Analysis of Project Proposals by the PMO

Topics: Project management, Investment, Rate of return Pages: 7 (1129 words) Published: March 14, 2015

Project Management Email
March 09, 2015

This paper addressed (in mock email format) three project proposals that needed to be reviewed by the Project Management Office (PMO). After an analysis of the three projects (Juniper, Palomino, and Stargazer), using a feasibility study, the PMO recommended that the company should invest in the Stargazer because it already had investment toward R & D, would highlight Piper Industry as a leader and innovator, and will provide the company with the most return on investment (ROI). Further explanation and description was given in the breakdown of the five phases of Stargazer project as well (Initiation, Planning, Execution, Performance & Control, and Close-out.

Ray Gritsch,
Our Project Management Team (PMO) has analyzed the three proposed projects for Piper Industries Corp. and has determined which project should be implemented and why. Our recommendation on which project the company should invest in is based on: Key Deliverables

Completion of NLT 12 months
Specific budget recommendations
Generation of revenue
Additionally, the following assumptions were made when forecasting each project: Estimated time to completion, forecasted net profits and strategic customer margin of error, forecasts for sales innovation/advancements, as well as forecasted risk of the overall project (Project Recommendations Handout, 2015). These will be applied when using the feasibility study to analyze the projects. Project Analysis

Using the deliverables and assumptions listed above, the PMO has given the following assessment of each project based on a feasibility study, which focused on Return on Investment (ROI), length of project, risk level and overall benefit to Piper Industries (Jacobs & Chase, 2015). Juniper

Project Juniper is an expansion/enhancement of an already existing product line. It has been determined that there is an existing market for this, however, project development in innovation will sway customer’s demand for this product in approximately three years. The overall risk of completion for this product is low and the estimated forecasted ROI is $250,000 in within three years. Again, net profits are forecasted to decrease after three years due to advances in technology. Palomino

The Palomino project is based on a new line product, which is innovatively designed and enhanced using existing technology. With moderate project risk, the market is already established and the targeted consumer has historically been reliable with a 5% margin of error. This project has an estimated forecasted ROI, over the course of five years of $450,000. The initial investment is expected at $655,000, to bring the product to market, but this project has the potential to gain additional revenue over the project’s lifespan of 7 years. It is forecasted that the net profit will be approximately $700,000 over the life of Palomino product but the ROI is estimated at $50,000 or below, which means the breakeven point would be close to the end of the project Stargazer

Stargazer is an innovative product line, having the potential to thrust Piper Industries Corp. into a leadership role (with this product) as well as the spotlight. There are concerns/reservations from the Sales and Marketing department, which makes this project considered to be high risk for the time criteria. The proposed product for this project is already in the R&D phase ($450K already invested) and has the ability to expand a derivative product line with an increase in cost ($575K). The total cost for this project is estimated at 1.25 million dollars. The estimated forecasted net profit, over the first three years, is anticipated to be $750K and there is potential for an additional 1.5 million before the product runs its course. Recommendation

The recommendation from this PMO team is to implement the Stargazer project. This recommendation is based on...

References: Jacobs, F. R. & Chase, R. (2011). Operations and Supply Chain Management (13th ed.) Boston,
MA: McGraw-Hill Irwin (2015) 5 Phases of Project Management. Retrieved from
UOP Classroom. (2015). Project Management Recommendation Email. Retrieved from
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