Cars for Ageing Population - Assignment Example

?Recommendation Memo Table of Contents Cars for Ageing Population 3 Project Management Process Along With Selection Criteria 4 Phase One: Prioritization and Selection of Projects 5 Estimation of the Cost of the Project 6 Balanced and Weighted Ranking 7 Phase Two: Maintaining the Pipeline 8 Measuring The Performance Of The Project 8 Application of the PPM Process to Support our New Product 8 Selection Criteria Matrix 9 References 14 Memo To: Richards Gill (Manager) From: Team Cc: Date: 10 / 10 / 2011 Re: Part II Team Paper Cars for Ageing Population It has been forecasted by AutomotiveWorld.com that there will be stable growth in light vehicles of United States registrations in the year 2015 by 16.3 million. It has also been foreseen that by the year 2015, there will be growth in the registration of the medium as well as heavy vehicles. It is expected that there will be growth of 15% in the year 2011 for light vehicle registration in the United States. Furthermore, it has also been expected that in the year 2012, there will be growth in the new registration of light vehicles in United States by 13%. In light of these facts, it can be stated that the automotive industries are increasingly focusing upon the innovation and developing the products that can meet the needs of the population such as cars for ageing population and megacity cars among others (AutomotiveWorld.com, 2011). The main objective of the memo is to state that a new project can be included into the portfolio that was prepared previously in order to comprehend the rising demand for the cars for the ageing population in the United States. The memo also tries to explain the portfolio selection process and identify the criteria that can be used in order to justify the project. Project Management Process Along With Selection Criteria The four different projects namely Project A, Project B, Project C and Project D have been taken into account for the study. All the four projects have been developed taking into consideration the automotive industries’ fuel efficient car segment. The projects A, B and C have been started initially and the project D needs to be started. However, project D will be started based upon the priority that can be given to each project. In order to monitor the progress of the project, higher authorities will be appointed. The main task of the higher authorities will be to manage the budgets according to the allotment that has been made for the projects. It will be their duty to analyze the strategic implications of the projects that have been presented by the General Manager. It would be part of the higher authorities’ responsibility to bring significant changes in the overall projects if during the process of evaluation any faults are identified thereby requiring major changes. Phase One: Prioritization and Selection of Projects It can be mentioned that the projects have been ranked according to the values and the benefits. In order to identify which project among the four such as project A, B, C and D needs to be executed it has been tried to evaluate the financial aspects as well such as return on investment made, increase in revenue as expected and the overall cost of each project. It is worthy of stating that the projects will also be assessed based upon the impact of business environment upon such projects. It will be tried to identify if the projects are likely to succeed at a particular course of time. In the study, it has been examined that there will be steady growth in the automobile industry by the year 2015. This creates a favorable impact upon the projects and therefore demonstrates the likelihood that the projects may succeed in the near future if the portfolios are managed in an adequate way. It becomes the responsibility of the higher authorities to keep constant watch upon the progress of the operations of the projects. It has been noticed that Mercedes Benz’s main intention has been to make the mobility of the near future safe and sustainable. Each and every activity of the organization is focused upon the needs and wants of the company. It aims at inspiring the customers with the first-class automobiles setting standards in the field of design, comfort, reliability, perceived value as well as focusing upon the environmental compatibility. Mercedes Benz also aims at developing the commercial vehicles that are capable of meeting the challenges of the competitive business environment. The main objective of the company has been to gain profitable growth, thereby enhancing the value of the group. The strategic intent of the company has been focused to become the leader in the automotive industry of the world (Daimler AG, 2011). Estimation of the Cost of the Project It is to be observed that the task of estimating the cost of the overall project is that of the project manager. He is the person responsible for planning the overall project and subsequently determines the cost that needs to be incurred by the company for each project and therefore develops a budget. At the onset, the project manager needs to identify the resources that will be required for the successful operations of the projects. After that, the manager needs to acquire them and manage them as per the schedule and must ensure that the acquired resources cost the company not more than the stipulated or estimated budget. The main problem faced by the project manager is to determine the cost before commencing the project. Therefore, the manager needs to consider the two main elements of the cost such as direct cost and indirect cost associated with the project (Old Dominion University, 2011). It is quite significant for the organization to evaluate the risk of each project. The value of the project is estimated taking into mind the cost of replacing the project, the cost of lost productivity, cost of brand reputation along with the direct as well as indirect business values (The Security Practitioner, 2007). Balanced and Weighted Ranking The projects have been ranked according to the level of priority. The projects have been ranked as high priority, medium priority and low priority projects. The projects that have obtained high priority are ranked according to the worth, necessity along with the arrangement of the goals, objectives as well as strategies. The medium priority projects are the projects that have a high priority but need not essentially be given priority as that of the high priority projects and may lack in terms of urgency, worth and alignment of the goals and objectives. The projects that have been classified as low priority needs not be executed at the very moment and the projects in this category might not be funded. Ostensibly, it can be stated that the ranking of the projects will be done by the Steering Committee whose main role will be to identify the impact of the new projects as well as the changes in the work load on the portfolio and amend them accordingly. Those projects need to be executed at first that will provide the company with the maximum benefits at lowest investment as possible. The assistance of the bubble charts, pie diagrams, X-Y charts as well as histograms will be taken to demonstrate the consequences of the portfolio analyses so that the executive management can arrive at decisions (Wideman, 2007). Phase Two: Maintaining the Pipeline Measuring The Performance Of The Project It will be the duty of the Project Management Office’s (PMO) manager to make sure that the performance of each project is being invigilated and reported. We will try to ensure that the degree of reporting can be achieved in a short period of time and therefore it does not overload the project managers. By identifying the cost and schedule issues on time the PMO as well as the company will be capable of identifying the remedial measures. It will be aimed that there is continuous improvement initiatives in those fields where the projects are performing at relatively lower level (The Project Management Docs, 2009). Those projects possessing deficiencies can be reevaluated and finished as per the requirements. Application of the PPM Process to Support our New Product It is worthy of stating that the findings need to be aligned with the processes that have been stated above. There are three projects in the previously prepared projects. The first project (Project A) is New Car for Megacities. The second project (Project B) is cars for the handicapped. The third project (Project C) will focus on development of the body & chassis parts of the Mercedes Benz cars. The fourth project has been (Project D) named as cars for ageing population. Selection Criteria Matrix At the onset, it is significant to present the evaluation of the project portfolio with the assistance of the selection criteria. Parameter Project A Project B Project C Project D Expected return of investment 5 3 3 3 Expected revenue increase 5 2 3 5 Expected cost 4 3 2 4 Risk assessment 4 4 4 4 Strategy one 3 3 5 5 Strategy two 4 4 5 5 Strategy three 5 4 5 4 Total 30 23 27 30 It can be observed from the table above that the Project A along with Project D have received the similar weightage, Project A needs to be executed first since it started prior to project D. The order of priority received by the projects can be mentioned below Project A: Priority 1 Project D: Priority 2 Project C: Priority 3 Project B: Priority 4 Actual Portfolio of Projects Mercedes Benz Project Delivery 1Q 2Q 3Q 4Q Total Project A 6/30 $2.0M $2.0M - - $4.0M Project B 9/30 $1.0M $2.5M $2.5M - $6.0M Project C 12/31 - $1.0M $3.0M $3.0M $7.0M Sunk Cost in other completed projects 3/30 $3.0M - - $3.0M Total Committed Funding - $6.0M $5.5M $5.5M $3.0M $20.0M It can be observed from the table above that with the execution of the project D there is delay in the project A. Portfolio Impact of Project D Project Delivery 1Q 2Q 3Q 4Q Total Project A 6/30 $2.0M $2.0M $4.0M Project B 5/30/Next year $1.0M $1.1M $2.1M Project C 12/31 $1.0M $3.0M $3.0M $7.0M Project D 12/31 $1.0M $2.5M $2.0M $5.5M Sunk cost in other completed projects 3/30 $3.0M $3.0M Staff $0.6M $0.6M $0.6M $0.6M $2.4M Total $5.6M $4.6M $7.1M $6.7M $24.0M It has been observed that in most of the markets the age of new car purchaser is on average that of 40 years. In this note, it can be expected that by the year 2015, that the age of the person will rise by four years. By aiming at development of the cars for this group of people will not mean developing “old-age cars”. It will mean development of the cars that have such designs and handling characteristics which can be useful for this age group. The car will have ergonomically prepared embarking, loading as well as setting resolution. It will also consist of visual aids that can assist during the nights and rainy seasons. There will be side along with rear view cameras in the car. Since the US is facing the issue of ageing population, the car will be able to attract consumers and will be able to generate revenues for the company (Oliver Wyman, 2007). It can be expected that with an expected cost of $5.5 million the company can expect revenue of nearly $9 million in a year. Current Project Portfolio Project A: New Car for Megacities It can be noticed that by the year 2015, more than 40 percent of the population of the world will reside in cities and approximately 17 percent may reside in megacities possessing five million residents. The speed of the cars in these cities will not be more than six miles per hour and a driver may use his car for approximately 3 hours in a day. If we can design car for this sort of environment then it is going to be of great benefit to us. The cars will have the features where they can easily be switched between recreation as well as driving points. There will be no emission of harmful gas. The expected revenue increase for project A may be $10 million and the return on investment is expected to be in 5 months. The expected cost is estimated to be $4 million. The product is at launching stage (Oliver Wyman, 2007). Project B: Cars for Handicapped This car has been designed taking into account the physically challenged people who desire to drive a car. The car will possess features such as additional comfort and flexibility in terms of seat arrangement. The expected revenue increase is likely to be $5 million. The return on investment is likely to be in a year with the expected cost of $7 million. The product can be described to be in its development stage. Project C: Development of Body and Chassis Parts This project aims at the development of the overall body of the car and building of the chassis parts for Mercedes Benz cars. The body parts will either be developed for Mercedes Benz itself or for other companies as per the requirement. The expected revenue increase is $8.2 million and the company is likely to avail the return in 10 months. The cost of the project is estimated to be $7.2 million. The product is at business case development stage. Project D: Car for Ageing Population The car will be designed taking into consideration the ageing population of the USA and the world. It will be designed taking that target group that likes possessing car even in their old age. It will be available in different colors and there will be two model of the car. The expected revenue for the project is expected to generate revenue of $9 million with the expected cost of $5.5 million. The return on investment will be after 6 months. The project is estimated to be at its scoping stage. References AutomotiveWorld.com, (2011). Us: Steady Growth In Light & Medium/Heavy Regs – Report. News and Analysis. Retrieved Online on October 08, 2011 from http://www.automotiveworld.com/news/commercial-vehicles/87265-us-steady-growth-in-light-medium-heavy-regs-report Daimler AG, (2011). Daimler. Strategy. Retrieved Online on October 08, 2011 from http://ar2010.daimler.com/cms/en/management-report/63-strategy Old Dominion University, (2011). Project Cost Estimation. The Problem. Retrieved Online on October 08, 2011 from http://www.cs.odu.edu/~cs410/costing.htm Oliver Wyman, (2007). A Comprehensive Study On Innovation In The Automotive Industry. 2015 Car Innovation. Retrieved Online on October 08, 2011 from http://www.oliverwyman.com/pdf_files/CarInnovation2015_engl.pdf The Security Practitioner, (2007). An Introduction To Information, Network and Internet Security. Introduction. Retrieved Online on October 08, 2011 from http://security.practitioner.com/introduction/infosec_5_3_7.htm The Project Management Docs, (2009). PM Docs. Measuring Project Performance. Retrieved Online on October 08, 2011 from http://www.projectmanagementdocs.com/articles/measuring-project-performance.html Wideman, R. M., (2007). Ten Steps to Comprehensive Project Portfolio Management – Part 5. Key Assumption. Retrieved Online on October 08, 2011 from http://www.maxwideman.com/papers/ten_step/ten_step5.pdf Read More