Consulting mock case interview: ROI evaluation (w/ ex-McKinsey Engagement Manager)

Here's a consulting case interview featuring a McKinsey Engagement Manager.

🎥 Should Abu Dhabi airport build a light rail to their city center? Watch Andrea Teja, ex-McKinsey Engagement Manager and RocketBlocks Expert coach, run Sebastiano through a consulting mock case interview focused on an investment decision.

The case hinges on whether or not the Abu Dhabi airport should move forward with an investment to build a light rail train from the airport to the city center to transport travelers back and forth. It's a fun, quant-heavy case and Sebastiano does a solid job handling all the numbers!

#consultinginterviews #caseinterviewprep #McKinsey #BCG #Bain

[t.gzhanje]

Wow genuinely amazing. Especially loved how he always circled back to his framework. There is obviously safety and certainty in sticking to a good framework and contextualizing it

[thedoomedheroes]

Hey, the solution of the case missed the portion of airplane capacity taking interconnecting passengers.

As 80% of the flights are international and Abu Dhabi is a international hub, a considerable chunk would be interconnecting passengers.

As such, The number of passengers entering the Airport would be lower than 140K and number of passengers taking cab would be much less than 26K.

[sarahuncke]

The note at 19:15 doesn't make sense, 360*390K = 140M and change. He doesn't say 1040M? which would be 1bn.

[jones]

what about passengers switching flights?

[sarahuncke]

The end seems incorrect? My calculation got to the following: they make ~140M in revenue per year. You deduct 19M = 121M per year in profit from the train (let's assume there's no depreciation cost, but that would be 1.4bn/20 years). That means you're already short on 15% ROI requirement. The ROI requires 15% of the 60% of 1400M in capex. That would mean that they need to make an ROI of 15% on 840 = total of 966M. 966M - 840M = 126M. 126M > 121M.

[dannidubig]

Amazing video. Thank you so much! The structure makes sense to me but I wonder if I could short cut by calculating train capacity (number of people who fit in the train & number of train rides per day) first, which should already be given by the known CAPEX) and if the capacity can allow for a ROI above 15% then check if there are enough passengers to fill that train capacity in the second step. Train capacity could be a limitation factor to reach the ROI goal to be identified with less efforts in my humble opinion.

[jmc]

Rreally well done case. Thanks for the video.

[shubhdey]

we calculated for the % of people from airport to city, should the revenue from other way journey (city - airport) also taken into consideration?

[Negrurismo]

Why is he asuming all passangers flying to AD are actually going to the city? what about connecting flights? Arent they the majority of flights of this airport connecting flights?

[for__four]

Is this a typical case study for entry level, or is this for a more experienced hire?

[jakebest]

I'm slightly confused here. The case is in the context of the people taking the train, so shouldnt we only be concerned with the planes flying in as these are the potential people being served by the train? so If one plane flys in our out every 5 mins and that 576 planes, don't we divide that by 2 to calculate the half of planes coming in, assuming its a one in one out pattern of flights?

[ahmedabbasi]

Why is there an assumption that all international flights passengers will be using one of the three ways to go to Abu Dhabi (Cab, Train or Relatives)? Wouldn't there be many passengers who are simply having a stop over at Abu Dhabi Airport, who will not go to the city at all, but will instead fly to their actual destination?

[saineshramjas]

Great video guys! Why was depreciation not taken into account? Thanks!

[twinbrother]

Hi Andrea, I wrote down some observations regarding the issue tree (plus a bonus point!), would like to know what you do think.

1. Why “Life” was placed on the lower branch of the tree? If we said that ROI is PROFIT – CAPEX, the lower branch should be just CAPEX, which is an upfront cost and no duration is involved;
2. Why going straight to revenues' drivers? Revenues could have been divided in P*Q, or even better, in this specific case “# of passengers” * “Avg. Ticket price”. Then he could have proceeded with explaining the drivers involved to calculate each number (e.g. total passenger is given by the "number of flight" * "avg # seats" * "occupation rate", then we need to take into account the % of people choosing the train, etc.);
3. Same apply to costs on the upper branch, which could have been divided in “Fixed costs” and “Variable costs”, this would have helped in finding more specific and hypothesis-driven drivers... was not necessary for this case?;
4. If I didn’t hear wrong, 90% of 567 is equal to 510.3, not 518. Is this an irrelevant error? Just curious

Many thanks sir
Giorgio

[KingMetal]

Hi, is an MBA necessary in order to proceed in the career of a strategy consultant?

[jadad]

Hi can you post the math solution to this

[m.fatihazka]

Can we use a calculator or laptop during the case interview?

[poonampandey]

In the initial part of solving this case, you had said that every 5 minutes, there is one plane either taking off or landing, i.e. every 5 minutes, you see one plane. Then it makes 12 planes/hour including both taking off and landing. Why was it multiplied by 2 to make it 24 planes/hour instead of 12 planes/hour?

[Aaa-ecbg]

how did he reach the 26, 000 people taking the train per day?

[TolgaKuzdere]

I honestly don't understand this math shit. Excel and calculator were invented a while ago. Just give me my number and let me do the analysis. This is so frustrating.