In response to your email, our team has analyzed each project. In your email, you stated that the selected project should generate revenue within 12 month of next week’s PMO Review. You also stated that we should also consider the degree of risk involved with on-time completion, the critical path requirement and cost, and the effective life cycle and forecasted ROI.
In order to make a recommendation, we took into account the scope of each project and whether it will meet the desired outcome, within your desired constraints. PROJECT JUNIPER The critical path for Project Juniper would be six months, which would be October 2015. The costs associated with this project would be less than the others, $325,000; however, the potential revenue is only $250,000. In addition, its break-even point is slightly less than three years, with a forecasted life cycle of only 2-3 years. PROJECT PALOMINO The critical path for Project Palomino would be nine months, which would be January 2016.
The costs associated with this project would be $655,000, with revenues as low as $450,000. However, using a 5% margin of error, this could be more profitable with its break- even point of seven years. The issue we are worried about is that this would also be the end of the project’s life of seven years. PROJECT STARGAZER The critical path for Project Stargazer would be ten months, which would be February 2016.
The costs associated with this project would be $575,000. The break-even point is one and a half years, with a seven-year life cycle. In addition, the company has already started on the research of the widgets, allowing the company a faster start up time, which will fit into the 12-month timeframe given. Even though the risks may be higher, the technology of this project will help dilute the risk, as well as the ability to increase price using skimming price strategy. This project is innovative and can have various modifications, which will enable the company to satisfy a larger customer base.
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