Management Information System: BAM Construct UK case - Essay Example

?Running head: BUSINESS DECISION MAKING Business decision making Insert Insert Grade Insert January 26, Management Information System An information system is a collection of several components that are bought together to process data that can give meaningful information (Oz, 2008, 13). Various elements of modern information technology are applicable in the collection and processing of data. These include computers and telecommunication networks like e-mail, internet, voicemail, and telephone. A Management Information System is concerned with the ‘collecting, processing, storing, and transmitting relevant information to support the management operations in an organization’ (Ajayi & Omirin, 2007). The success of operations in the organization depends highly on the accuracy and timeliness of the information to be used in decision-making processes. A successful design of a management information system will take into consideration the interaction between the information specialists and the management of an organization that will use the application (Locey, 2004, p.2). Management Information System plays an important role in the decision-making process in organizations in the contemporary world. Effective decision-making requires accurate, timely, and relevant information (Ajayi & Omirin, 2007). Lots of information is needed even in a simple organization in order to manage its operations and the human mechanisms may be insufficient especially since they are prone to errors. Organizations comprise various departments whose activities need to be coordinated in order to ensure that the overall operations are accomplished smoothly. This coordination is possible from some central position like the top management of the organization (Oz, 2008, 12). The use of management information system will be helpful in helping the management of such organizations to reach their subordinates in other departments. The professionals have to understand information systems applicable in their respective areas in order interact well with their coworkers and the customers (Oz, 2009, 12). BAM Construct UK is one of the Royal BAM Group companies in the UK that are known for the best civil and construction activities in the UK through proper corporate social responsibility (BAM Construct UK Ltd, 2011a.). Its portfolio consists of frameworks of numerous projects and several business products (Royal BAM Group, 2011). This necessitates the management of information system. The organization has various information systems key among them being the telecommunication networks that it uses in connecting its workers at different regions in the UK (Bloomberg BusinessWeek, 2012). BAM Construct UK has several regional offices spread throughout UK and employees about 2300 individuals (Royal BAM Group, 2011). Office systems are used in keeping the databases of the employees at different regions. Nonetheless, the organization needs to incorporate more information systems to improve its operations. The organization recorded a successive year-on-year improvement on health and safety performance until 2009 (BAM Construct UK Ltd, 2011a.). As such, one of the information systems that need to be incorporated into the operations of the organization is a health management information system (HMIS) that keeps track of the health history of the employees. Besides, since it is a construction company, BAM Construct UK procures materials for construction. These should be managed in such a way as to minimize the cost of storing the materials while also ensuring that materials are available when needed at every construction site. This can be achieved through an inventory management system. The company also requires transaction-processing system for managing the transactions involved. Project management Effective management of a project entails proper management of the resources, time, money as well as the scope of the project (Reh, 2012). These elements of project management are interrelated and needs proper management to ensure project success. A project plan outlines the set of tasks that are involved in activity and their precedence relationships. A project will comprise numerous activities/tasks. Some of the tasks will have to be performed in before others are performed and yet some can be accomplished simultaneously. This describes the precedence relations. The resources that are needed for a given activity may also be different from those required by other activities. Each of the activity has an estimated time within which it can be accomplished. The project manager often wishes to accomplish the project within the shortest period. An important tool that is used in the management of a project is the CPM/PERT model. In the critical path analysis, the activities in a given project are considered alongside their precedence relation. Then, the estimated time for accomplishment of each activity is considered. A CPM model will give, in a flow diagram, the precedence relations of the different activities from the beginning of the project to its completion. The model includes the duration for each activity. Following the different paths from the activity network, it will be observed that the starting time or completion time of some activities may be delayed without affecting to total project completion time. On the other hand, a path (or paths) will be observed that gives the longest completion time for the project. This becomes the critical path and total time recorded is the shortest period within which the project can be completed. The earliest start time and earliest completion time of the activities in this path cannot be delayed without affecting the whole project completion time. The organization has a number of projects, a set of activities that are interrelated and aimed at achieving a common objective. Other than construction activities, one of the activities at the organization is recruitment of new employees. Various career opportunities exist at different BAM’s businesses at different locations within the UK. The management often wants to select the best-qualified professionals through an extensive recruitment project since the success of its activities is dependent on the employees (BAM Construct UK Ltd, 2011b). Management of recruitment and selection as a project requires the identification of the key activities and their estimated times. The order in which the activities have to be done is also noted. This is represented in the following table Label Activity Predecessor activity Duration (days) A Pre-recruitment- Vacancy analysis - 5 B Advertising and receipt of application A 14 C Acknowledging receipt of application B 7 D Shortlisting C 10 E Notifying shortlisted/non-shortlisted candidates D 7 F Preparations for interview A 14 G Conducting interview E,F 2 H Selection G 10 I Communicating to successful candidates H 5 J Checking the references I 3 K Acceptance of offer/signing appointment letter J 3 The above activities and their precedence relations are represented on the activity-on-node (AON) diagram as indicated below. In the diagram, the arrow points at the activity that is next to be executed. Network of Activities- AON diagram From the diagram, it is observed that only two paths define the activity from start to completion. Activity G has to be done after the completion of both activity A and activity F. Thus, the paths are A-F-G-H-I-J-K = 42 days or A-B-C-D-E-G-H-I-J-K= 66 days. It is then evident that the second path is the critical path and these activities cannot be delayed without delaying the completion of the selection process. The critical path is indicated by bold in the diagram. Thus, the shortest completion time for the whole recruitment and selection process is 66 days. Depending on the availability of resources, the project could still be crashed further by incorporating more resources on some activities until the repeatedly until it becomes uneconomical to crash further. Discounted Cash Flow The discounted cash flow is an important tool used in estimating the attractiveness of some investment opportunity or the potential worth of a given project. It provides the net present value of the cash flows that are projected to occur and is based on the economic principles that the ability to generate cash flows determines the value of a business/project (Macabus, 2012). DCF analysis examines the future cash flows and discounts them to arrive at a present value that evaluates the potential of the project/investment. This value is calculated as discount on the cash flows in the future. The present value of a given project then becomes the sum of the present values of the cash flows that is discounted on the future values calculated over a specified period. The discounted cash flow gives the discounted present value of the future value of these cash flows. This is calculated from the given formula: DCF= CF1 / (1+R) + CF2/ (1+R) ^2+ …+ CFn / (1+R) ^n, where CF is the value of cash flow in some specified period in the future R is the discount rate expressed as a percentage, and n is the period in years that elapses before the cash flow is obtained For the given problem, there are cash flows of ?100 that is to be experienced beginning next year at a discount rate is 10% From the formula, the DCF is obtained as DCF = ?100 / (1+ .1) + ?100 (1+ .1) ^2 + …+ ?100 (1+.1) ^10 = ?100/ (1.1) + ?100/ (1.1) ^2 +… + ?100/ (1.1) ^10 = ? (90.91 +82.64+ 75.13 + 68.30 +62.09+56.45 +51.31+46.65+42.40+ 38.55) = ?614.43 Thus, the discounted cash flow is ?614.43 The DCF can be used to calculate the net present value of an investment if the costs of investments (cash outlays) are considered (Property-Investing.org, 2012). The NPV would be calculated as NPV = CF0+ DCF where CF0 is the investment cost (initial cash outlay), a negative value. Internal Rate of Return An internal rate of return becomes necessary in evaluating different prospective projects. Given the same conditions of operations, it is desirable to undertake a project with high internal rate of return. An internal rate of return can be calculated in different ways depending in the available information. The method of linear interpolation is appropriate if two net present values (positive and negative) are given at two different discount rates. If A is the upper NPV at rate R and a is the lower (negative) NPV at discount rate r, then as Abraham (2012) illustrates, IRR is given as IRR= R + [(r-R) (A)] / [(A-B)]. Given that the net present value of a project is $850 at 15% and negative $1,240 at 18%, then the internal rate of return is given as: IRR = .15 + [850(.18-.15)]/ [(850--1240)] = .15 + (850*.03)/2090 = .162 Thus, the internal rate of return of a project of this type is about 16%. A project of this nature can be pursued depending on the other available prospective projects. Reference List Abraham, A., 2012. Internal Rate of Return. (Online). Available at: http://finance.thinkanddone.com/irr.html [Accessed January 26, 2012] Ajayi, I. and Omirin, F., 2007. The Use of Management Information Systems (MIS) In Decision Making In the South-West Nigerian Universities. Educational Research and Review, Vol. 2 (5), pp. 109-116. (Online). Available at: http://www.academicjournals.org/err/PDF/pdf%202007/May/Ajayi%20and%20Fadekemi.pdf [Accessed January 26, 2012] BAM Construct UK Ltd. 2011a. BAM: Royal BAM Group’s UK operations post solid financial results. (Online). Available at: http://www.bam.co.uk/Default/NewsRoom/NewsDetails/10-04-29/Royal_BAM_Groups_UK_operations_post_solid_financial_results.aspx [Accessed January 26, 2012] BAM Construct UK Ltd. 2011b. BAM: Why work for BAM? (Online). Available at: http://www.bam.co.uk/Default/Careers/Careers-Overview.aspx [Accessed January 26, 2012] Bloomberg Businessweek. 2012. BAM Construct UK Ltd: Company Overview. (Online). Available at: http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=30866770 [Accessed January 26, 2012] Locey, T., 2004. Management Information Systems. 6th. London: Cengage Learning. Macabus. 2012. Discounted Cash Flow Analysis. (Online). Available at: http://macabacus.com/valuation/dcf/overview [Accessed January 26, 2012] Oz, E., 2008. Management Information Systems. Sixth ed. South-Western: Cengage Learning. Property-Investing.org. 2012. The Discounted Cash Flow (DCF) Model. ((Online). Available at: http://www.property-investing.org/discounted-cash-flow.html [Accessed January 26, 2012] Reh, F., 2012. Project Management 101. Part 1: Basic Project Management Outline. (Online). Available at: http://management.about.com/cs/projectmanagement/a/PM101.htm [Accessed January 26, 2012] Royal BAM Group, 2011. BAM: Operating Companies. (Online). Available at: http://www.bam.eu/profile/operating-companies [Accessed January 26, 2012] Read More