I would like to thank you for providing me with the essential information from your previous email to analyze the following projects Juniper, Palomino, and Stargazer. This information has provided me guidance with choosing the best project for the company. This email will provide you with the recommendation and proposal of the most beneficial project for the company. The project that fits our company’s expectations and requirements is the Stargazer project. This project is efficient and the expectation of the project being completed on time is high and obtainable. According to the project descriptions, $450,000 has been spent on the product and they average a total of $575,000 being spent in order to bring the product to the market. Even though the dollar amount spent in this project is high, the return on investment for this project is high; by the third year the product is forecasted to have a return of investments of $750,000. The product life of this project is forecasted to be 7 years. Because this product has not been used we would be the first company to launch the product to the market which would create an innovative style allowing our company to be the leader in the industry.
The method I used to make this decision was utilizing the feasibility study. This method allows us to determine how beneficial or practical the Stargazer project would be to the organization. The four phases associated with the feasibility study are: operational feasibility, technical feasibility, schedule feasibility and economic feasibility. The operational aspect informs whether the project is worth solving and evaluating for business usage. The technical feasibility allows us to evaluate if the proposed technology is practical. Technology feasibility also informs us if we currently possess the necessary technology to implement the project. The schedule feasibility informs us if the project deadlines are reasonable, which they are. The economic feasibility informs of our benefits; tangible or intangible benefits. The key deliverables for the project are not just the clients but also the external stakeholders. The break-even analysis is a financial analysis tool that determines if the project needs to be justified in terms of cost not the benefits. This is why this tool was not utilized in the decision for the Stargazer project.
Based on the break-even analysis for the Juniper project it basically shows the company will not, or barely break-even, during the life cycle of the production due to technology advancements causing this product line to become obsolete after three years. It has a cost of $325,000 and ROI only producing $250,000 for the two to three years of production with the third year being the end of life for this product. If the company chooses the Palomino project it will also have a hard time breaking-even and producing revenue streams over the life-time of the production with a 5% margin of error with the seventh year being the end of life for the product.
The strength of the economy plays a large determining factor in this forecast due to 5% differential in the life cycle of this product. Palomino will cost $655,000 with the ROI being $450,000 over a five year period with that 5%, plus or minus, margin of error. Profit would then start to be recognized in the sixth and seventh year of the life cycle which is way too long. Each of the five phases of the project management was evaluated in order to reach the best decision. Initiating, planning, executing, monitoring and controlling and closing were the primary outline for the decision. Project management requires processes to be done at each of these levels in a detailed step. These steps outline the idea into a general flow for the best project.