You are on page 1of 22

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 youre 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 costeffective 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 Operations Efficiency of operations Logistics, Data accuracy Accounting reflecting realand time changes in Operations the field Marketing Improved and airport client Operations satisfaction

Rating

7 8
Airport PDA Project

Forces against Airport Added management investment firm burden


investors Operations Rank and files

Rating 8

9 24

Total Weight

New learning curve Fear of new technology disrupting job security

6 6

Total Weight

20

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,.

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 Model Time 0 Capital Cost 10.00% Cash Out Investment (Internal fund) 5,000,000.00 Variable Cost (20% annual increase) Maintenance Marketing Licensing Fixed Cost (Manufacturing, salaries and wages) Margins

1 7,034,586.20 34,586.20 15,642.00 11,992.20 6,952.00 7,000,000.00 -6,634,846.20

2 7,127,360.64 127,360.64 78,210.00 14,390.64 34,760.00 7,000,000.00 -5,128,660.64

3 7,582,118.77 582,118.77 391,050.00 17,268.77 173,800.00 7,000,000.00 2,411,381.23

4 8,150,422.52 1,150,422.52 782,100.00 20,722.52 347,600.00 7,000,000.00 11,836,577.48

5 8,668,067.03 1,668,067.03 1,137,600.00 24,867.03 505,600.00 7,000,000.00 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 Forecast Time Net Cash Flow Openning Balance Closing Balance Cumulative Cash Flow

0 1 2 3 4 -5,000,000.00 -6,634,846.20 -5,128,660.64 2,411,381.23 11,836,577.48 0.00 -5,000,000.00 -11,634,846.20 -16,763,506.84 -14,352,125.61 -5,000,000.00 -11,634,846.20 -16,763,506.84 -14,352,125.61 -2,515,548.13 -11,634,846.20 -16,763,506.84 -14,352,125.61 -2,515,548.13

5 20,403,932.97 -2,515,548.13 17,888,384.84 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 Payback Period N/A N/A N/A Discounted Cash Flow (7% interest) -5,000,000.00 -6,200,790.84 -4,479,570.83 1,968,405.38 Cumulative Net Cash Flow -11,200,790.84 -15,680,361.67 -13,711,956.29 Modified Payback Period N/A N/A N/A NPV 9,220,405.81 IRR 22.83% Modified IRR 17.97% Profitability Index 1.84 4 N/A 9,030,068.29 -4,681,888.00 N/A 5 4.12 14,547,722.22 9,865,834.21 4.32

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 Capital Cost 7.0% Revenue Model Unit Cost Assumption: 1,100 in the years prior to break even point and reduced to 800 thereafter 1,100.00 1,100.00 800.00 800.00 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 Cash In 3,597,660.00 17,988,300.00 39,247,200.00 19,623,600.00 Sales forecast 3,128,400.00 15,642,000.00 34,128,000.00 17,064,000.00 Maintenance Charges (15% of Sales) 469,260.00 2,346,300.00 5,119,200.00 2,559,600.00 Operating and Capital Expenditure Model Capital Cost 7.0% Cash Out 7,742,995.00 8,826,203.50 10,027,793.50 8,918,633.50 Investment (Internal fund) 5,000,000.00 Variable Cost (from cost assumptions) 742,995.00 1,826,203.50 3,027,793.50 1,918,633.50 Maintenance 140,778.00 703,890.00 1,535,760.00 767,880.00 Marketing 539,649.00 809,473.50 809,473.50 809,473.50 Licensing 62,568.00 312,840.00 682,560.00 341,280.00 Fixed Cost (Manufacturing, salaries and wages) 7,000,000.00 7,000,000.00 7,000,000.00 7,000,000.00 Margins -4,145,335.00 9,162,096.50 29,219,406.50 10,704,966.50 Net Cash Flow -5,000,000.00 -4,145,335.00 9,162,096.50 29,219,406.50 10,704,966.50 Openning Balance 0.00 -5,000,000.00 -9,145,335.00 16,761.50 29,236,168.00 Closing Balance -5,000,000.00 -9,145,335.00 16,761.50 29,236,168.00 39,941,134.50 Cumulative Cash Flow -9,145,335.00 16,761.50 29,236,168.00 39,941,134.50 Payback Period N/A 2.00 N/A N/A Discounted Cash Flow (7% interest) -3,874,144.86 8,002,529.92 23,851,739.49 8,166,767.69 Cumulative Net Cash Flow -3,874,144.86 -871,614.94 22,980,124.55 31,146,892.23 Modified Payback Period N/A N/A 2.04 N/A NPV 28,477,881.92 IRR 94.23% Modified IRR 42.51% Profitability Index 5.70

600.00

10,665.00 7,358,850.00 6,399,000.00 959,850.00

8,306,355.85 1,306,355.85 287,955.00 890,420.85 127,980.00 7,000,000.00 -947,505.85 -947,505.85 39,941,134.50 38,993,628.65 38,993,628.65 N/A -675,558.58 30,471,333.66 N/A

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 scenarios 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. Its 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 dont 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, theres 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) Expected Duration Time 4 6 3 1.25 3 3 2 3 2 1.25 1.25 3

Early

Late Slack Time (weeks) 0 0 1 0.75 0 0 4.25 0.25 0 0 0 0

Predecessor Activity s p56 A B C D E F G H I J K L None None None A,C B,D E D,E F F I G,H,J K,J

a 2 4 2 0.5 2 1 1 2 1 0.5 0.5 1

m 4 6 3 1 3 3 2 3 2 1 1 3

b 6 8 4 3 4 5 3 4 3 3 3 5

Start ES 0 0 0 4 6 9 9 12 12 14 15.25 16.5

Finish EF 4 6 3 5.25 9 12 11 15 14 15.25 16.5 19.5

Start LS 0 0 0 4.75 6 9 12.25 12.25 12 14 15.25 16.5

Finish LF 4 6 3 6 9 12 14.25 15.25 14 15.25 16.5 19.5

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.

Table 8: Project activities in AOA

I
6 9

A
0

F
3 4

H G D

J L K
7

D B
2

Table 9: Project activity on AON Chart

A
4 4

1.25

5.25

1.25

11

15.25

16.5

D
START
0 4 0

G
6
12.25

K
15.3 G,H,J 16.5

4.75

A,C

D,E 14.25

C
4 4

END
3 19.5

6 0 6 0 6 4

12

15

E
B,D 9
12.25

H
F
15.25

14

15.25

16.5

B
4

J
14 I
15.25

L
16.5 K,J 19.5

12

F
9 E 12

I
6 F 9

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 theres no need to use the CPM,

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.
Table 10: Project Gantt Chart
Duration in Weeks 1 2

Activity Start A B C D E F G H I J K L End Legend

10

11

12

13

14

15

16

17

18

19

20

Normal activity

Critical activity

Slack time

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 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.
Table 11: Labour resource spread over the project duration
Activity Start A B C D E F G H I J K L TOTALS 4 3 2 1 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 Duration in Weeks 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

1 2 1

1 2 1

1 2 1

1 2 2 2

2 3 3 3 1 1 1 1 1 1 1 2 1 1 2 1 1 1 1 2 2 2 2 2 1 2 1 1

Expected Project Time and Probabilities (Q7) 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).
Table 12: Duration variance of critical activates

Activity A B E F I J K L Total

a 2 6 2 1 1 0.5 0.5 1

b 6 8 4 5 3 3 3 5 5

Var 0.4 0.1 0.1 0.4 0.1 0.2 0.2 0.4 2.0

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. Its 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.

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.
Table 13: Cost Slope of activities

Activity A B C D E F G H I J K L

Normal Expected Crash cost per Duration duration week Time (weels) (k) 4 6 3 1.25 3 3 2 3 2 1.25 1.25 3 2 4 2 1 2 2 1 1 1 1 1 2 1 9 1 1 3 1.5 1 3 1 0.5 1 3

Crash Cost per week (k) 1.6 10.4 1.2 1 3.5 2.1 1.6 3.8 1.9 0.5 1 3.8

Cost slope per week () 300 700 200 0 500 600 600 400 900 0 0 800

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) On the 10th week or at the projects 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.
Table 14: Actual and budget cost Summary for each activity and actual

Budgeted Costs to % Cost % % % Completion Activity cost () date () Variance Complete Planned Variance A 4,000.0 3,700.0 7.5 100 100 0.0 B 54,000.0 57,000.0 -5.6 100 100 0.0 C 3,000.0 2,900.0 3.3 95 100 -5.0 D 1,000.0 500.0 50.0 100 100 0.0 E 9,000.0 9,200.0 -2.2 25 100 -75.0 F 4,500.0 4,400.0 2.2 100 100 0.0 G 2,000.0 100.0 95.0 10 20 -50.0 TTL Todate 77,500.0 77,800.0 -0.4 75.7 88.6 -14.5 H I J K L TTL 9,000.0 2,000.0 500.0 1,000.0 9,000.0 99,000.0 0.0 400.0 0.0 0.0 0.0 78,200.0 0.0 80.0 0.0 0.0 0.0 21.0 0 50 0 0 0 48.3 0 0 0 0 0 51.7 n/a n/a n/a n/a n/a

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 projects overall deadline. Optimizing Resource Mix (Q10) 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 U (y) V (x)


7.5 7 6.5 6 5.5 5
Y = Reource U

Cost 400 900

(y) At least 2.5 resource-hours

y+2x Not to exceed 7.45 resource -hours

y-x Not to exceed 1.75 resource-hours

4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 0.5 1 1.5 2 2.5 3 X= Resource V 3.5 4 4.5 5 5.5

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 U (y) V (x)

Cost 400 900

Upper Limit 2.5 3.5

Cost 1,000 3,150

Lower Limit 0.75 2.5

Cost 300 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 projects 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 companys 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.badenfuller.com/Resources/a%20knowledge%20accessing%20theory%20of%20strategic%20al liance_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 PDAs 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-efreight-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