Project Management

Assignment 1
Submitted by:
Sourav Anand
PGP/26/112
 Case Datasheet

PROJECTS
PARAMETERS Product Enhancement Projects New Products
Calendar/email Expense report Portfolio tracking Spreadsheet Web browser Trip planner
Software development
1250 400 750 2500 1875 6250
time(in hrs)
Software development cost @ Software development cost per hr x software
$ 65,000.00 $ 20,800.00 $ 39,000.00 $ 1,30,000.00 $ 97,500.00 $ 3,25,000.00
$52/hr development time
Revenue Projections in Year1 $ 7,50,000.00 $ 2,50,000.00 $ 5,00,000.00 $ 10,00,000.00 $ 25,00,000.00 $ 13,00,000.00

Revenue Projections in Year2 $ 6,75,000.00 $ 2,62,500.00 $ 5,25,000.00 $ 11,00,000.00 $ 28,75,000.00 $ 13,65,000.00 Calculated based on the given annual
expected growth rate for respective projects
Revenue Projections in Year3 $ 6,07,500.00 $ 2,75,625.00 $ 5,51,250.00 $ 12,10,000.00 $ 33,06,250.00 $ 14,33,250.00

Probability of leadership moderate certain high moderate low low

Use of internet moderate little moderate no high high

Other Details
No. of Software Developers 4
Annual working hours of each
2500
software developer(in hours)
Expected Growth(%) Discount rate 12%
Portfolio Total development time
Calendar/email Expense report Spreadsheet Web browser Trip planner 10000
tracking available(in hours)
-10% 5% 5% 10% 15% 5% Cost of development(in $ per hour) $ 52.00
Assumptions
Probability Range Critical Weights in final
no 0-0.1 Parameters score Three critical parameters are chosen to reflect the performance of the projects:
NPV, Leadership scope, and Internet Usage. Out of these, the NPV is the top
low 0.1-0.2 NPV 0.5 priority and hence it is assigned with maximum weightage followed by
little 0.2-0.4 Leadership Scope and Internet usage
moderate 0.4-0.6 Leadership 0.3
high 0.6-0.8
Internet usage 0.2
certain 0.8-1

Calendar/ Expense Portfolio Web Trip

Spreadsheet
email report tracking browser planner
At first, we calculate NPVs for each of the
projects using given discount rate and cash flow NPV $ 15,75,155.23 $ 6,07,862.11 $ 12,18,324.22 $ 25,01,024.51 $ 67,79,898.70 $ 29,44,042.97
projections. Since the leadership scope and
internet usage are quantitatively expressed
through probability for different scenarios,
therefore the NPV for each project is Normalized NPV 0.100801498 0.038899919 0.077966225 0.160052173 0.433877204 0.188402982
normalized so that all the critical factors are
quantitatively expressed in the same
units/ratio.
Calculations
For reducing bias in the decision, multiple sub-scenarios for leadership scope and internet usage are generated using more than 30(41) different probability scores for the six
of the major scenarios(no, low, little, moderate, high, certain). Formula used for random value generation for the respective probability brackets: lower limit+(upper limit-
lower limit)*Rand()
Leadership Probability Scores Internet Usage
no low little moderate high certain no low little moderate high certain
0-0.1 0.1-0.2 0.2-0.4 0.4-0.6 0.6-.08 0.8-1 0-0.1 0.1-0.2 0.2-0.4 0.4-0.6 0.6-.08 0.8-1
0.066977075 0.145307952 0.219273842 0.559334517 0.626955666 0.879192186 0.07203994 0.141881356 0.28767024 0.559482488 0.687047648 0.851342319
0.067905248 0.111558134 0.332950955 0.487073883 0.66931192 0.988127615 0.079290282 0.120295213 0.376920093 0.546949396 0.707184027 0.93570896
0.03996839 0.114893239 0.305328252 0.562860247 0.682958111 0.810912341 0.070422495 0.107422529 0.338575918 0.513212604 0.738189398 0.900046069
0.066830339 0.15671859 0.235211031 0.422119156 0.642969713 0.897023284 0.007570963 0.11977911 0.387622226 0.57914711 0.667445853 0.833725166
0.040331799 0.192972785 0.253532971 0.500353623 0.630641351 0.819247191 0.003479032 0.16384056 0.256448329 0.45023577 0.777626256 0.927320933
0.092409517 0.113758047 0.33865997 0.596533391 0.689920062 0.933558131 0.038135059 0.120020315 0.337541177 0.459578581 0.799985902 0.982153621
0.028273304 0.139075744 0.277880847 0.554855278 0.774503381 0.805477597 0.010963013 0.120454069 0.351505758 0.481419193 0.77172793 0.984455781
0.09571625 0.179012626 0.307292385 0.447453278 0.785934322 0.863072719 0.015894176 0.154519174 0.218664112 0.505368861 0.660910618 0.953920317
0.057975168 0.111705519 0.28313056 0.433585824 0.666711498 0.891185282 0.048052333 0.128742418 0.316727523 0.537449653 0.701717174 0.856478387
0.095662014 0.104908248 0.395076622 0.568460737 0.734628479 0.916015189 0.052475069 0.162467548 0.286837214 0.51286074 0.604524081 0.954785587
0.036725806 0.105228572 0.361177702 0.541155269 0.688154482 0.995396906 0.005891903 0.145202705 0.213006314 0.563562032 0.732975963 0.93789947
0.066769072 0.143398116 0.31265815 0.57681913 0.622888708 0.868387051 0.024801516 0.184608551 0.347150551 0.404026527 0.640211147 0.809069646
0.019707649 0.195476559 0.210284129 0.518020433 0.768749685 0.897667442 0.007919412 0.186280341 0.334789955 0.439485045 0.618071692 0.891525917
0.025522836 0.109727225 0.308509617 0.411358241 0.6809221 0.822356585 0.00726187 0.148115169 0.398205766 0.537689968 0.750223823 0.805988066
0.098550057 0.15028408 0.396438609 0.589864828 0.678040413 0.87924437 0.079622882 0.146076039 0.39576503 0.431542875 0.701001966 0.939682247
0.054532596 0.15765453 0.298034433 0.469346619 0.721794118 0.843171103 0.022743954 0.145038399 0.201276563 0.519445268 0.772102481 0.802473803
0.094408533 0.113391842 0.302878763 0.416096648 0.75349952 0.878052166 0.086519696 0.107199911 0.298543299 0.465626175 0.622137185 0.918754283
0.096879091 0.15271212 0.320496367 0.478673656 0.715236235 0.822143513 0.049305697 0.183660779 0.25035739 0.553599089 0.619721693 0.913945128
0.063316334 0.133397284 0.372809821 0.46299611 0.610184533 0.808447385 0.048975998 0.194266351 0.334637065 0.564565332 0.642640532 0.887597507
0.083489889 0.199037167 0.318146453 0.485370198 0.646153065 0.924059605 0.033745663 0.152318367 0.314096015 0.487015403 0.607183436 0.873536812
0.028036271 0.141400319 0.335814726 0.591181141 0.7074542 0.853208799 0.087731164 0.10579515 0.390074755 0.477617913 0.685540551 0.929114284
0.020973119 0.125228865 0.306579684 0.570949827 0.757068317 0.849970871 0.072733627 0.150858036 0.248726147 0.437485985 0.750924355 0.861064548
0.06547417 0.148042211 0.258366845 0.500227878 0.737228748 0.945332593 0.064807864 0.10133103 0.279933379 0.531633688 0.757863932 0.988224251
0.058255111 0.149851962 0.227630604 0.41600128 0.627566557 0.920307982 0.058145991 0.13771372 0.267527937 0.511996812 0.695428412 0.947012316
0.087778374 0.19531767 0.229318889 0.556605093 0.730459925 0.990414785 0.063631845 0.150178978 0.280187691 0.485766618 0.725498495 0.966505027
0.073460856 0.112567926 0.346646411 0.529652369 0.707058702 0.818315751 0.060563605 0.165514153 0.215791076 0.53266335 0.78124701 0.809773814
0.035893505 0.10397015 0.261288594 0.566217311 0.661438514 0.812434421 0.078557619 0.134590013 0.236276615 0.438207212 0.747075855 0.969645217
0.030871821 0.1079448 0.347250823 0.476542037 0.713228112 0.882786641 0.05973461 0.184948382 0.324022729 0.539156043 0.635014793 0.849895247
0.003538897 0.106893538 0.243741759 0.555991718 0.76649807 0.901349746 0.016452302 0.159466517 0.288110736 0.487137726 0.749700352 0.930517479
0.025277095 0.145148238 0.330196088 0.500215711 0.709006463 0.880973111 0.055342064 0.196462772 0.266687745 0.422706557 0.620389524 0.832454228
0.078720939 0.136655338 0.391111569 0.522150765 0.783597403 0.97535744 0.010442356 0.18266844 0.263722699 0.429532293 0.780449291 0.996050164
0.0625923 0.166116443 0.314828509 0.504923165 0.765718332 0.834504574 0.054438343 0.186449704 0.254725194 0.584136773 0.676328127 0.809157928
0.028526448 0.106752977 0.209721849 0.502875495 0.761292215 0.823590534 0.059203378 0.118865998 0.331849056 0.465235174 0.647667624 0.824809727
0.020002479 0.158424715 0.353475386 0.518922321 0.60669456 0.824470067 0.093075631 0.14987861 0.294142113 0.480870363 0.651967686 0.941809126
0.049836516 0.176571062 0.284028505 0.417018308 0.763414413 0.844493672 0.06972867 0.147039485 0.243580181 0.541116067 0.649509929 0.899299215
0.013398175 0.186975083 0.371154372 0.487096497 0.681199725 0.920697218 0.075076277 0.173278553 0.273906354 0.461698881 0.621254491 0.82203949
0.025768209 0.189249671 0.277298272 0.495867615 0.799994717 0.85696638 0.086578659 0.162599618 0.385739768 0.501547084 0.741498012 0.887031996
0.0666886 0.188519001 0.292532326 0.504041099 0.745155464 0.92764262 0.065158146 0.150526687 0.310103831 0.593851691 0.607446164 0.933630365
0.012181613 0.116699674 0.304250724 0.558580323 0.777709044 0.833857873 0.082303072 0.15265414 0.26801965 0.474990309 0.605492623 0.96333431
0.060800141 0.162568131 0.279062836 0.465563902 0.632090293 0.944899548 0.011758533 0.141069567 0.209341107 0.488688679 0.74464138 0.8624049
0.023632869 0.183172495 0.325364297 0.495428782 0.620976387 0.862321114 0.057550391 0.145750071 0.39850493 0.592192069 0.7362054 0.831105689
Calculations
Weighted Average Scores
Post-generation of random probability scores, the expected values for each of
Calendar/email Expense report Portfolio tracking Spreadsheet Web browser Trip planner
the projects are calculated based on their respective weighted average scores
0.330097601
0.305912793
0.340741664
0.391272263
0.33896631
0.349166568
0.262234429
0.242006308
0.397940517
0.391842847
0
0
of normalized NPV, leadership scope, and internet usage for each of the 41
0.321901344 0.330438845 0.346513066 0.26296866 0.399044453 0 sub-scenarios. The following formula is used in the calculation:
0.292865918 0.36608139 0.347703448 0.208176026 0.397443349 0
0.29055399 0.316513783 0.318222672 0.23082798 0.430355689 0
0.321276482 0.367025634 0.337874847 0.266613116 0.411063196 0
0.313141171 0.33139439 0.367617965 0.248675273 0.413006911 0
0.285710504 0.322104598 0.375837181 0.217440905 0.402824513 0
0.287966427 0.350151049 0.346486492 0.2197123 0.390793692 0
0.323511118 0.351621959 0.361943804 0.261059321 0.369315892 0
0.325459736 0.360670294 0.358141863 0.243551048 0.395102366 0
0.304251793 0.349396185 0.30665503 0.258032129 0.388000266 0
0.293703888 0.355708183 0.357505027 0.237016099 0.399195908 0
0.281346215 0.345798088 0.350797736 0.204885933 0.399901534 0
0.313668772 0.362376277 0.328703811 0.272910111 0.402224219 0
0.295093788 0.312656603 0.359410401 0.225378863 0.418655457 0
0.268354978 0.342574269 0.358158204 0.22215902 0.375383591 0
0.304722663 0.316164492 0.364273801 0.233489323 0.386696576 0
0.302212648 0.328911588 0.334951539 0.228720119 0.385485893 0
0.293414889 0.359487044 0.330232112 0.232386279 0.398086439 0
0.323278674 0.35342755 0.346742955 0.274926662 0.396466808 0
0.309182894 0.32418645 0.353600805 0.26585776 0.404692132 0
0.30679585 0.359036413 0.366478474 0.243056023 0.412924051 0
0.277600495 0.349047942 0.329652442 0.216455669 0.400979873 0
0.3145356 0.372611933 0.355274413 0.259733983 0.420633602 0
0.315829129 0.3081029 0.357633393 0.251034518 0.406958382 0
0.307907385 0.310435609 0.325056109 0.265602804 0.397544818 0
0.301194569 0.349090498 0.360782754 0.23493562 0.376325 0
0.31462581 0.34747703 0.366360078 0.250114062 0.398946734 0
0.285006774 0.337079442 0.336226362 0.241159213 0.384560978 0
0.292952437 0.364801731 0.359968792 0.238759787 0.414025061 0
0.318705053 0.320746371 0.385525967 0.242390704 0.40203916 0
0.294310432 0.332896931 0.360417812 0.242729411 0.37849802 0
0.302251518 0.325619402 0.317165553 0.254317909 0.394859553 0
0.283729455 0.321514097 0.37623065 0.219077313 0.399811906 0
0.288869474 0.350440396 0.335682806 0.241170291 0.397282025 0
0.29947045 0.353687827 0.379290944 0.246102103 0.422013106 0
0.320383417
0.312972908
0.359763512
0.323211252
0.38130009
0.367293887
0.244270045
0.264060798
0.394983535
0.373047029
0
0
Finally, the average scores of the 41 sub-scenarios
0.287807655 0.344788045 0.326347936 0.222046964 0.414637317 0
0.317467797
0.303171817
0.35784728
0.343095152
0.343714442
0.350485574
0.240164799
0.242346578
0.41913143
0.399090825
0
0
for each of the 6 projects are calculated
Optimization Problem Model

Decision Variables:
X1: Integration of calendar and email program (0 = not chosen, 1 = chosen)
X2: Update of expense report program (0 = not chosen, 1 = chosen)
X3: Enhancement of portfolio tracking program (0 = not chosen, 1 = chosen)
X4: Development of spreadsheet program (0 = not chosen, 1 = chosen)
X5: Development of Web browser (0 = not chosen, 1 = chosen)
X6: Development of trip planner program (0 = not chosen, 1 = chosen)

Objective Function: Maximize the average of the sum of the weighted scores of project(i) in scenario(j)
i.e.,

Z= Sum(Average of (Weightage average score for project (i) in scenario (j)))for j=(1 to 30), i=(1 to 6)
Constraint:
Total software development time: Sum(X(i)*Software development time for project (i)) for i= (1 to 6)
Excel Solver Results
Objective Function 1.642637985 PROJECTS
Product Enhancement Projects New Products
Optimal Software
6775
development time Calendar/email Expense report Portfolio tracking Spreadsheet Web browser Trip planner

Decision to choose project 1 1 1 1 1 0

Weighted Average Scores

Project Ranking
Calendar/email 4 Calendar/email Expense report Portfolio tracking Spreadsheet Web browser Trip planner

Expense report 2
Portfolio tracking 3
0.299841777 0.351839466 0.347443865 0.240437211 0.400864989 0
Spreadsheet 5
Web browser 1 Final Solution: Therefore, as per the excel solver solution for the
Trip planner 6 optimization problem, Handstar Inc. should go ahead with the
following projects: Web browser, Expense Report, Portfolio Tracking,
Calendar/email, and Spreadsheet
Thank You