Project Management of Hamza BioDiesel - Essay Example

Assume that there is a delay of five weeks in completing activity F. Analyze one action that the Project Manager could take to avoid exceeding the current length of the critical path. Once activity A is completed, both activities B and D should commence. Activity F is dependent on the completion of both activities B and C consecutively. Activity F has a total float of 1 week while activity D has a total float of 13 weeks. This means that activity F should commence latest on the 14th week while activity D should commence latest on the 21st week. To avoid exceeding the current length of the critical path, the management should commence activity B immediately after completion of activity A and put activity D on hold. All resources should be diverted to activity B so that it can be completed so that it is completed within minimal time. Activity C can commence thereafter for prompt completion as well. Once activities B and C are completed, activity F can commence. All the resources will be diverted to this activity so that subsequent delays can be contained. This will ensure that the process does not exceed the current length of the critical path. Thus, activity F will be completed latest on the 14th week. Presumably, activity D can commence and be completed within one week (latest 21st week). QUESTION 1 (b) Discuss the most important factors that the management consultants might have considered before choosing the locations for the three new sites. The management consultant may have considered the main roads leading to major cities. People driving to major cities are definitely going to spend time and money on the establishment. They could be nationals or foreigners who are on business trips in the cities. Therefore, setting up petrol stations on those roads will enable them meet the fuel needs of the drivers. While drivers refuel in their vehicles, they could refresh themselves with soft drinks and foodstuffs provided in the establishment. The management might also have considered the purchasing power of the targeted consumers. Inhabitants of major cities and their environs have a relatively higher purchasing power than their counterparts in the outskirts or rural areas have. Putting up the stations on roads leading to the major cities will definitely tap the spending power of these consumers. The stations will also have competitive prices for their products dictated by the purchasing power of the consumers. This project hopes to create a sustainable source of income. In addition, the management might also have considered the nature of goods and services preferred by the target group. Consumers in these areas use goods and services of relatively higher prices than other parts of the country. This is why it was suggested that they stock ready-to-eat foods, wines, and spirits, which are a luxury as opposed to a necessity. QUESTION 2 Can the project be completed within the budget? If not, how can Hamza BioDiesel raise additional capital? The management has earmarked £85,000 while the budget for the project is £103,950, bringing a deficit of £18,950. Thus, the project cannot be completed within the budget. Hamza BioDiesel should downsize its staff, currently working in 23 petrol stations. Some of the staffs can be transferred to the three new stations. Since the business is still invariant in the long-term, there will not be need for any meaningful recruitment and training. These staff will already have the necessary experience and skills to manage the new stations. Therefore, activities F and G of recruiting, selecting, and training staff will be unnecessary. Consequently, the costs of implementing these two activities will be lowered. In essence, the budget will have been reduced by £18,500 (£10,000 for recruiting and selecting staff and £8,500 for training staff). Cost of activity B can further be reduced by £450 so that they can settle for £4550 with the suppliers. This will ensure that they have at least £85,000, as they earmarked initially. Alternatively, instead of reducing the budget as explained above, they can source for additional funds. The management consultants had recommended spending £0.5 million on promotion. However, this figure was not justified. Hence, the amount of promotion can be reduced by £18,950 to cover the deficit on the budget. This will leave them with £481,050 to spend on promotion. QUESTION 3 a) Capacity utilization is a measure of the extent to which an entity is using its production potential. It is the percentage of total capacity been achieved in a given period. It is computed as (actual level of output/maximum possible output) * 100. b) (4800/7500) * 100 = 64% c) (7800/x) * 100 = 75% (7800/75) * 100 = x x = 10,400 units d) At full capacity, the management is better placed to assess the quality of its staff and production compared to those of competition. In addition, the company is acquiring more assets resulting to more production. This increases its competitiveness and profitability. However, operating at full capacity will result to more expenditure in production. This becomes disadvantageous especially if the production is not very profitable. In addition, working at full capacity implies the company is at its best and there is no room for improvement. However, there is no ideal situation in business since the business world is highly dynamic. If a company is at its best and cannot be improved further relative to its external business environment, then it would be underprivileged. e) Their main constraint is the finances. To reach full capacity, the company will have to acquire more inventories. Currently, the company has constraints in budget implement following the proposed new petrol stations. Moreover, the 3 new stations will take time to study the market dynamics in those 3 areas before they can achieve full-scale production under the given environmental conditions. References Hirschey, M. (2009). Fundamentals of Managerial Economics 9th Ed. Boulevard: Cengage Learning. Read More