MBA643 Infigen Energy Analysis Assignment Sample

• Subject Code : MBA643
• University : Kaplan University My Assignment Services is not sponsored or endorsed by this college or university.
• Subject Name : Management

Project Initiation, Planning and Execution

Executive Summary of Infigen Energy

Company Strategy- Infigen corporate strategy is to provide customers reliable and competitively, cost effective and clean energy by combining intermittent renewables with fast start firming assets.

They have a belief that their clients and their partners. Infigen provide them the customized solution to the specific needs of the different businesses and by giving them dedicated relationship managers which are focused on serving and evolving needs.

Their customers are various business segments and sector which include manufactures, Telecom providers, F & B industry, Construction companies, Educational Universities and hubs and other commercial units.

The Aim of the report is to identify the project selection criteria, Project funding, Project Planning and Execution by Infigen Energy and ways to monitor the cost of the Project.

Report has been prepared to identify the various steps and cost controlling techniques available in the energy sector which is available to Infigen Energy which can be implemented by Infigen.

Introduction to Infigen Energy

The selection of an optimal renewable energy project and its performance assessment is a major challenge for most of energy companies including Infigen. Evaluation of projects in terms of project criteria and task completed as per the expectation is complicated but an important factor in success of the project. To do so different project management process is available which can help management in their decision making towards a project.

Project Selection

Infigen is renewable Energy Company which has large fleet of renewable energy assets in all over Australia. In addition to their own assets, in addition to this they also contract the output from other energy operators. Project selection process evaluates various individual ideas or investment options and one which fit the criteria below are selected further to analyse for final decision.

Following are the project selection criteria

• Organizational Goal or strategy is an important factor to choose a project, an idea must align with the goal or business strategy of the company.
• Project Champion or Sponsor is identified
• Do Environmental or Organizational assessment.
• Assess the available resources and required resources in terms of money, material and Man to complete the project.
• List down and identify all Parameters to gage the success.

To analyse further and finalize the process following tools and techniques are used

Cost Benefit Analysis- In this tool we see that benefits are more than the project cost.

Payback period – Payback period is the time in which, total investment cost will be recovered, so shorter the period better the project

Net Present Value- NPV is the difference between the sum of the Present Value of all cash flows (Revenue) and sum of present value of all investment and cost. If NPV is positive, project is acceptable or vice versa.

Internal Rate of Return (IRR) – IRR is expected return on the investment from a project, higher IRR is better the investment opportunity

Cost Management

Cost Management is a very important process or step in overall project management, it is very crucial step in success of failure in the project. It the process by which one plans and manages the budget of a project. Cost managers uses this as a tool to measure the performance of the project and monitors the project cost against the budget set.

This process of cost management begins in the planning phase itself and ends after the winding up of the project.

A company which does not implement cost management system as part of project management, takes huge risk and could lose money and end as project failure. Even good investment projects can also end up as loss if no cost control is followed. Another issue is that you might incorrectly invoice your customers. All this leads to a sloppy budget and a dangerous inability to note when you’re overspending.

Here are just a few commonly known and used project KPIs that are essential to effective project budget management:

• Actual Cost, which is actual cost of the work performed also known as ACWP, to show that how much has been spent on a particular date on the project.
• Cost Variance it indicates the variances in budget (estimated cost) vs Actual cost against estimation
• EV or Earned Value is the approved budgeted cost against the work performed till date also called as BCWP. Basically the cost for approved and performed
• Planned value or PV is the budgeted cost of work scheduled at a particular date, kind of milestone budget, e,g in a construction company floor wise cost or activity wise budget .
• Return on Investment is a popular term used in the project management it shows the profitability of the investment also known as ROI

Funding

Infigen is cash rich company, and it is not very difficult for them to fund any new project, and generally there are various options available for instance:

Equity financing is a first option preferred by any business unit it means exchanging a portion of ownership for finance invested in the business by someone. Shareholder are treated as owners of the company because they have invested in company’s Equity. It involves a permanent investment and done to earn return and bear risk or losses also in case there is no income.

Debt Financing is the borrowed fund used in the business. Investors are called creditors. Debt is provided to a company by Bank and other lenders on fixed interest. Debt has to be repaid after a stipulated period of time, it may be short term or long term finance. In Case of Infigen the Debt Equity ratio is good almost 55:45(Average)

Venture Capital is the another form of Funding for the different projects which can be used by Infigen to reduce their cost of capital.

Crowd funding is recently a very popular practice of funding nowadays, it is project of venture capital funding from large number of people, generally for social cause and environmental projects. But trend is growing faster for other forms of business ideas as well for the alternative finance option. And Infigen can suggest their business partners to opt in case of fund crisis for any such social projects.

Implementation and Winding Up

Winding up of a project is generally done once the project is either complete if it is tenure based , or for long term based projects once commencement of all things are implemented and work starts , project team is replaced with actual operations team, and project is treated as Complete.

Winding up process of project certain important points which must be kept in mind while winding up. These are few things which can help in to wind up and also in next project:

• Finalize testing, Project should run as a pilot period or control period for few months under the project team to test it finally.
• Finalize training Process owner should be decided and all the knowledge should be shared to with actual users
• Deliverables need to be validated
• Project sign off from all stakeholder is an important step
• Analyse actual vs. planned
• Documentation needs to archived

 A post-mortem or windup meeting should be conducted just like done at the start kick off meeting is done

• Ensure contract closure it's not unusual for a project to have its own budget. Projects have many suppliers and vendors so it very important to close all those contractual obligation.
• Perform a self-assessment

Conclusion and Recommendation on Project Initiation, Planning and Execution

To conclude we can recommend that Infigen because has mission statement to provide clean energy and has large customer base with many small and big project need to very process oriented in selection a project and its execution. Because the clients from all type of business and sectors are attached and every client’s work is project for them so to select the project which is feasible and align to organisational goals it is very important to follow the steps involved in the project selection till implementation of the project. It will definitely reduce the risk involved in the projects. To summarise

Project idea should be properly screened in terms of resource requirement, project feasibility in terms of financial viability and profitability should be measured

Control measures using cost management techniques should be in place by Infigen Energy team to monitor the budget vs actual cost.

Implementation and windup process should be laid down and followed for a successful handover to operations team.

Project Initiation, Planning and Execution - PART B

a) The FCF (Free Cash Flows) of the project for each year have been calculated in excel file.

b) The NPV of the project is calculated in excel. The NPV of the project is -30640735.07. Since the NPV is negative, the project should not be undertaken.

c) In the current scenario, the project does not account for the reduced CO2 emissions. It is calculated that the project will reduce 85000 tonnes of CO2 produced by coal fired electricity generation per year. Since this is clean energy, so there should be benefits on emission tax. There are government funds which provide incentives for reduction in emissions which can be used in the project.

Government of Australia encourages growth of sources of energy which have lower emissions/renewable energy. The example of these can be solar energy sources, wind energy sources, bio energy sources and others and is working on increasing it. Funding has been provided for such causes to the tune of $1.2 billion. This is done by Australian Renewable Energy Agency (ARENA). Future projects can also avail help from government, the fund for that is to the tune of $1 billion

d) The debt equity ratio also called the gearing ratio for this company in 2019 is 48%. For Other companies such as REG it is 23.83. For AGL, it is 39.51, for Dyesol, it is 714.88%, for IFN it is 107.82% etc. So, this shows that its debt equity ratio is not very high and not very low as compared to other utility companies. Some of these companies are highly geared and some of them are not highly geared. Most of the utility companies are smaller and they are not listed also. In such companies the debt equity ratio is approximately 68% as per the Australian government paper on unlisted companies.

The current share price of Tilt Renewables Limited is 3.35.

Tilt Renewables is listed on the New Zealand stock exchange and Australian stock exchange. It was demerged from Trust power in October 2016 and listed. It deals in wind power and wind and solar development pipeline.

Reference List for Project Initiation, Planning and Execution

www.infigenenergy.com. (n.d.). Home | Infigen Energy. [online] Available at: https://www.infigenenergy.com/.

reuters.com. (n.d.). Business News - Indian Stock Market, Stock Market News, Business & Finance, Market Statistics | Reuters India. [online] Available at: https://in.reuters.com/ [Accessed 18 Jun. 2020].

EcoSys. (n.d.). Project Cost Management: Steps, Basics, and Benefits. [online] Available at: https://www.ecosys.net/reference/project-cost-management/#:~:text=Project%20cost%20management%20is%20the [Accessed 18 Jun. 2020].

‌Tilt Renewables. (n.d.). Tilt Renewables | Renewable energy generation. [online] Available at: https://www.tiltrenewables.com/.

ResearchGate. (2019). ResearchGate | Share and discover research. [online] Available at: https://www.researchgate.net.

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