Question 1

Using the Scenario, answer the following questions about the Financial Appraisal of the option to build a new campus onthe site of the Old Fire Station Headquarters. Decide whether the action taken represents an appropriate application of the Five Case Model for this project and select the response that supports your decision. The cost of inflation is estimated to be 2% per annum. Should the project manager use this information when preparing the Financial Appraisal for this scheme?

Options :

A : No, because the Financial Appraisal should include constant or real prices.

B : No, because the Financial Appraisal should exclude the cost of general inflation and depreciation.

C : Yes, because the Financial Appraisal should include the cost of inflation.

D : Yes, because inflation will reduce the cost of the scheme over time.

Answer: C

Question 2

The Financial Appraisal for the new campus includes the cost of inflation over the life of the scheme. Is this an appropriate application of the Five Case Model for the project?

Options :

A : No, because the Financial Appraisal should be based on constant prices.

B : No, because it is the Economic Appraisal that should include the cost of inflation.

C : Yes, because this will be an on going cost to the new campus over the life of the scheme.

D : Yes, because all of the new campus assets will decrease in value over the life of a scheme.

Answer: A

Question 3

The Financial Appraisal includes a sensitivity analysis of the new campus based on varying forecasts for future demand. Is this an appropriate application of the Five Case Model for the project?

Options :

A : No, because a sensitivity analysis is only conducted in the Economic Case.

B : No, because the forecast for demand was identified in the Strategic Case.

C :

Yes, because the preferred option should be subject to a sensitivity analysis in the Financial and Economic Case.

D : Yes, because all short listed options should be subject to sensitivity analysis.

Answer: C

Question 4

The Financial Appraisal for the new campus includes the cost of inflation over the life of the scheme. Is this an appropriate application of the Five Case Model for the project?

Options :

A : No, because the Financial Appraisal should be based on constant prices.

B : No, because it is the Economic Appraisal that should include the cost of inflation.

C : Yes, because this will be an on going cost to the new campus over the life of the scheme.

D : Yes, because all of the new campus assets will decrease in value over the life of a scheme.

Answer: A

Question 5

Using the Scenario and the information below, answer the following questions about the creation of the short listed options for the Pittville project. Spending Objectives At least 15% increase in rate of participation A 15% increase in attainment of qualification At least 65 education courses Critical Success Factors Strategic fit and business needs - fit for purpose schools and universities attractive to 16-18-year-old learners Potential Value For Money Supply side capacity and capability Potential affordability Potential achievability Remember to select 2 answers to each question. Scoping Solution 1: 'Current level of participation, 55 education courses and current qualificationsuccess rate' Which 2 statements are correct about this entry in the Options Framework?

Options :

A : Should be carried forward to the short listed options.

B : Delivers against one or more of the critical success factors.

C : Will represent a benchmark for Value For Money throughout the appraisal process.

D : Supports one or more of the Spending Objectives.

E : Incorrectly identified as a Scoping Solution.

Answer: C,D

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