In response to your email, our team has analyzed each project. In your email, you stated that the selected project should generate revenue within 12 month of next week’s PMO Review. You also stated that we should also consider the degree of risk involved with on-time completion, the critical path requirement and cost, and the effective life cycle and forecasted ROI. In order to make a recommendation, we took into account the scope of each project and whether it will meet the desired outcome, within your desired constraints.
The critical path for Project Juniper would be six months, which would be October 2015. The costs associated with this project would be less than the others, $325,000; however, the potential revenue is only $250,000. In addition, its break-even point is slightly less than three years, with a forecasted life cycle of only 2-3 years.
The critical path for Project Palomino would be nine months, which would be January 2016. The costs associated with this project would be $655,000, with revenues as low as $450,000. However, using a 5% margin of error, this could be more profitable with its break-even point of seven years. The issue we are worried about is that this would also be the end of the project’s life of seven years.
The critical path for Project Stargazer would be ten months, which would be February 2016. The costs associated with this project would be $575,000. The break-even point is one and a half years, with a seven-year life cycle. In addition, the company has already started on the research of the widgets, allowing the company a faster start up time, which will fit into the 12-month timeframe given. Even though the risks may be higher, the technology of this project will help dilute the risk, as well as the ability to increase price using skimming price strategy. This project is innovative and can have various modifications, which will enable the company to satisfy a larger customer base. Our team recommends Piper Industries to accept Project Stargazer.
1. Concept Development/Project Conception – Data of customer’s needs will be collected, competition will be identified, and the idea for a project will be carefully examined to determine whether or not it benefits the organization. During this phase, feasibility, risk, and return on investment will be analyzed. The project is already at this stage, with the research and the costs being well documented. 2. Project Planning – This step is the most important step. The team will decide on a budget, set timelines, and identify available resources, materials, and expertise to ensure on-time delivery, clarify roles and responsibilities, and identify roadblocks. A project plan, project charter and/or project scope may be put in writing, which will outline the work to be performed. The team will prioritize, calculate a budget and schedule, and determine what resources are needed.
3. Project Execution – The project manager clarifies roles and responsibilities, timelines, and individual deadlines. There is constant communication to ensure tasks are completed on time and to specification. For this project, execution will take place 12 months after the PMO meeting. 4. Project Performance and Control – The project manager monitors timeline, plan, and team performance. They will also conduct review meetings and periodic project performance reports to review the budget.
The project managers will also compare the status of the project to the actual plan to keep the project on schedule. If there are key constraints affecting project success, the necessary adjustments will be made. This step is necessary to improve quality, delivery time and the launch timings for market capture. 5. Project Close – This is the final phase of the project. Project tasks are completed and the client has approved the outcome. An evaluation can be done at this point, along with closing all contracts and settling all bills. Documentation can be used for future projects. The project team is released.
Aside from the dates and costs mention about, the project team decided on five key deliverables for Project Stargazer. They are as follows: 1. To launch the new line of widgets quickly, infiltrating into an existing competitive market. 2. Increase revenues, utilizing modifications and increasing sales during the maturity stage. 3. The team will provide product testing and analysis, meeting client requirements 4. In order to gain and/or retain reluctant customers, increase the product lifestyle and hold as a market leader. 5. Use customization to highlight the flexibility of the widget and introduce new products.
Jacobs, F.R., & Chase, R. (2011). Operations and supply chain management (13th ed.). New York, NY: McGraw-Hill Irwin. Nestor-Harper, M. (n.d.). Tasks in the Five Phases of Project Management | Chron.com. Retrieved April 24, 2014, from http://smallbusiness.chron.com/tasks-five-phases-project-management-52690.html