Payback Period Analysis

A project manager's primary responsibility is to decide if a project is worth

investing in and to assure its success from start to finish. The Payback Period is a
Project Management tool used to determine how long it will take to recover an
investment in a project. The phrase describes the length of time needed to recoup
an investment's cost. Simply described, it is the period of time it takes for an
investment to break even.

Shorter paybacks mean more attractive investments, while longer payback periods are
less desirable. Based on a Payback Period Analysis by me, I would recommend the
Project C, Develop online training and development modules. I would now like to
explain with the following example.

The above formula explains that the Initial Investment describes the original
expenditure for the project, which for Project C is $50,000. Periodic Cash Flow
depicts the total revenue the project makes during the period of 1 year i.e. $20,000.
According to the Payback Period Analysis, the payback period for Project C is 2
years and 5 months. Though it is much more than the other projects, but according
to our top priorities, by developing online training and development modules
would decrease the operating costs as the employees would work more efficiently.
Moreover, as the employees would be on their potential, it would retain their
talents to the fullest and enhance their productive skills.

Weighted Factor Model

A Weighted Factor Model is a project management strategy for weighing particular
decisions, such as prioritizing project tasks, prioritizing product feature
development, purchasing new software, and so on.

Goals Importance Plan A Plan B Plan C Plan D

Reducing operating 0 0 1 2
costs through gained 50% (0.5) (0.5x1)= 0.5 (0.5x2)= 1
efficiencies
Attract & retain top 30% (0.3) 2 0 1 0
employee talent (0.3x2)= 0.6 (0.3x1)= 1
Develop & enhance 20% (0.2) 0 0 2 0
employee skills (0.2x2)= 0.4
Total 100% (1) 0.6 0 1.2 1