PROJECT MANAGEMENT
Table of Contents
TOC \o “1-3″ \h \z \u 1 Introduction
2 Feasibility Stage
2.1 Analysis of the Needs
2.2 Uncovering the Options
2.3 Exercise Due Diligence
2.4 Analysing the Financial Standing
2.5 Determination of Affordability
2.6 Gauging the Value
2.7 Economic Analysis
2.8 Assessing the Practicality of the Project
2.9 Confirmation and Signing
3 Conclusion
4 References
1 Introduction
Being a project manager requires one to be able to implement a cautiously designed plan which is organised to accomplish a particular task. The challenge in this type of work is to ensure that the project is being managed according to the prescribed plan. The project manager tends to deal with specific elements like project goals, timelines, and budget. However, before a project manager could do all these things, he/she must be able to determine whether or not a particular project is feasible. This is done during the feasibility stage. The following discussions shall be covering the specific actions which one would undertake upon operating within the feasibility stage in the case of Johnson and Johnson.
2 Feasibility Stage
In its simplest sense, the feasibility stage is where the project manager acquires all the information that he/she needs. This information can come from the external or internal environments of the company. (Richman 2002, 69) Upon acquisition, the acquired data shall be the ones that determine whether or not a particular project is feasible or doable. This is an important part of the project management process as this stage will determine whether or not the project will push through. In the same manner, this is important on the part of the investors as they would want to know whether or not a particular venture would bring positive results. The following discussions shall be presenting the recommended actions to be done in the feasibility stage by Johnson and Johnson as stated in the existing literature.
2.1 Analysis of the Needs
It is in this stage of the feasibility study where Johnson and Johnson define the actual needs of the market. It points to the specific principles on which the output may be based. (Fort 1995, 109) It imperative that the objectives stated in this stage are aligned with the actual strategic objectives of the company. In this case, the respondent company is specialising in the microbiological testing of swimming pool water quality. In this part of the feasibility stage, the actual financial means should be determined to know early on how the needs are to be addressed. Johnson and Johnson must determine whether or not the fees they collect from the services they make to local authorities, commercial clubs, schools, and holiday parks are enough to deal with their operational costs.
In addition to the budget, the output specifications should also be established as this stage. These specifications basically present the description of the actual services or product required. (Fort 1995, 109) However, it is important to note that how the said services or products will not be detailed in this part. In the same manner, this part of the feasibility stage should also install performance indicators to guarantee that the products or service are within a level of quality that will satisfy the demands of the market. In the same manner, the project manager should bear in mind that the indicators that are instituted are practical and reasonable. This is because it will resolve the actual costs of the service or products to be marketed.
2.2 Uncovering the Options
In this part of the feasibility stage, the consideration of Johnson and Johnson should go back to its output specifications. In this part of the process, the available options to deal with the finances, technical aspects, political, and legal features of acquiring the specified output is presented, detailed and analysed. (Lewis 2007, 16) Basically, this part chooses the best option possible for the project. In this case, the change of venue appears to be the best possible issue that constitute the project on the part of Johnson and Johnson. Hence, the project manager has to do away with anything that is contrary to law or public policy. He/she has to eliminate options that are apparently too costly. He/she similarly has to take away anything that has too many uncertainties. After justifications, the particular option suited to the company shall then emerge.
2.3 Exercise Due Diligence
In its simplest sense, due diligence is the identification of issues on the project before embarking into the actual implementation. Basically this means that due diligence is the responsibility of the company, and in this case the project manager, to determine and have knowledge of the conditions that operate within the environment of the project. (Dinsmore and Cabanis-Brewin 2006, 427) The analysis made by Johnson and Johnson should be thorough as these external elements directly affect the operations of the project. Such elements include the legal, political, technical, social, and ecological components of the environment. The problem in this stage is that a good amount of the capital of the project may be shelled out in this part; however, it actually gives the project a chance to save money in the long run. Moreover, it ensures that the project is operating within the confines of what is considered lawful and financially doable.
2.4 Analysing the Financial Standing
The purpose of analysing the finances of the project is to reveal whether or not the project will be appealing to the company, particularly the investors, shareholders and stakeholders in the said project. (Cooper 1993, 30) To accomplish this part of the feasibility stage, there are several actions that Johnson and Johnson need to be done. The first is to specify the technical scope and limitations of the project. This is to actually have a ballpark figure on the actual costs to of the operations. In this case, an analysis on the shifts on the cost of relocating operations from the old facility to the new one should be taken. In the same manner, the additional hiring of a microbiologist should be examined particularly with the effects on the finances of the organisation. In line with this, the identification of the direct costs shall be made. Such direct costs include the capital, maintenance, and operating costs. The capital costs pertain to the possibility of acquiring new assets for the overall operations of the firm. Maintenance costs include the costs in sustaining the assets so as to realise the output specifications provided in the earlier part. Operating costs points to the expenses incurred in the day-to-day functions of the project. This includes wages and other costs of raw materials. Similarly, the project manager should also take into consideration the indirect costs. These are basically unforeseen costs which may have been excesses of the project. Examples would be bills, rent and other legal costs. (Cooper 1993, 30) The project manager should also take into consideration the identification of the project revenue. This basically shows the need for revenue projection. In this part, it is imperative that the project manager veer off from any possibility of overestimation.
2.5 Determination of Affordability
This part points to the affordability of the consumers to purchase the product or services offered by the project of companies like Johnson and Johnson. (Young, Fischer, Koshland 2007, 39) Basically, this is manifested in the rate at which the buyers are willing to pay for the said merchandise. In this part, the assessment should constantly include the future payments that Johnson and Johnson may incur. These include the wages as well as the benefits that the 17 employees shall receive within the fiscal year. The project manager should recognise whether or not there is a change in the demand curve if the price of the product or service should change as well. This is considered given that there may be changes in the costs of operation with the change of venue. Such additional costs shall be handed down to the customers of the company. It is at this point that the project manager should find ways so as the existing risk of such changes in the demand curve is mitigated.
2.6 Gauging the Value
In this part of the feasibility stage, Johnson and Johnson’s value for money is assessed. This means that the project manager should establish the net benefits of the project. (Cooper and Kleinschmidt 2000, 17) These includes the financial (such as savings and cost reduction) and qualitative benefits (like good reputation and positive feedback). This value is assessed with the overall lifespan of the actual project. This may be the more crucial part of the feasibility process. It is in this part where the value of the actual money to be invested in the project is determined. In this regard, the greater the value held by the project for the company and its investors, the greater the possibility of the project pushing through. However, it must be emphasised that in assessing the value of money, the existing risks should be included. Such risks may come in the form of fluctuating interest rates or any other force majeure.
2.7 Economic Analysis
This part of the feasibility study is essential in computing the incremental costs as well as the advantages of the completion of the project to the Johnson and Johnson. More specifically, economic analysis shall provide an indication on whether the project did have a positive influence or the company should have been better off without it. (Badiru 1993, 189) As a general rule, the conduct of economic analysis is to provide a realistic estimation of the economic costs and benefits and their effects to the company, shareholders, investors and stakeholders. It is to guarantee that the Johnson and Johnson will be getting the option with the least costs in consideration of the all the existing externalities. And in instances where the externalities are too much to bear, then certain adjustments to the design of the project may be initiated.
The economic analysis of the project should constitute several activities from the project manager. First, the project manager should establish the actual economic costs of the project. (Badiru 1993, 190) These include the overall costs and possible profits which the Johnson and Johnson may incur in the course of the project. The project manger should also establish the key assumptions for the analysis of the economic environment of the project. Such assumptions may include the variability of the exchange rate or the implications of taxing regimes on the operations of the project.
2.8 Assessing the Practicality of the Project
The project should be deemed practicable or viable before it is approved to commence. Organisational studies have indicated that a project is viable if it is the existing technology could support it and sustain its operation. (Neal 2003, 168) In the same manner, studies have indicated the importance a project that embraces sustainable development. Basically, this points to the adherence of the project to social corporate responsibilities and having a “green” perspective in their operations.
In addition, the investors particularly the shareholders and stakeholders should be able to find the project financially capable. This means that the investors should find the project able acquire a respectable return of investments. On the part of the target customers, the product or service that Johnson and Johnson offers should be within their means financially. (Neal 2003, 168) If the customers do like the products and services that a Johnson and Johnson offers but could not well afford it, then the project is bound to self-destruct unless some pricing strategy adjustments are imposed.
2.9 Confirmation and Signing
Basically, this part of the feasibility stage is a preparation for the approval of the management plan. This part places a description of the assumptions of the Johnson and Johnson as well as the methodologies used to assess the environment. It explains the manner in which the company measured the costs and possible benefits by the project. It is thus subjected to the approval of the proper authorities. If they approve, then the project management plan is pursued. If not, then adjustments on the feasibility stage are taken.
3 Conclusion
Conducting the functions of the feasibility stage is vital to the actual project. It determines as to whether or not the project will push through. It is also the basis for the of the actual project management plan. It gives Johnson and Johnson an idea on how the project shall be prepared and how much time will be allocated in the said project. It also deals with the basic elements of the project such as the required manpower and the means to finance the operations as a whole. Upon knowing such data, the project shall be decreasing the possibility of issues that it may encounter in the future.
Like any other activity or venture, projects do incur a certain level of risk. It is the role of the feasibility stage to uncover these risks and make them known to the proper authorities so as to deal with it opportunely. They may alter certain parts of the project, for instance they can augment the budget, reduce the costs, or even scrap the idea all together. In any case, the implementation of the feasibility stage allows the company to remove uncertainties in their project. It provides them the ability of foreseeing whether or not a particular course of action will put them in the direction that they intend to go. It gives them the idea on whether or not the project is worth undertaking.
4 References
Cooper, R. (1993) Winning at New Products: Accelerating the Process from Idea to Launch. Massachussets: Perseus Books.
Cooper, R. and Kleinschmidt, E. (2000) “New Product Performance: What Distinguishes the Star Products.” Australian Journal of Management. 25(1), 17.
Dinsmore, P. and Cabanis-Brewin, J. (2006) The AMA Handbook of Project Management.New York: AMACOM.
Fort, J. (1995) “Building Blocks of a Successful Project.” Security Management. 39(7), 109.
Lewis, J. (2007) Fundamentals of Project Management. New York: AMACOM.
Neal, P. (2003) Urban Villages and the Making of Communities. New York: Spon Press.
Richman, L. (2002) Project Management Step-by-Step. New York: AMACOM.
Young, J., Fischer, S., and Koshland, C. (2007) “Institutional Resistance to Assessment: A Case Study of Rural Energy Development in Chinese and International Context.” Urban Anthropology & Studies of Cultural Systems & World Economic Development. 36(1-2) 39.
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