Business Project Management - Essay Example

?Business Project management By Affiliation Part Answer Inside a corporation, the success of overall project is contextual. In other words,organization itself plays a significant role in making a project a success. In addition, all the attributes of an organization such as its culture, its strategy, its structure each plays a significant and central part and they collectively form an environment in which a project flourishes or fail. However, issues that can have an effect on a project vary from organization to organization. It depends on the nature of a host organization for which a project is initialized. Additionally, a project’s relationship to contractor firm’s overall strategy such as the care with which they build the team and the objectives and goals they establish for the projects can be vital. In the same way, host corporation’s policies, strategies, structure, culture, and operating systems work collectively to maintain and support project management or work against the capability to successfully execute projects (Pinto, 2009). Thus, before initializing a project, project manager and team must be sure about the structure of the host firm because it influences their project and the operations they seek to perform. In addition, the culture of an organization is composed of certain attributes such as values, attitudes, viewpoints and behaviors of its staff members. In addition, it demonstrates the established principles and values of the organization, infusing all the activities which a corporation performs. In simple words, it can make a project a success or a failure. However, the perfect organizational culture is that in which projects are well thought-out in strategic management and are executed to promote and support a firm’s corporate strategy and corporate goals. As a result, top management pays more attention to them and assigns more and more organization’s resources to allow them to be successful. Here strategic management is the discipline of building, implementing, and assessing cross-functional decisions that facilitate a corporation to attain its goals. Moreover, each corporation has its own model organizational culture, operating systems and inside and outside resources to attain this (Stanleigh, 2012; Pinto, 2009). In addition, at the present it is necessary for the project managers to be familiar with the cultural, organizational and social environments adjacent the project. It could be done by recognizing the stakeholders and their capability to have an effect on the project. Thus, it could lead towards the likelihood of influencing project surroundings in an optimistic manner. Therefore, the any kind of risks could be considerably diminished; however failure to adopt such a way could unavoidably lead to a less than acceptable ending. In addition, the successful project managers would be familiar with the importance to put some effort in changing or improving the organizational culture for the benefit of the project stakeholders. In this scenario, it is the responsibility of every team member of a project, undeniably every employee of the organization, needs to be influenced to express the attitude that, just as they are stakeholders, as well as every other project stakeholder is also vital (Wideman, 2001). Moreover, the organization's culture plays a significant role in success rate of projects. Take into account that this is about projects all throughout a corporation, not just about one specific project. In addition, the culture of a host organization plays possibly the major role in whether their organization is flourishing in running projects. On the other hand, if a supplier firm faces challenges running projects productively with the host firm, they cannot blame the project managers. In fact, they are struggling surrounded by a culture that is not in support of their struggle. Thus, it is essential for the project manager as well as the top management of the supplier firm to identify and assess the culture of the host organization. Until they are comfortable with the culture, they will constantly fight to be successful (Mochal, 2003). In the same way, organizational structure of a host organization can help or hurt project success. In addition, to a smaller extent, structure of a host organization can get in the way of, or help make a project a success. However, this is not a serious problem for the reason that, to a definite level, an organization can modify their organizational structure. Indeed, they can modify the organization chart regularly, and it is normal for many organizations. On the other hand, organizational culture is a very serious problem because it is not simply changed. In addition, it can take years for a large corporation to build up a culture of superiority (Mochal, 2003). Moreover, organizational structure may also hinder the capability to share and distribute resources among project team members. For example, if a project team needs a resource with a particular knowledge; it would not be feasible to simply share that resource with another functional area. In addition, organizational structure can also play a significant role in the success and failure of a project. This structure actually helps the project team decide how well a host organization focus on projects and how easy it would be to share resources between both organizations. Thus, if an organization attacks the broader cultural issues, it will surely have a constructive influence on many of the organizational problems to success as well (Mochal, 2003). Furthermore, the research conducted in organizational cultures and structures demonstrates that project teams and organizations cannot work in ways that pay no attention to the external effects of their decisions. In this scenario, one important way to recognize the connection of project managers and their projects to host organization is by carrying out stakeholder analysis. In this scenario, the stakeholder analysis is a valuable technique for determining some of the apparently irresolvable problems that take place through the designed formation and initialization of any new project. In addition, the project stakeholders consist of all individuals or groups who have an active stake in the project and can possible impact, either positively or negatively, its development (Pinto, 2009). It is necessary for the supplier organization to understand the needs and requirements of each project stakeholders. For this purpose a stakeholder analysis should be performed. References Mochal, T., 2003. Organizational culture and structure influence project management more than you realize. [Online] Available at: http://www.techrepublic.com/article/organizational-culture-and-structure-influence-project-management-more-than-you-realize/5035216 [Accessed 24 January 2012]. Pinto, J.K., 2009. Project Management. 2nd ed. London: Prentice Hall. Stanleigh, M., 2012. How to Establish an Organizational Culture that Supports Projects. [Online] Available at: http://www.bia.ca/articles/HowToEstablishanOrgCultureThatSupportsProjs.htm [Accessed 23 January 2012]. Wideman, R.M., 2001. Managing the Project Environment. [Online] Available at: http://www.maxwideman.com/papers/projenviron/projenviron.pdf [Accessed 20 January 2012]. Task 2: Project Evaluation Introduction XYZ Corporation is a small catering company which wants to set up its first retail outlet where it aims to sell take-out lunches (sandwiches, drinks, snacks etc.) and a selected range of cakes and breads. As discussed in given scenario, Site A is located in a reasonable wealthy suburban shopping area where the company already has secured business providing catering for weddings, small events, and business functions. Site B is located on a business park where there is known and immediate demand but where competition exists from various other food outlets. In addition, XYZ Corporation has financial estimates for each option produced that show the expected initial investment and likely annual returns over the first three years of operation. Table 1 shows the entire data, where negative values refer to initial investment and positive values are return in every year. Their financial advisors have stated that a discount factor of 10% should be used when looking at future cash flows. We will use this discount factor to calculate net present value of each option and finally select a option which gives maximum return on investment. Data Analysis As discussed above we have to choose one of the two options. We have been provided with following options: Table 1given data Year Option A Option B 0 -40 -60 1 15 25 2 20 25 3 25 25 Cost-Benefit Evaluation Before we start working on a project we need to evaluate the cost vs. benefit. There are many techniques to evaluate a project, in this report we will use some of the well-known techniques such as net profit, payback period and net present value. Net profit The net profit of a project is the difference between the total costs and the total income over the life of the project (Hughes & Cotterell, 2005; Maylor, 2003). It is the simplest way to evaluate the project options. Year Option A Option B 0 -40 -60 1 15 25 2 20 25 3 25 25 Net Profit 20 15 In the above given table, option A gives maximum net profit. The table given above shows that option A is the best choice if we would have to choose on the basis of net profit. Payback Period The payback period is the time taken to break even or payback the initial investment. In simple words, payback period is the time needed for a corporation to recover its initial investment as determined from each cash inflow. In this scenario, we prefer to choose the project with shortest payback period (Hughes & Cotterell, 2005; Kerzner, 2003). Year Option A Option B 0 -40 -60 1 15 25 2 20 25 3 25 25 Payback Period 3 years 3 years In above given table, both projects (option A and option B) show equal payback period. We can see that both the projects are recovering their initial investment in 3 years. So from this data it is not clear which option should be selected or rejected. For this purpose we would need to adopt another technique which could help us determine the best possible option from the given options. Net Present Value (NPV) The Net Present Value (NPV) is a project evaluation technique that takes into account the profitability of the project and timing of the cash flows that are produced. This kind of calculation is performed by discounting expected cash flows by a percentage which is known as the discount rate. The basic idea of this evaluation technique is that a ?100.00 today is better than having to wait until next year to get it, for the reason that ?100.00 next year is worth less than ?100.00 now. Net present value is calculated using discount rate that is the annual rate by which we discount future earnings for instance in case of XYZ Corporation discount rate is 10%. So we will use discount rate 10% for the calculation of NPV. In addition, the present value of any future cash flow is calculated by using the following formula: (Hughes & Cotterell, 2005; Pinto, 2009) Present Value = Value in year t/(1+r)t And formula for calculating discount factor is given below: Discount factor =1/(1+r)t The results of this technique on given data are as follows: Table 2NPV calculation for Option A Year Option A Discount factor 10% Discounted Cash flow 0 -40 1.00 -40 1 15 0.9090 13.635 2 20 0.8264 16.528 3 25 0.7513 18.7825 Net present Value ?8.94 Table 2 outlines the calculations performed on the data of option A. We obtained NPV=?8.94. Now we need to apply same procedure on the data of option B to get its net present value. Once we calculate the NPVs of both options we will choose the option which has highest NPV. Table 3NPV calculation for Option B Year Option B Discount factor 10% Discounted Cash flow 0 -60 1.00 -60 1 25 0.9090 22.72 2 25 0.8264 20.66 3 25 0.7513 18.78 Net present Value ?2.16 We calculated NPVs for both the options using the discount factor of 10%. Option A gives NPV=?8.94 and option B gives NPV=?2.16. We need to choose the project which gives us maximum net present value. In this case option A seems more feasible as its net present value is greater than option B. So XYZ Corporation should choose option A. References Hughes, B. & Cotterell, M., 2005. Software Project Management. New York: McGraw-Hill Higher Education. Kerzner, H., 2003. Project Management: A Systems Approach to Planning, Scheduling, and Controlling. 8th ed. New York: Wiley. Maylor, H., 2003. Project Management, 3rd edition. Harlow: Pearson Education. Pinto, J.K., 2009. Project Management. 2nd ed. London: Prentice Hall. Task 3: SOW, WBS and WBS A project is a temporary activity with a defined starting and ending date. It is normally a team based activity. Many people work together to achieve a common goal. All the people need to communicate and depend on each other. In addition, a project is divided into various activities and success of each activity depends on the success of subsequent activity. In this scenario, project planning is the most critical activity which can make a project a success of a failure. The success or failure of a project is highly dependent on project planning. A project planning is further divided into various other processes such as defining scope and setting objectives of the project. There a wide variety of tools which can help execute the planning stage effectively. In this scenario, some of the well-known tools include Statements of Work (SOW), Work Breakdown Structures (WBS) and Organizational Breakdown Structures (OBS) (Pinto, 2009; Kerzner, 2003). Once the project’s requirements definition/needs, scope and objectives are determined, the next responsibility of project team is to construct the SOW, which is the foundation for a supplier’s tender response and contract performance. Basically, the term SOW refers to the document fully describing the contractual work requirements. In addition, a SOW gives each supplier which they use to prepare their offer. A supplier which wins will execute the agreement following the requirements mentioned in SOW, thus it is vital to incorporate and clearly describe the entire functional, technical, performance and project management requirements and expectations without uncertainty in the SOW. Moreover, the SOW describes thoroughly what the supplier would do through by following the four fundamentals i.e. what, who, when, where and how. These four elements should include: (Virginia Information Technologies Agency, 2012; U.S. Army, 2011) What needs to be done along with the deliverables/milestones? Who will do what (organization, supplier, third party etc.). When will be done? Where will it be done? How will it be done? Thus, SOW is the first step towards the planning stage. SOW gives a detailed overview of all the activities which will be performed in a project. On the basis of this SOW we can build WBS, which is used for demonstrating work packages and developing and tracking the cost and schedule for the project. All these tasks are critical in project planning. Basically, a work breakdown structure breaks down the project into several tasks, a manager along with budget and schedule, technical scope, and, to the extent possible, a specific geographic piece of the machine is assigned to each task (Stanford University, 2012). In addition, a work breakdown structure is a graphical representation of tasks in which the critical work elements, known as tasks, of a project are shown to represent their associations to each other and to the project as a whole. Moreover, the graphical nature of the WBS is helpful for the project managers in predicting results based on a variety of conditions, which can make sure that most favorable decisions are taken in relation to whether or not to approve suggested actions or modifications. Furthermore, a well-ordered and comprehensive WBS assists project managers in the efficient distribution of resources, project budgeting, scheduling, procurement management, quality assurance, quality control, product delivery, risk management and service oriented management (TechTarget, 2007). Given below is an example of work breakdown structure: Figure Work Breakdown Structure, Image source: http://www.chambers.com.au/sample_p/wbs_2.gif In figure1, a project is divided into sub tasks and each task is further divided into more tasks. This work breakdown structure is built from SOW. Since SOW describes what has to be done in a project. On the basis of this WBS, an OBS can be built which shows organizational relationships and then uses them for assigning work to resources in a project. Similar to WBS, the OBS also breaks up large projects into various tasks, offering a more structured illustration of the work to be performed. In addition, there is a difference between WBS and OBS, where WBS is utilized to describe the tasks during initial phases of project life cycle; on the other hand the OBS presents an organizational structure for the project as it moves toward end. However, both these tools are based on SOW. The basic purpose of OBS is to clarify the resources that will be used throughout the project development. In addition, the hierarchical structure of the OBS helps the project managers assign suitable resources and responsibilities to the project tasks. On the other hand, OBS is used in large size and complex projects and along with the WBS. Additionally, it is used whenever a WBS would be supportive. Moreover, it allows an at-a-glance look at the organizational resources controlled in a hierarchical way (Roberts, 2011). Given below is an example of organizational breakdown structure: Figure 1Organizational Breakdown Structure, image source: http://images.brighthub.com/FF/3/FF3E2BE8452CC708D066EA1B1392C0F3160DEFCC_large.jpg It is clear from the image organizational breakdown structure provides details about resources. Below given image clearly shows the relationship among three tools. The key objective of SOW, WBS and OBS is to make planning more efficient. SOW could be used to derive WBS and WBS could be used to derive OBS of a project. Bibliography Egeland, B., 2012. Benefits of the Work Breakdown Structure. [Online] Available at: http://pmtips.net/benefits-work-breakdown-structure/ [Accessed 24 January 2012]. Kerzner, H., 2003. Project Management: A Systems Approach to Planning, Scheduling, and Controlling. 8th ed. New York: Wiley. OPEN Process Framework Repository Organization, 2009. Work Breakdown Structure (WBS). [Online] Available at: http://www.opfro.org/index.html?Components/WorkProducts/ManagementSet/WorkBreakdownStructure/WorkBreakdownStructure.html~Contents [Accessed 25 January 2012]. Pinto, J.K., 2009. Project Management. 2nd ed. London: Prentice Hall. Roberts, R., 2011. How and When to Use an OBS. [Online] Available at: http://www.brighthub.com/office/project-management/articles/11639.aspx# [Accessed 25 January 2012]. Stanford University, 2012. Work Breakdown Structure. [Online] Available at: http://www-ssrl.slac.stanford.edu/lcls/cdr/lcls_cdr-ch15.pdf [Accessed 22 January 2012]. TechTarget, 2007. work breakdown structure (WBS). [Online] Available at: http://searchsoftwarequality.techtarget.com/definition/work-breakdown-structure [Accessed 23 January 2012]. Tenrox, 2009. Setting Up The Organizational Breakdown Structure (OBS). [Online] Available at: http://helpcontent.tenroxhosting.com/Setting_Up_The_Organizational_Breakdown_Structure_(OBS).htm [Accessed 23 January 2012]. U.S. Army, 2011. Chapter 1: Introduction to Performance Work Statements and Statements of Work. [Online] Available at: http://usacac.army.mil/cac2/call/docs/09-48/ch-1.asp [Accessed 22 January 2012]. uCertify, 2006. What is Organizational Breakdown Structure (OBS)? [Online] Available at: HYPERLINK "http://www.certpedia.com/?p=3011" http://www.certpedia.com/?p=3011 [Accessed 25 January 2012]. Virginia Information Technologies Agency, 2012. Chapter 12 – Statements of Work for IT Procurements. [Online] Available at: http://www.vita.virginia.gov/uploadedfiles/VITA_Main_Public/unmanaged/scm/procurement_manual/chapter_12_-_describing_the_need_-_specs_and_requirements/SCM_Chapter12.pdf [Accessed 24 January 2012]. Work Breakdown Structure, 2012. What is a Work Breakdown Structure? [Online] Available at: http://workbreakdownstructure.com/ [Accessed 26 January 2012]. Read More