret has set an aim to make at least 50% profit after cost, which equates to a net profit target of $200,000.

Budget variances of up to 5% can be accommodated but must be reported. To help ensure costs are kept within this 5% scope, any individual resources that exceed their estimated project costs by more than 5% must be approved by Margaret, in writing, prior to them being purchased or contracted.

All expenses should be accounted for at the end of the project.

To help get you started, Table 5 details the Work Breakdown Structure (WBS) for the Conference, and Table 5 outlines the conference budget from the previous year’s event to help get you started.

Table 5 – Conference Work Breakdown Structure

Task	When	Who
Venue Get quotes Decide venue Book venue and equipment Arrange catering	Six months prior to conference	Project Officer
Speakers Decide topics Identify speakers Arrange speakers Brief speakers	Six months prior to conference	Project Officer
Marketing Decide marketing communication strategies Develop promotional materials Implement marketing communications	Commencing on finalisation of venue and speakers	Project Officer
Registration Prepare conference materials Create registration process Process registrations	Two months prior to the conference	Project Officer

Table 6 – Conference budget from previous year

Expenses		Income
Venue	$70,000	Registration fees - individuals	$100,000
Equipment hire	$25,000	Registration fees - companies	$100,000
Staff time	$10,000	Sponsorship: Gold	$50,000
Catering	$15,000	Sponsorship: Silver	$45,000
Speaker travel	$6,000	Sponsorship: Bronze	$100,000
Speaker fees	$14,000
Registration software	$5,000
Marketing and entertainment	$10,000
Printing	$4,000
Courier	$2,000
Total		Total	$395,000

Additional conference detail

Speakers should be well known and will receive a fee of

between $1500 and

$2,000 for their participation.

It is expected that one to two speakers may

request more than this $2000

cap,

and this can be accommodated

if

the total speaker budget does not exceed the $1

4

,000 allocated by more than 5% -- unless

savings can be made on the catering budget (as below).

Margaret has requested that the specific expense of catering must not exceed $

15

,000

,

along with

her

preference for the team to

actually

come in under this cost

and potentially shift any savings to acquiring an additional speaker

.

The team may need to

consider limits on delegate numbers to make this happen

and or identify a stronger breakdown of catering costs, such as beverages, first course, second course etc.

Complete Tasks 2 – 4 BEFORE moving to the next Tasks.

Task 5 – 6

Note: The following contains information required to complete Task 5 – 6 of BSBPMG533_AE_Pro2of2

The project commenced one month ago. All team members are enthusiastic and fortnightly meetings have taken place. You are satisfied that at this early stage, the planned processes and procedures are being followed. At a recent team meeting, you received the following preliminary information:

registration software quotes show best option to be $5,500. The full amount has been paid for

.

a deposit of $3,000 has been paid for equipment hire (quoted amount $23,000)

marketing has commenced, with $4,000 already having been spent (marketing and entertainment quotes have been received to total $10,000)

the venue that meets all requirements has been confirmed, and a deposit of $15,000 has been paid (quoted amount $82,000)

staff costs to date are $2,000.

One speaker who the team agree is vital to the program has requested a $2,200 speaker fee, which is 10%

The team has also requested a sixth speaker, who they say will help complete the program at a cost of $1500

The catering was set to come in at $

18

,000, but the team have managed to bring this down to $1

4

,000 after removing the alcoholic drinks package.

Entertainment came in more than $5% above the $6,400 total allocated

Complete Tasks 5 – 6 BEFORE moving to Task 7.

Task 7

Note: The following contains information required to complete Task 7 of BSBPMG533_AE_Pro2of2

It is one month since the conference occurred, and all costs have been paid and income received.

You noticed towards the end of the project that the initial enthusiasm from your team members has died down. Some of the team members were slow in responding to emails and update requests. This meant that you could not report back to the CEO as regularly as required.

Income for the conference was as follows:

Table 7 – Actual income generated

	Actual income
Registration fees - individuals	$110,000
Registration fees - companies	$95,000
Sponsorship: Gold	$50,000
Sponsorship: Silver	$47,000
Sponsorship: Bronze	$93,000

Complete Task 7