Project Management Recommendation

Project Management Recommendation Paper

OPS/571 - OPERATIONS MANAGEMENT

Instructor: JEFFERY MESSINGER

September 12, 2013

Project Management Recommendation

Piper Industries Corp. wants to make a decision on the appropriate project to invest in based on three recommendations. First, Juniper is an enhancement of a current widget being offered by the company, while Palomino is a new line of widget products including enhancements using existing technology, and Stargazer is a production of completely new widgets, which research and development have already started on. The company assigned our team to analyze the three projects and make recommendations on which project the company should invest in. The recommendation must include our description of the five phases of the project and the key deliverables (project completion date and cost) for each project (University of Phoenix, 2013).

The Project Recommendation

Based on the break-even analysis for the Juniper project it basically shows the company will not, or barely break-even, during the life cycle of the production of these widgets due to technology advancements causing this product line to become obsolete after three years? It has a cost of $325,000 and Return on Investment only producing $250,000 for the two to three years of production with the third year being the end of life for this product.

If the company chooses the Palomino project it will also have a hard time breaking-even and producing revenue streams over the life-time of the production with a 5% margin of error with the seventh year being the end of life for the product. The strength of the economy plays a large determining factor in this forecast due to 5% differential in the life cycle of this product. Palomino will cost $655,000 with the Return of Investment being $450,000 over a five year period with that 5%, plus or minus, margin of error. Profit would then start to be recognized in the sixth and seventh year of the life cycle.

The Stargazer project will actually see it at breakeven in a year and a half. The cost of the project being $575,000 and the Return on Investment is $300,000 the first year, $550,000 the second year, and $750,000 the third year with the life cycle of the product extending to a seventh year. The following table represents the break-even point calculations for the three projects:

Projects Juniper Palomino Stargazer

Cost $325,000 $655,000 $575,000

ROI $250,000 for a period of