Piper Industries Corporation Project Management Recommendation

Piper Industries Corporation Project Management Recommendation

OPS/571

August 13, 2015

Piper Industries Corporation Project Management Recommendation

With reference to your email regarding the selection of project, our team has analyzed the three projects.  The risk levels in Juniper are low, Palomino carries a medium risk, and Stargazer’s risk is high. Our team therefore recommends proceeding with the Stargazer project. This decision was reached by the data you provided us which include a forecast of revenue generation the first year, the degree of risk involved with on-time completion, the critical path requirement and cost and, the effective life cycle.

The selection of the Stargazer project was made using a feasibility study and risk level. The feasibility study conducted reveals that there’s already the product interest.  It is in the Piper Industries best interest, and its board to proceed with the Stargazer project given that a huge risk is already taken because the company has already taken a huge risk by investing $450,000.

The feasibility study conducted is concentrated on Return on Investment (ROI), length of project, break-even analysis, level of risk and the benefits to the company. The following analysis results would make for better understanding of the three projects.

Juniper

Cost of the project: $325,000

Critical Path:  6 months

Return on investment (ROI): 77% or $250,000 for a period of 2 to 3 years

(Break-even): A little under 3 years if ROI is reached in 2 years

Length of project: Unknown

Risk of completion on time: Low

Overall benefit: Increased product demand, enhancement of current product

Palomino

Cost of the project: $655,000

Critical path: 9 months

Return on Investment (ROI): 69% or $450,000 for a period of 5 years

Break-even: a little under 7 years Margin of error: 5%

Length of project: 7 Years

Risk of completion on time: Medium

Overall benefit: Constant demand, new product, custom part, use of existing technology,

As a team, we did not consider the R & D costs of the Palomino and Juniper projects. Also, we have considered only the estimated Stargazer project’s product cost and excluded the R & D cost which is already been invested.

Stargazer

Estimated Cost: $575,000 R&D cost: $450,000 already invested

Return on Investment (ROI): 278% or $1,600,000 for a period of 3 years