DA: Statistics Summary (Windows 7, Teaching Lab PC's)

 

Launch Excel via PHstat

Click on File, Options

Enable Analysis and Solver Add-ins

Data Classification (p32, p81)

1. Categorical- ex: separated by region, customer type 
1. Use Proportions to describe this data-type 
2. Cross Tabulation- tabular method that displays the number of observations in a data set for different subcategories of two or more categorical variables
3. The subcategories of the variables must be ME and exhaustive, meaning that each observation can be classified in only one sub-category
4. Common Marketing Research Tool
2. Ordinal- ex: ranking data (1st - Last)
3. Interval-  no natural zero. ex: temperature in C or Fahrenheit
4. Ratio- have a natural zero. Sales dollars ($0 is natural zero for 0 sales activity)
5. Types of Data
1. Cross-sectional- data that are collected over a single period of time
2. Time-series- data collected over time
6. Number of Variables
1. Univariate- single variable
2. Multivariate- two or more variables 

PM: Estimating

1.  Projects by definition, include a large degree of uncertainty.
2. "To predict costs. The art of approximating the probable worth (or cost), extent, quantity, quality, or character of something based on information available at the time." -NASA
3. You have decided to repaint your living room. You want to go buy the paint but you must first figure out how much you need. How many gallons will you need, and how much will it cost?
1. Basic Information:
2. 1 gallon of paint covers 350 sq ft. and costs 27 Pounds
3. Room is 16X14ftX8 with one door 3X7 and three windows (3X4)
4. Paint all surfaces with 2 coats. No fractional gallons.
5. Solution: 108 pounds
4. You have the least amount of information at the beginning of a project, but the greatest need for estimation. Making the correct choices early can save money later.
5. Proposal Estimate: +/- 50 % feasibility (AACE: Concept screening -> class 5)
6. Budget Estimate: +/- 20 % viability (AACE: feasibility -> class 4, pre-design)
7. Sanction: +/- 10 % obtain funding (AACE: budget estimate -> class 3)
8. Control: +/- 5 % measure progress, assign resources (AACE: definitive class 2)
9. Tender: +/- 2 % prepare tender (AACE: detailed -> class 1)
1. CTR:Cost, Time, Resource
10. Estimating Methods:
1. subjective: historical project comparisons
2. parametric: proportional
3. analytical
11. Cost Components 
1. labor
2. materials
3. equipment (buy/lease) Cap-Ex vs Op-Ex
12. Data sources
1. supplier quotations
2. trade literature, technical literature
3. company historical data
4. computer systems
5. government figures
13. Estimating Accuracy 
1. level of accuracy depends on:
1. relative size of part and project
2. level of WBS
3. error in the part & in the project

CS: Zara Case (309-113-1)

1. Zara Case (309-113-1)
2. Strategy:
1. vertical integration
2. long incubation period (before going to other countries)
3. selective international expansion
4. aggressive in European Markets, cautious in the US
3. Comptetitors
1. Hennes & Mauritz (Sweden) 
2. Mango (Spain)
3. Top Shop (UK)
4. Market Positioning:
1. Fashion on horizontal, Price on Vertical
5. Technology usage:
1. flexible production
2. lean
6. Recommendations:
1. Online Shopping 
2. Globalization of brand? 
7. References:
1. Zara Enters India (FT)
2. Zara: Taking the Lead in Fast-Fashion (BBW)
3. Inditex's strong growth driven by emerging markets
1. Spain's Inditex, owner of the Zara fashion label, reported robust first-quarter earnings driven by rapid growth in emerging markets...
4. Inditex sets the pace for fashion retailers

 

PM: Offshore Windfarm Project (List of UK Farms)

1. 2000: Blyth Harbour, Northumberland
2. North Hoyle, Wales
3. Scroby Sands, Norfolk
4. Kentish Flats, Kent

Land leased from the Crown Estate
The following Images are taken from their "Guide to Offshore Windfarms"

 

 

Courtesy of Seagreen Energy

Financial Analysis: David Hatherly (Enron)

1. Four Feedback Failures of Accounting (Enron)
1. Failure to identify the performance of intangibles
2. Failure to link reward with risk
3. Failure to separate present performance and expected future performance (productive gains and speculative gains)
4. Failure to focus on the legacy value of promises
2. Rewards are "headlined" while risks are hidden in the footnotes
3. Enron's year 2000 annual report:
1. "We are participating in a New Economy, and the rules have changed dramatically. What you own is not as important as what you know. Hard wired businesses such as energy and communications, have turned into knowledge-based industries that place a premium on creativity. Enron has been and always will be the consummate innovator because of our extraordinary people..."
4. Enron's History:
1. Natural Gas producers/supplier, expands through acquisitions
2. Expands to other utilities as producer/supplier, became asset heavy
3. grew to an international scale utility producer/supplier, gained US political support
4. expanded into new markets into other utilities, obtained regulation easing
5. entered into long term contracts from supplier side, sold long term contracts to customers, creates a time mis-match, creates risk
6. Enron's Activities mirrored Banks: borrow short term but lend long-term (risky before even consideration of investment banking) 
7. Began an "online trading" scheme (only business to have value when they crashed)
8. Dispose of utility assets, began SPV (special purpose vehicle development)
9. Began a move into Broadband, in order to mirror their energy trading scheme
5. Energy/Communications
1. transportation and distribution
2. wholesale services
3. retail energy services
4. broadband services
6. Year 2000 Balance Sheet (millions, USD)
1. Fixed Assets and other investments: 22,496
2. Debt: (13,547) -> 8949
3. Intangibles: 3638
4. Cash: 1374
5. Other current assets: 16,989
6. Current liabilities: (16,232)
7. Working Capital: 2131
8. Deferred creditors (4336)
9. Price risk assets 1088 (3248) (net position on all of the futures and options entered into)
1. fair value stated (according to Enron)
10. Equity: 11,470 (book equity, not the market value of shares because market will )
7. Enron Income Statement
1. Natural Gas: 50,500
2. Electricity: 33,823
3. Metals: 9,234
4. Other: 7,232 100,189
5. Costs and expenses: 98,836
6. Operating Income: 1,953
7. Other Income and Deductions
1. gains on sale of assets: 146
2. interest (net), tax (1120)
8. Separating Productive and Speculative gain
1. traditional vs. casino banking! 
9. Enron's Profit making methods
1. selling options/futures (fees)
2. selling bundled long term contracts for NPV on a market
3. underlying asset value increase/decrease (depending on contract)
4. traditional energy rates (legal) 
10. Banking is a highly geared business
1. borrowings are greater than our equity (extremely risky)

Angus Cockburn: Aggreko

1. 1985: Edinburgh University Graduate
1. Scottish chartered account
2. IMD MBA
2. Restructuring and turnaround at Pringles
3. Aggreko
1. Power Infrastructure as a Service
1. 30kW->2MW
2. 1MW->container
2. chillers, heaters for temperature control
3. head office in Glasgow
4. quirky niche business
5. power supplies (emergency especially)
6. London Olympics
7. 1962: business founded in Netherlands
8. Industrial Work
9. new growth areas in gas generation
10. over-spec for global mobility of assets (generators)
11. IPP= Intl' Power Projects
12. average control value approx $16,000
13. Returns on Capital Employed 27%
14. 20 ft. ISO container
4. Competitor
1. GE energy rentals (acquired)
2. Caterpillar
3. Cummins
4. Siemens
5. APR
5. Core Competencies
1. logistics outsourced (centralized?)
2. IT outsourced
3. market understanding (city generation)
6. Culture
1. Pace
2. Passion
3. Performance
4. 30 people in the head office
5. Entrepreneurial and Customer Focused
7. Threats
1. security in developing countries 
2. Local Tax authorities
3. Tax on CO2 emissions (carbon trading)
8. Questions:
1. Does Aggreko hire security contractors? In house security
1. Pakistan PatrolRisk, Egis
2. How to you adapt to local infrastructure?
3. What functions do you outsource, which do you keep in-house? Engineering in house, logistics (trucking) outsourced,
4. Efficiency in asset use, systems development growth area?
5. How long did it take to implement the ERP system? 6 years
9. Financial Measures
1. last 12 mos utilization -> project out
2. price
3. WACC=7.5%, hurdle rate 11% (IRR)
10. Business Summary:



2009 Summary: Courtesy of Aggreko

1.  

Eviews Software (Statistics)

This is the software used by our MSc in Finance students, and I think it makes much more sense than fooling around with plug-ins in Excel. With a couple of clicks you can get a lot of data out of Excel tables.