Performance
checks

Jot down your answers to the following questions on Managing Projects.

Question 1     Why are first line managers in good positions to identify changes in the organization?

Question 2     What does SWOT analysis examine?

Question 3     What does a PESTLE analysis consider?

Question 4     List the four stages of a product life cycle where change is regularly considered.

Question 5     Give another name for managed costs.

Question 6     What is the difference between capital and revenue costs?

Question 7     Name the financial technique which values most highly projects that repay their investment early.

Question 8     Which financial appraisal technique gives the highest priority to projects that generate the most money from a given investment?

Question 9     What are the two different bases of measurement used in investment appraisal techniques?

Question 10     What is meant by a cut-off point in financial investment appraisal?

Question 11     What does cost-benefit analysis set out to do?

Question 12     How are monetary values given to social benefits and costs?

Question 13     State the four important details that need to be included in a financial case for a project.

Question 14     What are the four stages in project management?

Question 15     Why should a risk assessment be made in determining the feasibility of a project?

Question 16     What is the purpose of setting milestones in the project plan?

Answers to these questions can be found on pages 87–88.

Read the following case incident and then deal with the questions that follow. Write your answers on a separate sheet of paper.

Sam is a first line manager in a despatch department of an organization which has put more emphasis on its mail order business in the last couple of years.

Two members of Sam's workteam are due to retire shortly and Sam has seen equipment in a trade magazine which could be run by one person and could do the work of four. Sam sees this as being a way of dealing with an increased workload without taking on extra staff. It also uses plastic covering rather than cardboard, at a reduced cost for packaging.

The equipment will cost £30,000 and should have a working life of six years at least. A further £3,000 will be needed to train up several staff to be able to work it effectively but, once the initial training period is over, no further training costs should be necessary over the following six years.

The brochure about the equipment suggests that it will generate £15,000 profit for the organization before depreciation each year. Sam has worked out that it will save £500 a month for the organization before taking into account the reduced wages bill after the retirement of staff.

The total present wages bill for the two staff who are due to retire is £24,000 a year.

1   Calculate the payback period for the equipment.

2   Calculate the return on investment.

3   Comment on any other non-financial costs and benefits that Sam should consider.

4   Explain whether you would recommend that Sam's organization should purchase this equipment. If so, justify your decision. If not, suggest what other options, if any, are available.

The time guide for this assignment gives you an approximate idea of how long it is likely to take you to write up your findings. You will need to spend some additional time gathering information, perhaps talking to your manager and colleagues and thinking about the assignment. As you research and report, you should aim to develop your personal competency too. Ensure that you talk to people at mutually acceptable times, so that the information you receive is of the best quality and that people are fully committed to helping you. You may need to convince them of the value of your work, for instance. The result of your efforts should be presented on separate sheets of paper.

What you have to do

1   Talk to your manager to find out what investments need to be made in the short term and suggest that you would like to develop a case for an investment.

2   Draw up a case for the investment.

a  Obtain as much financial and cost-benefit information as possible about the potential investment.

b  Draw up a financial appraisal, using both payback period and return on investment techniques. Add a full cost-benefit analysis.

c  Analyse your figures and other information, comparing any choices you have.

3   Prepare a project management plan, including a feasibility study, an implementation plan and suggested milestones for reviewing progress.

4   Arrange to present your preliminary findings to your manager, making a note of any helpful suggestions towards presenting your case.