B&W`s FORECASTO

B&ampW’sFORECASTO

Thesoftware development team of the B&ampWs Company have come up with anew and exciting program by the name Forecasto. This is an internetbased forecasting system which is supposed to guide small and mediumsized companies as they make their way through the troubled waters ofbusiness. This is an ideal system for the business persons as theystart they companies and helps them to successfully make theirventures a success. According to the statistics on startups in thelast five years, most small business venture fiddle out and diewithin two years of starting. The development team at B&ampW hasthus taken it upon themselves to come up with this system which isaimed to make this situation a little better (Balthazor, 2012).

Forecastois based on cloud computing which is a system which makes use ofinterconnected computers and data sources around the world to use thedata around so as to make the particular venture a success. The cloudcomputing part enables the business owners who make use of Forecastoaccess to data stored not only in their computers but also around theworld. This access of large and diverse information is vital in theincubation of the business idea and goes a long way in ensuring thebusiness makes it past the projected life time and is able to turn aprofit in the end.

Theintroduction of Forecasto is estimated to set back the prospectiveclients a sum of $200 which is manageable and in comparison to theamount of information available to the entrepreneurs. The gamble ofinvesting in this system is worth taking for any prudent investor asit will help u turn a profit in a record time and will give you ahigh chance of building an empire in record time (Voropajev, 2013).

Objectives

B&ampW’ssoftware development team as well as the top management of thecompany had the following reasons for coming up with thisrevolutionary system which is expected to be a must have for currentand future entrepreneurs Forecasto aims to guide small and mediumcompany owners through the process of business startup and incubation(Thiry, 2004). Many people who open up small and medium sizebusinesses are mostly professionals in the area in which theyventure. As a result, such individuals may not have adept knowledgeon how to make sure the business becomes a success.

Theissue of cloud computing and the access the participants get via thecloud and the internet as a result of our system gives any person whomay not have any certification in running a business the requiredinformation to make sure his or her venture is a success. Forecastoprovides useful business and also technical information which whenused by the business owner can be beneficial to the business and thebusiness owner.

B&ampWmanagement and development team has also the intention of makingtheir quarter in the software and computing industry secure. The endgame of any cooperation is to make a fortune and create a monopoly inits field of expertise. At the moment B&ampW systems is a largesoftware development company which has hundreds of software relatedsystems in the market and mostly sells its products through retailerslike Best Buy. With the introduction of Forecasto, B&ampW projectsthat its market share will rise significantly above the percentagesshared by its main competitors. The management team has its faith inthe team lead by Mr. Bob Phillips that the Forecasto system will bein the market in the next nine months. The achievement of this timedeadline is important as there is no similar product in the marketand if we are able to release our first then we will have a marketmonopoly and as a result we will recoup the cost of the project andmake a lot of money in the process (Stoddart-Stones, 2013).

Themanagement of B&ampW Systems also require something from the teamlead by Mr. Philips. The project, being still in the developmentphase, is supposed to be completed in record time, within a givenbudget and produce an exemplary system to its consumers.

Thetime given to the project management team is approximately ninemonths or 35 weeks to be exact. As it stands, the projections of therollout time show that the project will take a little longer thatthat by about five weeks. It is up to the project management team tobring this time down to within the given time framework. To finishwithin the specified time is essential to make sure the system isreleased before each of their competitors get wind of the project anddevelop a similar product. This ensures that the market share of B&ampWSystems will not be challenged unnecessarily (Stoddart-Stones, 2013).

Thebudget of the program was set aside by the management and hence theproject management team has the mandate to stick with that or do thework with a lower amount but not compromising the quality that thecustomers and the management expects from the team. The art ofcutting down on the project time has an effect on the cost as theemployees will have either to be increased or work overtime. Theovertime or increased employees translates to increased cost. Mr.Philips and his team has to strike a balance between the cost of theproject and the time they have been allotted to make sure they do notfall short of the Board’s expectations.

Withinthe time scheduled for the project and the amount of money allocatedto the System development, the development team is supposed to ensurethe final system is up to what the customers have come to expect fromthe developers from B&ampW Systems. The quality of the Forecasto issupposed to be good enough for the market and easy enough for thecustomers to use without complaining or unnecessary explanations.Maintaining a good quality product ensure the competitors will haveto work extremely hard to match our products, our customers will getvalue for their money and the development team will have a fewerproblems related to fixing the product in future after the beta tests(Selin, 2009).

Theproject management team has to put all these points intoconsideration and strike a good balance between quality and cost ofproduct while still managing to release the product in record time.The perfect balance the team is expected to attain should enable theSystem to be of exemplary quality, within project cost and timeframework allocated.

Answersto key Questions

Thedevelopment of Forecasto is expected to be completed within a periodof thirty five weeks, make use of a sum of up to $210000. To achievethe said system in the given time period and within the budget theproject management team led by Mr. Philips had to consider thefollowing aspects of project management Critical path, Additionalcost and finally the behavior of the crash cost curve.

Criticalpath analysis

Thecritical path in project management is longest necessary path througha network of activities and how the said activities interrelate witheach other. The critical path Method of program management is thealgorithm for the scheduling of the project activities to ensure theproject is successful. The Critical path is developed by first givinga list of all the activities required in the completion of a project,allocating each activity in the given list the time required for itscompletion in accordance to the project time line, determining thedependencies between the activities in the list and finally gettingthe logical endpoints of the activities which will give favorableresults (Ruuska &amp Vartiainen, 2005).

Inthe development of Forecasto, the following steps are to be followedfirst the requirements for the system are determined and gathered,the market research is conducted, the system is designed to meet themarket requirements and to use the requirements, the system isdesigned by the technical team, the system is tested, the flows ofthe system are corrected, documentation of the system is done, thesystems quality is assessed, the price is set depending on the amountof work that went into developing the product and the market researchdetails, production begins on a large scale and finally distributionof the System. All these activities have been allocated timenecessary for their completion as a function of the time forcompletion of the whole project (Remenyi, 2004). The critical path ofthe project can be drawn as depicted below:

Inthis diagram the critical path is depicted by A-C-D-E-F-J-K

Theproject will take the following time period to its completion.

3+6.3+8.3+8.83+5+5.5+3=39.93 weeks

Accordingto the depicted critical path it’s apparent that, the project willtake 4.93 more weeks to its completion as compared to 35 weeks asdepicted by management.Fromthe data above we are able to calculate the probability by which thewhole project will be completed in 35 weeks this is calculated asdepicted below

Probability= (X – X)/ σ (standard deviation)

Standarddeviation = (35 – 39.93) / (2.676)

Thisgives the probability which is 0.4671

Usingthe tables a final figure is arrived at as follows

0.5– 0.4671 = 0.03

Crashing

Crashduration is the shortest time possible for which an activity in theproject production path is to be completed. Crashing an activity maybe vital in our case as it ensures the project is completed in thestipulated 35 weeks instead of the 39.9 weeks projected depending onthe time required for each activity. Project crashing can be achievedin one of the following methods shifting resources or addingresources to a particular activity on the production chain so thatthe said activity is finalized in a way shorter period than projectedor by merging two or more activities and as a result cutting down onthe time required to do both activities (Pons, 2008). By allocatingmore resources to an activity or merging different activities thecost of the activity goes up. A balance must be attained to make surethe hike in price doesn’t make the entire project cost very highabove what it was meant to cost.

Crashto 35 weeks

Crashactivity F by 4 weeks=39.13593 weeks

Crashcost=3000

Criticalpath changes to A-C-D-E-H-J-K =39.1 weeks

Crashactivity D by 4.1 weeks=35 weeks

Crashcost=8695.6

Criticalpath changes to A-C-D-E-F-J-K =35 weeks

Thusthe critical path is: A-C-D-E-F-J-K and the additional cost incurredis

3000+ 8695.6=11695.6

Expansionand resource scheduling

Expansionis a way the critical path is attained in project management.Expansion is mostly achieved by a process called resource levelscheduling. This creates delays due to the resource being unavailablewhen it is needed due to the fact that it is being used in anotheraction due to crashing. Another negative impact of this is that pathsthat were previously short are now made longer or more resourcecritical hence more time might be wasted (Pemsel &amp Müller,2012). To take care of the adverse effects of resource levelscheduling, a critical chain is developed so as to protect theactivities and project duration from unseen delays. The projectschedule should therefore be monitored since the development ofcritical paths changes the path of activities. Mr. Philips has thetasks of utilizing PERT to monitor the project so that criticalactivities are not overlooked leading to necessary delays in theproduction line (Patel, 2008).

Theproject implementation should therefore be flexible to take care ofall the changes that have been brought about as a result of changesin the project’s path. The flexible implementation lead torecalculation of project time and as result blind estimates should beavoided because these will affect project implementation. To trackthe changes in the project implementation, an As Built Critical Path(ABCP) is used to analyze the specific causes and impacts of changesbetween the planned and the eventual schedule as actuallyimplemented.

Accordingto the times given for the completion of each task in the completionof the project, it is clear that the project will not be successfullycompleted in the stipulated 35 weeks and as a result an extension to39.93 weeks is required so that the project is completed with therequired quality which the management of B&ampW systems as well asthe customers have come to expect from the products B&ampW releasesinto the market (Parchami Jalal &amp Matin Koosha, 2014). The 35time given is good benchmark for the team but ideally falls short ofthe requirement to produce both quality and a consumer friendlysystem.

Programevaluation and review technique (PERT)

PERTis used in project development where time estimates are required.This is because sometimes management of the project manager cannot beable to ascertain the exact time duration that a given project willtake in order to be completed. PERT emphasizes on node occurrenceactivities as depicted above in the critical path diagram,probability is also a major concept drawn into PERT. The specifiedtime must be provided in order to complete the probability of thewhole project occurring within a certain time period as may be set bymanagement. the specified time is the time period that managementexpects the project will take to its completion (Milosevic &ampPatanakul, 2005). It is from these data that the all computations canbe done. B&ampW’s Forecasto project expected time can becalculated as follows.

Determineexpected time.

Formula:expected time=(a+4m+b) / 6

Where a=optimistic time

m=mostlikely time

b=pessimistictime

Activity

mean

Preceding activity

A

3

B

7

A

C

6.3

A

D

8.3

C

E

8.83

D

F

5

B,E

G

6.17

D

H

4.17

C,E

I

2

B

J

5.5

F,G,H,I

K

3

J

Additionalcosts

Withall the adjustments that have to be taken into consideration toreduce the time required for the production of the System, there is arise in the capital required to produce Forecasto within the timegiven (Mehta, 2007). For the crashing to be achieved, additionalresources need to be directed to the activity whose period you wishto shorten. The channeling of resources can be inform of personnel orinvesting in more efficient machinery which will cut the timerequired for the completion of that activity. Employing more peoplewill translate into more money being used to pay the extra employeesso that the activity is finished faster. Another way of reducing thetime taken is to increase the working hours of the existing employeesbut as such the employees have to be compensated for the more hoursthey put in which will also translate to higher production cost(Lundin, 2011).

Thechange of machinery or technique with which a given task isundertaken also raises the cost of production. New machinery arealways more expensive and will require some more specializedpersonnel to run the new machinery. The increase in production costcan be compensated by reduced working hours but overall the cost ofthe project is raised. This shows that reducing the project time to35 weeks exponentially increases the cost of the project which causesit to be outside the scope of the budget allocated to the project.This supports the idea that the project time should be slightlyextended (Loo, 2014).

Theadditional cost can be calculated as shown above. In the first crashthe additional Crash cost= 3000 and in the second crash theadditional cost is 8695.6, this adds up to give a total value of11695.6.

Forthe development of the Forecasto, the Crash Cost Curve is non-linearas shown in the figure below. The crash cost curve describes theeffect of reducing the time of the project is supposed to take on thecost of the overall project. In order to reduce the time taken forthe project to be completed, the cost of the project rises because inorder to cut the project time, resources for the said activity has tobe increased and raises the cost (Lock, 2004). It is important thatthe time for completion of the project as a way to lower the cost ofthe project so as the eventual cost of Forecasto is friendly to theconsumers.

Behaviorof the cost curve

Thecrash cost curve can be drawn as illustrated below, the X-axisconnotes the crash costs while the Y-axis connotes the crash periodsthat had to occur in order to attain the expected time period toattain completion of the project. Since in this case only two crashperiods occur, it is possible to determine the behavior of the crashcost curve (Lauridsen, 2011). From the figure it is imperative tostate that the crash cost curve portends a non-linear curve, whichcontinues while dropping up to a certain point where optimality isachieved beyond which resources can no longer be allocated due tofixed allocation of the resources.

Thereare three main factors that explain the behavior of the cost curve asnon-linear. 1) As one continues to crash towards a determined timelimit the cost varies, for instance the initial crash cost was at $3000, the second crash cost was determined to be $8695. If the secondcrash cost was to become $9000, the curve would have turned to becomea linear curve. However, the variations in crash cost leads to thecurve to become non-linear (Jowett, 2013). 2) One of more crashingcosts lead to non-linear trend of the cost curve, this is mainlyexplained by the large number of resources employed during crashingwhich offsets the real costs. 3) Lastly crashing is not limited totime and costs only, there are other factors that come into play andaffect the costs associated to crashing (Khan &amp Rasheed, 2014).Some of these factors may be termed as overhead costs in projectmanagement.

Conclusion

Forthe quality of the Forecasto, the critical path for the developmentof this System should be adjusted so that the company release aquality and customer friendly product which will go a long way in theincreasing the market share taken up by the sales and profits B&ampWSystems. The sales are directly related to the price of a commoditybecause a fairly cost product will have very high sales which willreflect on the profits of the company (Hyväri, 2006).

Thetime allocated for the completion of the project at the moment isthirty five weeks. As it stands this time is very little for thequality and fair pricing of the resultant System and is therefore myrecommendation that the CEO and the management revise the time periodin order to increase this period by about ten weeks (Hydari, 2014).The ten week extension is vital to ensure that the quality of theSystem will be up to task, the cost of the project will be within theallocated budget and most importantly the eventual price of Forecastowill be reasonable at $200.

Therevision of the project time will go a long way in ensuring the costof the System is within the allotted capital. The budget will beachieved if the time is increased because the number of employeeswill not be so large so as to strain the budget, newer and moreefficient machinery will not be required which as a result will makethe cost of the project within the given budget. The crashing programis an expensive venture and its control to within reasonable levelsmake the entire project cost effective. This is what the managementof the company needs from the project management team and as thusshould be achieved (Holzmann &amp Spiegler, 2011).

Toensure that the project produces the System, Forecasto, which iswithin the quality customers have come to expect from the B&ampW’sSystem production line and the price of the System should be asprojected by the board, a balance of time and cost of the projectshould be attained. A good balance ensures that the production costis within the time frame and the quality is ensured. Having a limitedtime and the same amount of time makes the production teams tosacrifice the quality of the product which will make the customerscomplain. Giving priority to quality and time only makes the cost ofthe product to sky rocket which will have to be transferred to thecustomer (Balthazor, 2012). This again led to the customers tocomplain.

Inorder to attain the optimum balance, the management team has toincrease the time given for the project so that the eventual cost andquality is maintained and still keeping the capital cost of theentire project to within the stipulated budget. The efficiency of theproduction teams need to be increased so that they work on theproject within the stipulated time (Holzmann &amp Spiegler, 2011).The supervisors are to make sure the work is done effectively toensure the same quality of work is attained by the same number ofemployees.

Withthese changes adhered to strictly, the production of Forecasto willgo on seamlessly and in the end B&ampW Systems will have a highquality ,fairly priced and premiere product in the market which willhelp the company increase its market share, profit and also betterits reputation among the customers.

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