Airport PDA Project

Airport PDA Project Business Plan

By

Marvin D. Lee

Introduction

Hand held and vehicle-mounted Personal Digital Assistant (PDA) are currently used by

several service firms in the fields of paramedic and roadside assistance; inventory management

warehouse vehicles; courier and shipping deliveries, and logistics and industrial monitoring and

control. Employees in the field or shop floor use PDA units to retrieve data, record transactions

and update central systems over wireless networks for real time processing.

The company is seriously considering expanding it lines of business to offer handheld

and vehicle mounted PDA technology in a commercial airport environment. A PDA can be

configured to run applications to serve as a wireless computer terminal for online real time

transaction processing when undertaking ground support activities for processing passengers,

cargo and aircraft at the airport terminal.

Functionalities of wireless Airport PDA

The PDA will run a tweaked Microsoft Windows 8 OS that will have tight integration

with the airport specific application and will have a rugged water and shock-resistant body

casing of outdoor use, with attachments that can mount it in any part of a service vehicle or taken

out for field assignment. The application suite that can be configured for specific airport user

requirement will cover the following:

Pre-flight activities

Cargo and baggage handling: This feature often comes with a scanner that accepted

IATA bar coding standards or Radio Frequency tags so they can just read bag tags and to

ensure that baggage and cargo get correctly loaded as manifested into the right flight and

destination (Stecher)

Mobile check-in service for passengers: With a PDA on hand, terminal check-in staff

effectively brings the counter to passengers forming a queue at the check-in counters

(Trivedi). Like hamburger fast foods taking orders while you’re queuing, airport staff can

check you in doing the same thing but with a PDA. Some airlines consider it a better

alternative that Kiosk-based self-check-in counters offered in several European airports.

Conveyance for disabled and elderly passengers using electric vehicles to transport them

to their gate assignments.

Refueling vehicles to record actual fuel uploads

Aircraft turnaround line maintenance

Post-flight activities:

Cargo and baggage off-loading for delivery to appropriate terminals

Telecommunications Support Infrastructure

The wireless network infrastructure will harness WiFi 802.11 technology that operates on

the spread spectrum range of 2.4 GHz, well outside of airline UHF frequency ranges. It will use

the 802.11n for higher throughput and longer range operation of up to a quarter of a kilometer or

doubled with special repeater antennas in select tarmac locations.

Business Requirements

The project as initially estimated will require an investment of £5 Million in

manufacturing assembly costs and systems development over an 18-20 month period.

a) A client-server middleware that can send and interrogate data from in house systems

b) UK-CAA clearance to operate in the frequency range that will not interfere with

airline operations

c) Project management teams that will develop and support the PDA

d) Marketing support for promotions and advertising for product pre-launch 6 months

into the project which will fall into Year 1 of operations.

e) 24x7 help desk to support airport operators

f) Organizational Project implementation support of customer users

Pricing Approach

The break-even point to recover product development costs will be computed and a

suitable margin will be determined. Unit prices will be uniform regardless of volume sold to

each client. Initial customers may have to carry the brunt of recovery costs while succeeding

customers after achieving the break-even point can benefit from lower or discounted pricing

depending on the volume of PDA terminals ordered.

Several vehicle mountable PDA computers are currently available from Rhino, Datalogic,

Motorola and Intermec costing upwards of £1,600 with the more expensive one at around £4,500

per gadget. The initial pricing per Airport PDA of £1,100 is at the low end of the market value

spectrum, especially for highly specialized applications and all airline and airport applications

are generally in the upscale pricing bracket. The price will remain for the first few years of

operation and can be marked down to £800 after the break-even point or payback period is

reached. Pricing will be cost based plus mark-up.

A standard laptop or tablet can be sourced at less than £200 per unit but what sets the

Airport PDA is its robust casing construction that can survive the elements for outdoor use as

well as the default application systems that will provide the value add to the product. This is not

a consumer product and the specialized application is meant to increase efficiency and seamless

services for airport terminals and airlines which can have significant savings out of the PDA

application.

The cost of 1,100 per unit will recover the licensing and royalty costs for 3rde party

technology patents to be used in the Airport PDA hardware and software including in0house

software development costs for the specialisd application. Offshore manufacturing will be

considered to achieve better cost efficiencies. Licensing will be done on a per user per site basis.

A separate pricing component will involve hardware and software maintenance services

which will be priced at a minimum of 15% of total hardware acquisition and license cost per

client per year after the expiration of the first year warranty. It will contain the following

components

24x7 help desk support,

3-6 hours response time for technical staff deployment and 1-hour remote diagnostics

and repair support,

Basic parts inventory and identified sourcing to ensure fast and reliable hardware repairs

In-house systems programming work to support PDA client-server application

Instant PDA field replacement during in-shop on or-site repairs.

Part A: Project Feasibility and Management

The PDA technology is readily available to be enhanced for airport application and

together with network connectivity, the projects proposed here is merely an application that will

allow airport and airline stakeholders to harness the technology for seamless, efficient and cost-

effective operations for managing ground activities in support of chartered and scheduled flights.

domestically and internationally.

Stakeholder Identification using FFA (Forced Field Analysis)

Determining the stakeholders of the project can be first validated using the Forced Filled

Analysis. This allows the project management to identify people and groups that have a stake in

the success of the project, whether in confirming their initial support for it or in convincing those

with lesser enthusiasm or harbor concerns about it.

Table 1 FFA Analysis of stakeholder viewpoints

Forces in favor RatingOperations Efficiency of

operations7

Logistics, Accounting and Operations

Data accuracy reflecting real-time changes in the field

8

Marketing and Operations

Improved airport client satisfaction

9

Total Weight 24

Cash Flow Forecast and Analysis

The Revenue Model

The company will invest £5 Million in Year 0 from internal funds to roll out the product

over a one-year project implementation timeframe. Revenue streams are expected to be

generated during the first 5 years based on initials sales of a modest 316 units based on the

following assumptions:

The pricing approach as discussed above will apply, starting at 1,100 per unit and getting

lower after the break-even on payback period has been achieved.

The project development will take all of Year 0 and 6-8 months into the second year to

accommodate the standards systems beta testing market penetration.

The first two years will experience heightened market growth, registering 500% annual

increases in sales volumes for two consecutive years starting on the 2nd year and settling

to a 200% increase annually thereafter,.

Airport PDA

Project

Forces against RatingAirport management firm investors

Added investment burden

8

Operations New learning curve

6

Rank and files

Fear of new technology disrupting job security

6

Total Weight 20

Table 2: Revenue Model

There will be a fixed operating and overhead costs pegged at £7 Million annually to take

dare of manufacturing costs and salaries of executives and employees involved in the. For

variable costs, the following assumptions are made.

Maintenance costs will be a function of customer volumes and is initially pegged at 30%

of the estimated maintenance charges paid out by customers from the purchase of the

PDA, and will grow proportionately with the annual sales volume.

Marketing costs will increase proportionately with increase in clients (sales calls, trade

exhibits, promotional giveaways, user training costs, etc.) and this is initially pegged at

3% of the gross revenues and will grow at an estimated 20% annually representing

planned client growth which is independent of PDA units sold.

Taxes are expected to grow but cost component are excluded in the pre-tax variable costs.

Licensing costs and royalties in the use of patented technologies in the PDA products will

also increase the number of units sold and is estimated to cost 2% of unit prices.

The Operating Expense and Capital Model

With these assumptions, the following Operating and Capital Expenditure model is made,

accounting for the investment on year one with a project development, testing and marketing

lasting 18 -20 months.

Table 3: Operating expense model

Operating and Capital Expenditure ModelTime 0 1 2 3 4 5Capital Cost 10.00%Cash Out 7,034,586.20 7,127,360.64 7,582,118.77 8,150,422.52 8,668,067.03Investment (Internal fund) 5,000,000.00Variable Cost (20% annual increase) 34,586.20 127,360.64 582,118.77 1,150,422.52 1,668,067.03

Maintenance 15,642.00 78,210.00 391,050.00 782,100.00 1,137,600.00Marketing 11,992.20 14,390.64 17,268.77 20,722.52 24,867.03Licensing 6,952.00 34,760.00 173,800.00 347,600.00 505,600.00

Fixed Cost (Manufacturing, salaries and wages) 7,000,000.00 7,000,000.00 7,000,000.00 7,000,000.00 7,000,000.00Margins -6,634,846.20 -5,128,660.64 2,411,381.23 11,836,577.48 20,403,932.97

Getting the difference between the revenue streams and operating and capital expenses

yields the net cash flow forecast over the five year period as follows.

Table 4: Net cash flow forecast

Net Cash Flow ForecastTime 0 1 2 3 4 5Net Cash Flow -5,000,000.00 -6,634,846.20 -5,128,660.64 2,411,381.23 11,836,577.48 20,403,932.97

Openning Balance 0.00 -5,000,000.00 -11,634,846.20 -16,763,506.84 -14,352,125.61 -2,515,548.13Closing Balance -5,000,000.00 -11,634,846.20 -16,763,506.84 -14,352,125.61 -2,515,548.13 17,888,384.84

Cumulative Cash Flow -11,634,846.20 -16,763,506.84 -14,352,125.61 -2,515,548.13 17,888,384.84

Applying the standard financial measures of Payback, Modified Payback, IRR, and Net

Present values, and Profitability Index (Abraham), we get the following:

Table 5: Payback Period

Time 0 1 2 3 4 5Payback Period N/A N/A N/A N/A 4.12Discounted Cash Flow (7% interest) -5,000,000.00 -6,200,790.84 -4,479,570.83 1,968,405.38 9,030,068.29 14,547,722.22Cumulative Net Cash Flow -11,200,790.84 -15,680,361.67 -13,711,956.29 -4,681,888.00 9,865,834.21Modified Payback Period N/A N/A N/A N/A 4.32NPV 9,220,405.81IRR 22.83%Modified IRR 17.97%Profitability Index 1.84

Based on the cash flow forecast, payback computations show that given the assumptions,

the company can realize its money back only after 4 years, more precisely, 0.12 months into the

5th year or roughly in the second month of that year. This may prove problematic in seeking the

approval from the board which usually would like to see some promise of a return at an earlier

date, preferably in the 2nd year.

Moving the Payback Period Earlier

A second scenario can be simulated where the payback period is advanced to the 2nd year

of project implementation. This means a net cash flow that will allow full investment recovery

on the 2nd year which is quite ambitious for the project. This can happen only with the following

assumptions based on the first scenario:

The first year volume of sales is effectively increased nine-fold from 316 to 2,844 PDA

units. This means that the project development timeframe is shortened to less than a year

during which time, marketing would be in full swing.

The 2nd year is critical and the earlier assumption of a five-fold growth is maintained

while a slower growth can be expected for the 3rd year onwards.

For expenses, the following assumption is made:

Marketing cost will be increased to 540T for Year 1 and grow 20% on the 2nd year and

maintained at the level thereafter.

After this time, the unit price can already come down to 800 on the 3rd year and 600 on the 5th

year. The simulation yielded the following:

Table 6: Scenario 2 moving the payback period the 2md year

Cash Flow Analysis (Scenario 2)Time 0 1 2 3 4 5Capital Cost 7.0%Revenue ModelUnit Cost

Assumption: 1,100 in the years prior to break even point and reduced to 800 thereafter1,100.00 1,100.00 800.00 800.00 600.00

Volume Sold Assumption: rapid annual growth of 500% for the first two years and stabilized at 200% annual growth therafter

2,844.00 14,220.00 42,660.00 21,330.00 10,665.00Cash In 3,597,660.00 17,988,300.00 39,247,200.00 19,623,600.00 7,358,850.00

Sales forecast 3,128,400.00 15,642,000.00 34,128,000.00 17,064,000.00 6,399,000.00Maintenance Charges (15% of Sales) 469,260.00 2,346,300.00 5,119,200.00 2,559,600.00 959,850.00

Operating and Capital Expenditure ModelCapital Cost 7.0%Cash Out 7,742,995.00 8,826,203.50 10,027,793.50 8,918,633.50 8,306,355.85Investment (Internal fund) 5,000,000.00Variable Cost (from cost assumptions) 742,995.00 1,826,203.50 3,027,793.50 1,918,633.50 1,306,355.85

Maintenance 140,778.00 703,890.00 1,535,760.00 767,880.00 287,955.00Marketing 539,649.00 809,473.50 809,473.50 809,473.50 890,420.85Licensing 62,568.00 312,840.00 682,560.00 341,280.00 127,980.00

Fixed Cost (Manufacturing, salaries and wages) 7,000,000.00 7,000,000.00 7,000,000.00 7,000,000.00 7,000,000.00Margins -4,145,335.00 9,162,096.50 29,219,406.50 10,704,966.50 -947,505.85Net Cash Flow -5,000,000.00 -4,145,335.00 9,162,096.50 29,219,406.50 10,704,966.50 -947,505.85

Openning Balance 0.00 -5,000,000.00 -9,145,335.00 16,761.50 29,236,168.00 39,941,134.50Closing Balance -5,000,000.00 -9,145,335.00 16,761.50 29,236,168.00 39,941,134.50 38,993,628.65

Cumulative Cash Flow -9,145,335.00 16,761.50 29,236,168.00 39,941,134.50 38,993,628.65Payback Period N/A 2.00 N/A N/A N/ADiscounted Cash Flow (7% interest) -3,874,144.86 8,002,529.92 23,851,739.49 8,166,767.69 -675,558.58Cumulative Net Cash Flow -3,874,144.86 -871,614.94 22,980,124.55 31,146,892.23 30,471,333.66Modified Payback Period N/A N/A 2.04 N/A N/ANPV 28,477,881.92IRR 94.23%Modified IRR 42.51%Profitability Index 5.70

A second year payback period pushed all financial measures to an astounding level that is

hard to believe – about 94% IRR and a staggering NPV of more than 5 times the initial

investment. On the other hand, the first scenario provides a more modest but realistically

achievable target with IRR at 24% and a Net Present Value of 9.2 million which is almost twice

the value of the investment. The financial indicators already present a lucrative promise for the

project despite having a nearly 5-year break even period.

While the first scenario’s payback period may prove unattractive, a 2nd year payback

simply looks too good to be true and betrays a very optimistic projection that can later disappoint

as reality sets in. In the first place, hurrying the project development team to get the Airport

PDA out the production line sooner than planned could result in system bugs that, while allowing

for patches, could prove embarrassing for the company. In addition, it will be a real challenge

for marketing to penetrate the target airport and airline markets with its new product lines given

the time constraints getting significant sales turnover right on Year 1.

Benefits of inter-project learning for a global consumer electronics firm

A company that has ambitious plans to manufacture and market consumer electronics as

well special-function gadgetry such as what is envisioned in this project can benefit from a

synergistic and symbiotic strategic alliances and business partnerships with companies overseas

that have specialized focused skills and the products identified as critical to the totality of i9t

planned products (Grant). The point is that there is no business sense reinventing the wheel, as it

were, to allow a company to go into vertical integration when it is so much more efficient to

focus on your own knowledge and skill and let other to what do best for you.

It’s all about collaborative enterprise engagement – one that creates more value to the

customer because it achieves better efficiencies of focused contribution by each partner in the

alliance. It is said that when Pavarotti partnered with the Spice Girls to make an album, it is not

because Pavarotti is crossing over to pop, or that the Spice Girls are interested in cross into

operatic singing. It was all about creating a collaborated engagements where both partners reap a

more rewarding performance and market following.

Companies in South Korea, Taiwan and China, for instance, manufactures LCD screens

and built-up circuit boards for almost any kind of processing function needed to make a PC,

smartphone or any appliance. A company needs only to choose which ones are relevant and

have them assembled and branded by a 3rd party lost cost producer, just as what Apple is doing

for its iPad and iPhones which are 100% built in China and elsewhere but conforming to rigid

Cupertino-engineering and design specifications.

It is strongly recommend seeking out these companies, mostly based in Southeast and

Northeast Asia for the company to achieve strategic cost efficiencies in business alliances with

suppliers. Just like Pavarotti or the Spice Girls, businesses today don’t want to learn how to make

LCD displays, or do laser soldering, but if these technologies are needed for their products, they

can always harness these highly focused skills using capital –intensive processes from partners

faster, more cost effectively and profitably.

Hence, there’s now need to craft the PC from scratch. The company can just re-house a

hand-held computer with more robust casing for outdoor and have it rebranded. There are many

in China that can do this. Even the programming effort can be outsourced to 3rdparty partners

that specialize in airport applications. The only real effort the company needs to do is marketing

and positioning the product well in the global markets.

Part B: Project Planning & Control

The project management aspect starts with defining the resource allocation, timelines and

budgets for several developmental aspects of the Airport PDA project. It has the following

project activity parameters.

Table 7: Project activities and duration

Time estimates (weeks)

ActivityPredecessors p56 a m b

A None 2 4 6

B None 4 6 8

C None 2 3 4

D A,C 0.5 1 3

E B,D 2 3 4

F E 1 3 5

G D,E 1 2 3

H F 2 3 4

I F 1 2 3

J I 0.5 1 3

K G,H,J 0.5 1 3

L K,J 1 3 5

Expected Duration

Time

4

6

3

1.25

3

3

2

3

2

1.25

1.25

3

Start ES

Finish EF

Start LS

Finish LF

Slack Time

(weeks)

0 4 0 4 0

0 6 0 6 0

0 3 0 3 1

4 5.25 4.75 6 0.75

6 9 6 9 0

9 12 9 12 0

9 11 12.25 14.25 4.25

12 15 12.25 15.25 0.25

12 14 12 14 0

14 15.25 14 15.25 0

15.25 16.5 15.25 16.5 0

16.5 19.5 16.5 19.5 0

Early Late

AOA/AON, Gantt charts and Critical Path Assessment (Q5/Q6)

These duration estimates are expressed as: a (optimistic), m (mostly likely) and b

(pessimistic) parameters in each project activity or milestone. Once their values have been

estimated based on experience and educated guess, the expected time of completion can be

computed using PERT formula (a + 4m + b) / 6 which yields the values reflected on the 6th

column of Table 7. Computing for the early start/finish and late start/finish as well as the slack

times yield the columns thereafter (7th to 11th). Based on the early start/finish and late start/finish,

the critical activities with zero float or slack times emerged to show the critical path. The arrow

node charts on Table 8 and Table 9 below illustrate this.

I A F C H J J D E G L

B D K

A slack time or a float of zero defines a critical activity (Meredith) which must be

completed as scheduled or the next task cannot start and project delays become a certainly unless

the succeeding task can be finished ahead of schedule. Creating the Gantt chart as illustrated in

Table 10 clearly indicates which tasks have slack times and which does not. The critical path

become obvious and in cases like these, determining the critical path is fairly obvious and there’s

no need to use the CPM,

0 9

1

3

2

5

87

6

4

Table 8: Project activities in AOA

START

12 3 15

H12.25 F 15.25

0 4 0

A4 4

0 4 0

C4 4

0 6 0

B4 4

4 1.25 5.25

D4.75 A,C 6

6 3 9

E6 B,D 9

9 3 12

F9 E 12

9 1.25 11

G12.25 D,E 14.25

14 3 15.25

J14 I 15.25

15.25 3 16.5

K15.3 G,H,J 16.5

16.5 3 19.5

L16.5 K,J 19.5

END

6 3 9

I6 F 9

Table 9: Project activity on AON Chart

Based on the expected duration time computed form the Table 7, the Project Gantt chart is

constructed below with initial critical path presented. The project is expected to be completed in

4.5 months based on expected time of completion. Of course, very few projects, if at all, ever

get done on schedule or as planned mostly due to several factors like, unexpected supervening

events beyond the control of the project manager, accidental errors along the way, change in

corporate priorities, changes in the project activities due to changes in suppliers, project team

member turnovers, or inability to get the need resources in time.

Duration in WeeksActivity 5Start

A

B

C

D

E

F

G

H

I

J

K

L

End

Legend Normal activity Critical activity Slack time

3 41 2 10 20146 7 8 9 11 12 13 15 16 17 18 19

Scheduling Optimization Option

A great deal of time and effort often goes in planning a project in an the hope of arriving

at the optimum schedule of activities mapped out to match time-sensitive resource allocation and

to bring the project to its conclusion at the least cost and at the earliest possible time (Meredith).

For sure, there are appropriate ways to schedule activities such as trial and error, Heuristic

prioritization and optimized modeling using linear programming. For this project, a simple

Table 10: Project Gantt Chart

Heuristic prioritization using minimum slack activities as having the highest priority can be used

to optimum effect. The minimum slack rule is often the most preferred scheduling method. This

is constrained and something compromised by the availability of resources when needed and any

lack thereof can restrict how far the project manager can manipulate the schedule without have

any impact to the overall project deliverables and completion date.

From Table 11, the manpower resources are fairly spread homogenously throughout the

project duration. Without any peaks or troughs, no resource smoothing is necessary as this would

be just a waste of time in a project like these.

Expected Project Time and Probabilities (Q7)

Duration in WeeksActivity 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20Start

A 1 1 1 1

B 2 2 2 2 2 2

C 1 1 1

D 2

E 3 3 3

F 1 1 1

G 1 1 1 1 1 1 1

H 2 2 2 1

I 1 1

J 1 1

K 1 2

L 2 2 2 2

TOTALS 4 4 4 3 4 2 3 3 3 2 2 2 4 4 4 3 4 2 2 2

4321

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 3 1 4 1 5 1 6 1 7 1 8

Table 11: Labour resource spread over the project duration

Activity durations are at best educated estimates made by project planners based on

experiences and assumptions. But because these estimates are averages which open up risks that

they are only 50% accurate, meaning that the chances of exceeding the timeline or hitting it

earlier are equal. It is in the interest of management to manage the risk and reduce them to the

minimum using PERT (Program Evaluation and Review technique).

In getting the critical path variability, Table 11 shows the variance total among critical

activities as 2 days and the standard deviation is its square root or 1.41 weeks. If management

can only tolerate a 2% probability of not meeting the deadline, then multiplying 1.41 weeks x

2.054 (z-score found in a probability distribution table) yields 2.02 or 2 weeks. In short,

management can only accept a 2-week delay form a planned 20=week project timeline.

Determining the probability that the project task will meet deadlines must be approached

with a grain of salt as these are mostly the best guess estimates meant to boost confidence of the

project sponsors and approving bodies. It’s a fact of life that the most well-planned projects

rarely even fall within the target deadlines. But having the information gives projecti managers a

better handles on the project.

Activity a b Var

A 2 6 0.4

B 6 8 0.1

E 2 4 0.1

F 1 5 0.4

I 1 3 0.1

J 0.5 3 0.2

K 0.5 3 0.2

L 1 5 0.4

Total 5 2.0

Table 12: Duration variance of critical activates

Reducing the Project Duration By Two Weeks (Q8)

A sudden urgency may prompt the project manager to reduce the project timeline by two

weeks. A simple tabulation of the crash and normal duration and their corresponding associated

costs per activity are shown on Table 13.

Critical activities B, E, F, and L can be crashed. The rule of thumb is to reduce the

duration of a critical task with the least cost slope, Reducing B by two weeks will move the

project two weeks forward but will cost £1,400. Another option is to crash E and F one week

each which will cost £1,100 for an overall two-week reduction. The latters makes for a cheaper

option.

Project Performance as of the half point(Q9)

Table 13: Cost Slope of activities

Activity

Expected Duration

Time

Crash duration(weels)

Normal cost per week (£k)

Crash Cost per week (£k)

Cost slope per week (£)

A 4 2 1 1.6 300

B 6 4 9 10.4 700

C 3 2 1 1.2 200

D 1.25 1 1 1 0

E 3 2 3 3.5 500

F 3 2 1.5 2.1 600

G 2 1 1 1.6 600

H 3 1 3 3.8 400

I 2 1 1 1.9 900

J 1.25 1 0.5 0.5 0

K 1.25 1 1 1 0

L 3 2 3 3.8 800

On the 10th week or at the project’s half time mark, the summary of actual project

expenses compared with budget allocation for each project activity is tabulated and it is plain the

that the project is slightly behind schedule. It should already hit 51.7% complete but is running

at 48% which is not entirely out of hand. The project enjoys a negative cost variance of 0.4%

which means that out of a planned budget of £77,000 so far, it went overboard by a measly £300.

Activity Budgeted cost (£)

Costs to date (£)

% Cost Variance

% Complete

% Planned

% Completion Variance

A 4,000.0 3,700.0 7.5 100 100 0.0B 54,000.0 57,000.0 -5.6 100 100 0.0C 3,000.0 2,900.0 3.3 95 100 -5.0D 1,000.0 500.0 50.0 100 100 0.0E 9,000.0 9,200.0 -2.2 25 100 -75.0F 4,500.0 4,400.0 2.2 100 100 0.0G 2,000.0 100.0 95.0 10 20 -50.0TTL Todate 77,500.0 77,800.0 -0.4 75.7 88.6 -14.5

H 9,000.0 0.0 0.0 0 0 n/aI 2,000.0 400.0 80.0 50 0 n/aJ 500.0 0.0 0.0 0 0 n/aK 1,000.0 0.0 0.0 0 0 n/aL 9,000.0 0.0 0.0 0 0 n/aTTL 99,000.0 78,200.0 21.0 48.3 51.7

On the other hand, a negative completion variance of 14.5% as of the 10th week indicates

that its completion level is off by that amount. At the time the report was made, the project

should be 51.7% complete, but is hitting only 48.3%. And when it should be 88.6% complete for

the 10th week, it is only hitting 75.7%. Despite overshooting the budget by just a small amount,

it has failed to complete the project in the time allotted and unless subsequent schedules are

completed earlier, is certain to result in failure to meet the project’s overall deadline.

Optimizing Resource Mix (Q10)

Table 14: Actual and budget cost Summary for each activity and actual

The project manager needs to minimize the cost of Rouserces U and V used in a certain

project task. The details are provided in tableseeks to minimize the total cost of a certain activity

related to this

Table 15: Constraints for resources U and V

Resource Cost (y) y+2x y-xU (y) £400 At least 2.5

resource-hoursNot to exceed 7.45 resource -hours

Not to exceed 1.75 resource-hours

V (x) £900

7.5

7

6.5

6

5.5

5

4.5

4

3.5

3

2.5

2

1.5

1

0.5

00.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5

X= Resource V

Y =

Reou

rce

U

Legend: Y – X = 1.75 Y + 2X = 7.45 Upper and Lower Limits

Given the X and Y conditions in the table, a Cartesian graph is made and the Y – X =

1.75 and Y + 2X – 7.45 equations are plotted. Given the minimum and maximum values, the

result is a set of values falling within a triangular area as illustrated in the graph. Upper limit for

Resource U is 3.5 RH and lower limit is 2.5 RH. Upper limit for Resource V is 2.5 RH and

lower limit is around 0.75 RH. These values and their corresponding optimal costs are tabulated

below.

Table 16: Optimal resource costs

Resource Cost Upper Limit

Cost Lower Limit

Cost

U (y) £400 2.5 £1,000 0.75 £300V (x) £900 3.5 £3,150 2.5 £2,250

Conclusion

While the use of PERT/CPM provides project managers a set of tools, that enable them to

check on the viability of a project’s timeline, they are rarely used in real world projects as the

time and effort to gather all the data needed in the computations are better spent on getting the

project on the road (Coster). Indeed, observations have revealed that whether you use them or go

for a trial and error approach, it is rare that a complex project can meet the target deadlines and

within budget. But having said that, the tools are now better harnessed with project

management software that use them as part of its algorithms and can benefit management in

better adjusting schedules within available resources in part rather than in totality.

Project managers in charge of the company’s Airport PDA project has 12-18 months to

implement their new product offering and get the most cost-effective market to win local airports

for starters. This can be greatly reduced by identifying prospective partners in the supply chain

to ensure the company does not re-invent wheel and get the best deal in any business partnership.

Three areas and operationally critical, getting the vehicle-mounted PC hardware, the program to

interface with airline and airport systems, and the telecommunications infrastructure in place at

the airport. Having the business alliance in place at this time is the first step and the best way to

get the project off the ground and achieve the shortest implementation time.

__________________

References

Carter, Steve, Neville J.Macdonald and Denise C.B. Cheng, “Ch.6: Investment Decisions – Capital Budgeting,” Basic Finance for Marketers. Rome: Food and Agriculture Organization (FAO) of the U.N., 1997.

De Coster, Rebecca, “Project Management,” The Nature of Management, n.d. [lecture presentation and document] School of engineering and design, (Materials sent)

Grant, Robert M. and Charles Baden-Fuller. “A Knowledge Accessing Theory of Strategic Alliances.” Journal of Management Studies 41:1 0022-238. Blackwell Publishing , Ltd.,January 2004. Web 09 February 2012 http://www.baden-fuller.com/Resources/a%20knowledge%20accessing%20theory%20of%20strategic%20alliance_pdf1.pdf

Jessop, Andy, “Performing critical path analysis” Project Learning Interantional, New Zealand, PDF. Web. 11 February 2012 http://www.projectlearning.net/pdf/X2_1.pdf

Kumar, Somesh, “Force field analysis: application is PRA” PLA Notes (1999), Issue 36, pp.17–23, CD-ROM 1988 – 2001, IIED London, Web. 11 February 2012

Meredith, Jack R and Samuel J. Mantel, Jr, Project Management: A Managerial Approach, New Jersey: John Wiley & Sons, 3rd Ed. 2005

“PDA’s and Mobile Computers” Footprint Wireless, 2012 Web 28 Jan 2012. http://www.footprintwireless.co.uk/products.asp?sectionId=23

Stecher, Daniel R.J. “RFID, e-freight, bar code scanning, PDA, Logistics.” Xing AG.27 July 2006. Web. 28 Jan 2012. https://www.xing.com/net/logistik/future-shop-363/rfid-e-freight-bar-code-scanning-pda-2035669/

Trivedi, Gunjan. “Terminal Velocity.” Real CIO World 15 Nov 2007 PDF. 28 Jan 2012, http://www.cio.in/open_save_file?fname=sites/default/files/Case%20File%20-%20Kingfisher.pdf