Feasibility analysis and selection of the Palomino project

Project Management Email Response

Choosing a Project

In order to determine which of the three projects is best, it is important to conduct a feasibility study. That is done to take a careful look at each one of the projects offered and examine what they provide to the company in the future. Of course, it is not possible to know exactly what will happen, and there are only projections and assumptions that can be made with any new product launch or adjustment (Farris et al., 2010). Still, the best way to make these is through studying the feasibility of the different options provided in order to make the best and most educated plan for the future (Farris et al., 2010; Levy, 2002). This study shows that the Palomino project is going to be the recommended option between the three choices available, because it provides the most balance. There are a number of reasons for this, with the most important two being:

A realistic (medium) level of risk that protects the company from too much damage if the project does not perform as expected, and A relatively high level of reward for the company if the project performs at or near expectations.

In order to fully understand why this project has been chosen over the other two, however, all three projects are being discussed here. That way it is easier to compare the pros and cons of them and see why the Palomino project is the best option for the current state of the business and the direction it plans to take in the immediate future. While growth and development of a business can change how that business works in later years, it is important for any business to avoid planning too far ahead because of changes that can take place and make a difference in those plans (Levy, 2002).

The Projects -- Feasibility Information

The Juniper Project

The Juniper Project is a widget that is already carried by the company, but is enhanced. The risk to the company for producing and marketing/selling this widget is very low, as is the risk of not completing the project on time, but the return on investment is also low. The project costs $325,000 and takes six months to complete, and is going to give back $250,000 per year. That does not sound bad when initially considered, but the real problem comes in with the lifespan of the project. Since it will only last for two to three years before it will become completely obsolete, it will not continue to provide income for the company on any kind of long-term investment. This is not a good return on investment (Farris et al., 2010). The company is spending $325,000 and six months of its time, and receives between $500,000 and $750,000 over the two to three years the product lasts.

While the company makes a profit, there are better ways in which to make more money for a longer period of time (Levy, 2002). If the Juniper Project could be made to have a longer lifespan, it would certainly be more economically feasible, but that is not realistic for the company. The lifespan ends because of advances occurring in technology. There is always the chance that these advances will not take place, but the company cannot count on the lack of technological advancement as part of its strategy for a good return on investment. When a company has a strategy planned for its return on investment, it considers the worst case scenario in order to prepare for any eventuality (Farris et al., 2010). Companies that do this are much more likely to be successful with their plans for future expansion, and can end up healthier financially than companies that do not plan for what could go wrong.

The Stargazer Project

The Stargazer project appears to be theoretically good due to the growing level of profit every year and the length of the return on the initial investment based on the project's lifespan. With a seven-year lifespan, the project returns money to the company for much longer than the other projects. Of course, that does not come without risk in the uncertainty of the project and the cost of the initial start-up. With high risk and uncertain rewards, the project is unappealing even though the money it returns to the company could be high. There has already been $450,000 spent on this project, and it costs another $575,000 to complete it and bring it to market. Additionally, there is a high risk of the project not being ready on time, which is a serious concern for the company. However, there is no specific projected date of completion for this project.

The return on investment is not high for the first and second year, and is higher and more realistic the third year. With a seven-year lifespan the project sounds good, but derivative products (and further costs) are needed in order to meet this lifespan. Innovation and leadership in any industry is important, but generally not at the expense of making a profit for a long period of time (Farris, et al., 2010). There are also a lot of questions about this project and many customers do not appear interested, further pushing the risk profile to a point that is too high to be considered realistically.

The Phases of a Project

There are five distinct phases to any project. These phases are initiating, planning, executing, monitoring and controlling, and closing. The project is currently in the initiating phase. All of the people who are involved in the project should take this time to learn about it, so they are able to focus on what they need to do in order to carry the project forward. They must understand their roles, or the project may not be successful. The more people prepare for a new project, the better chance of success the project and the company will have (Levy, 2002). The excitement about the project is also very important, and worth consideration. As the project moves into the planning stage, input is provided from the people who will be working on that project. That helps to keep it on track, and also get it moving forward so that it can benefit the largest number of people possible (Farris, et al., 2010).

The execution of the project is the next step, which involves creating the product and making sure the customer can receive it. Once that has been done, the project is controlled and monitored in order to make sure it is working smoothly and as expected. If a project is not meeting expectations, it is important to discover this as soon as possible, so changes can be made before the company loses significant money (Farris, et al., 2010). At the end of the product's lifespan, the project moves toward closure. Closing out a project the right way ensures the company has very little end product remaining when it is no longer needed by the majority of customers.

Key Deliverables

With the Palomino project, the key deliverables are the actual widgets themselves. The widgets have to be ready for the customer when needed, and as promised. If that is not the case, it is possible that the customer will go elsewhere or stop working with the company in the future because of the cost of the delays experienced (Levy, 2002). This is both a short and a long-term issue for any company that provides a product, because ensuring that the product is quality and available is the key toward future advancement in the field. The best choice for this company right now is the Palomino project, as it will provide the best return on investment for the lowest level of risk.